RNS Number:1704T
Abacus Group PLC
26 October 2005
For immediate release 26 October 2005
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO
DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
Abacus Group plc ("Abacus") and
Deltron Electronics plc ("Deltron")
Recommended offer for Deltron Electronics plc by Abacus Group plc
The Boards of Abacus and Deltron announce that they have reached agreement on
the terms of a recommended all share offer for the whole of the issued and to be
issued share capital of Deltron, a pan-European specialist distributor of
electromechanical components and solutions and manufacturer of electromechanical
components, sub-assemblies and related tools and production aids.
The Acquisition will be implemented by way of a scheme of arrangement under
section 425 of the Companies Act.
* The consideration payable to Deltron Shareholders will
comprise 0.6432 New Abacus Shares for each Deltron Share and, based on the
Abacus Closing Price of 106.5 pence on 25 October 2005, values each Deltron
Share at 68.5 pence.
* The proposed all share consideration values the existing
issued share capital of Deltron at approximately #28.4 million and, following
completion of the Acquisition, existing Deltron Shareholders will hold
approximately 38.5 per cent. of the Enlarged Group.
* The Offer Price represents a premium of approximately 45.7
per cent. to the Deltron Closing Price of 47.0 pence on 24 October 2005 and a
premium of approximately 38.4 per cent. to the average price for one month to
the same date of 49.5 pence per Deltron Share.
* The Board of Abacus believes that the acquisition of
Deltron will enable the Enlarged Group to offer a more comprehensive service to
its customers and will facilitate growth of the business within Europe. The
overlapping business activities in the UK, the Nordic Region and Italy will
afford cost saving synergies, thereby strengthening the financial position of
the Enlarged Group.
* The estimated reduction in annual operating costs of the
Enlarged Group will be approximately #3.5 million in the first full financial
year following completion of the Acquisition and at least #5.0 million in the
following financial year. The cost of achieving these savings is not expected to
exceed #6.0 million (including #1.8 million of non-cash balance sheet
adjustments but excluding estimated transaction costs).*
* The Acquisition is expected to be earnings enhancing in
the first full financial year following completion of the Acquisition.**
* Upon the Scheme becoming effective, Jerry Vaughan is to be
appointed to the Abacus Board as an executive director and David Weir is to be
appointed to the Abacus Board as a non-executive director.
* Irrevocable undertakings to vote in favour of the Scheme
have been received from the Deltron Directors in respect of, in aggregate,
3,974,957 Deltron Shares, representing approximately 9.6 per cent. of the
existing issued share capital of Deltron.
* Irrevocable undertakings to vote in favour of the
Acquisition at the Abacus Extraordinary General Meeting have been received from
the Abacus Directors in respect of, in aggregate, 202,623 Abacus Shares,
representing approximately 0.5 per cent. of the existing issued share capital of
Abacus.
* The Abacus Directors estimate that Abacus Group's profit
before tax, exceptionals and goodwill will not be less than #8.0 million for the
year ended 30 September 2005. The Abacus Group intends to announce its
preliminary results for the year ended 30 September 2005 on or around 22
November 2005.
* Abacus Shareholders will receive a second interim dividend
of 3.6 pence per share in lieu of the final dividend that the Abacus Directors
would otherwise expect to declare in respect of the year ended 30 September
2005.
* The Deltron Directors estimate that Deltron's profit
before tax, goodwill amortisation and exceptional items will not be less than
#2.5 million for the financial year ended 30 September 2005. The Deltron Group
intends to announce its preliminary results for the year ended 30 September 2005
on or around 22 November 2005.
* Deltron Shareholders will, conditional upon the Scheme
becoming effective, receive a second interim dividend of 1.386 pence per Deltron
Share in lieu of the final dividend that the Deltron Directors would otherwise
expect to declare in respect of the year ended 30 September 2005.
* The Acquisition will be conditional on, inter alia, Abacus
shareholder approval at the Abacus EGM and Admission.
* The Boards of both Abacus and Deltron intend unanimously
to recommend the Acquisition to their respective shareholders.
Harry Westropp, Chairman of Abacus, commented:
"The Board of Abacus believes that the Acquisition will enable the Enlarged
Group to offer a more comprehensive service to its customers and will facilitate
growth of the business within Europe. The Acquisition is in line with our
strategy of expanding into new regions within Europe and improving our market
share in those regions in which we have existing businesses."
David Potter, Chairman of Deltron, commented:
"The combination of Abacus and Deltron represents an exciting opportunity to
capitalise on the strengths of both groups. It creates the opportunity for
operating efficiencies, while reinforcing the position of the Enlarged Group in
the markets in which it operates."
This summary should be read in conjunction with the full text of the
announcement.
Enquiries:
Abacus Group plc (01635) 36222
Martin Kent, Chief Executive Officer
Peter Allen, Chief Financial Officer
Deltron Electronics plc (01638) 561 156
Christopher Sawyer, Group Chief Executive
Derek O'Neill, Group Finance Director
Hoare Govett Limited (financial adviser and broker to Abacus) (020) 7678 8000
John MacGowan
Justin Jones
Sean Wegerhoff
Hawkpoint Partners Limited (financial adviser to Deltron) (020) 7665 4500
Christopher Darlington
Jonathan Coddington
Jeremy Millard
Evolution Securities Limited (broker to Deltron) (020) 7071 4300
Tim Worlledge
Buchanan Communications (020) 7466 5000
Tim Anderson
* The expected pre-tax cost savings have been calculated on the basis
of the existing cost and operating structures of the companies and by reference
to current prices and exchange rates and the current regulatory environment.
These statements of pre-tax cost savings and costs for achieving them relate to
future actions and circumstances, which, by their nature, involve risks,
uncertainties and other factors. Because of this, the cost savings referred to
may not be achieved, or those achieved could be materially different from those
estimated. This statement should not be interpreted to mean that earnings per
share in the first full financial year following completion of the Acquisition,
or in any subsequent period, will necessarily match or be higher than those for
the relevant preceding financial period.
** This statement does not constitute a profit forecast nor should it be
interpreted to mean that earnings per share in the first full financial year
following completion of the Acquisition, or in any subsequent period, will
necessarily match or be higher than those for the relevant preceding financial
period.
Appendix I(a) contains the Abacus Profit Estimate.
Appendix I(b) contains the Deltron Profit Estimate.
Appendix II contains the conditions of the Acquisition and implementation of the
Scheme.
Appendix III contains the definitions of terms used in this announcement.
Hoare Govett, which is authorised and regulated in the UK by the Financial
Services Authority, is acting for Abacus and no-one else in connection with the
Proposal and will not be responsible to anyone other than Abacus for providing
the protections afforded to clients of Hoare Govett nor for providing advice in
relation to the Proposal nor any other matter referred to in this announcement.
Hawkpoint, which is authorised and regulated in the UK by the Financial Services
Authority, is acting as financial adviser to Deltron in connection with the
Proposal and no-one else and will not be responsible to anyone other than
Deltron for providing the protections afforded to clients of Hawkpoint nor for
providing advice in relation to the Proposal nor any other matter referred to in
this announcement.
Evolution Securities Limited, which is authorised and regulated in the UK by the
Financial Services Authority, is acting as corporate broker to Deltron and
no-one else in connection with the Proposal and will not be responsible to
anyone other than Deltron for providing the protections afforded to clients of
Evolution Securities Limited, nor for providing advice in relation to the
Proposal nor any other matter referred to in this announcement.
Hoare Govett has given and not withdrawn its written consent to the inclusion in
this announcement of its name and of its letter in Appendix I(a) and the
references to that letter in the form and context in which they appear.
Hawkpoint has given and not withdrawn its written consent to the inclusion in
this announcement of its name and of its letter in Appendix I(b) and the
references to that letter in the form and context in which they appear.
Ernst & Young LLP has given and not withdrawn its written consent to the
inclusion in this announcement of its letter in Appendix I(a) and the references
to that letter in the form and context in which they are included.
Deloitte & Touche LLP has given and not withdrawn its written consent to the
inclusion in this announcement of its letter in Appendix I(b) and the references
to that letter in the form and context in which they are included.
This announcement does not constitute an offer or invitation to acquire or
exchange securities in Abacus or Deltron. Any such offer or invitation will
only be made in documents to be published in due course and any such acquisition
or exchange should be made solely on the basis of information contained in any
such documents.
The availability of the Proposal to persons who are not resident in the United
Kingdom may be affected by the laws of the relevant jurisdiction. Persons who
are not resident in the United Kingdom should inform themselves about and
observe any applicable requirements.
The implications of the Scheme for persons resident in, or citizens of,
jurisdictions outside the UK ("Overseas Shareholders") may be affected by the
laws of the relevant jurisdictions. Such Overseas Shareholders should inform
themselves about and observe any applicable legal requirements. It is the
responsibility of each Overseas Shareholder to satisfy himself as to the full
observance of the laws of the relevant jurisdiction in connection therewith,
including the obtaining of any governmental, exchange control or other consents
which may be required to be observed and the payment of any issue, transfer or
other taxes in such jurisdictions.
Dealing disclosure requirements
Under the provisions of Rule 8.3 of the Code, any person who, alone or acting
together with any other person(s) pursuant to an agreement or understanding
(whether formal or informal) to acquire or control securities of Abacus or
Deltron, owns or controls, or becomes the owner or controller, directly or
indirectly, of one per cent. or more of any class of securities of Abacus or
Deltron is required to disclose, by not later than 12.00 noon (London time) on
the business day following the date of the relevant transaction, every dealing
in any relevant securities of that company (or in any option in respect of, or
derivative referenced to, any such securities) during the period to the date on
which the Scheme becomes effective or is withdrawn.
Under the provisions of Rule 8.1 of the Code, all dealings in relevant
securities of Abacus or Deltron by Abacus or Deltron or by any of their
respective "associates" (within the meaning of the Code) must also be disclosed.
If you are in any doubt as to the application of Rule 8 to you, please contact
an independent financial adviser authorised under the Financial Services and
Markets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk or
contact the Panel on telephone number +44 (0) 20 7638 0129; fax +44 (0) 20 7236
7013.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO
DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
Abacus Group plc ("Abacus") and
Deltron Electronics plc ("Deltron")
Recommended offer for Deltron Electronics plc by Abacus Group plc
1. Introduction
The Boards of Abacus and Deltron announce that they have reached agreement on
the terms of a recommended all share offer for the whole of the issued and to be
issued share capital of Deltron. The Acquisition will be implemented by way of
a scheme of arrangement under section 425 of the Companies Act.
The Board of Abacus believes that the acquisition of Deltron will enable the
Enlarged Group to offer a more comprehensive service to its customers and will
facilitate growth of the business within Europe. The overlapping business
activities in the UK, the Nordic Region and Italy will afford cost saving
synergies, thereby strengthening the financial position of the Enlarged Group.
2. The Scheme
The Acquisition will be effected by way of a scheme of arrangement between
Deltron and Deltron Shareholders under section 425 of the Companies Act. The
implementation of the Scheme is subject to satisfaction of the Conditions (which
are set out in Appendix II to this announcement). If the Scheme becomes
effective, the Deltron Shares will be cancelled and Deltron Shareholders on the
Deltron register of members at the Scheme Record Date will receive:
for each Deltron Share 0.6432 New Abacus Shares
and so in proportion for any other number of Deltron Shares held.
On the Scheme becoming effective, it will be binding on all holders of Deltron
Shares including any Deltron Shareholders who did not vote to approve the Scheme
or who voted against the Scheme.
The Scheme is expected to result in the issue to Deltron Shareholders of
approximately 26.6 million New Abacus Shares, representing approximately 38.5
per cent. of the enlarged issued share capital of Abacus.
On the basis of the Abacus Closing Price of 106.5 pence on 25 October 2005
(being the last business day immediately prior to the publication of this
announcement) the Acquisition values each Deltron Share at 68.5 pence and the
entire existing issued share capital of Deltron at approximately #28.4 million.
The Offer Price represents a premium of approximately 45.7 per cent. to the
Deltron Closing Price of 47.0 pence on 24 October 2005 (being the last business
day immediately prior to the announcement by Deltron that it was in discussions
which may or may not lead to a recommended offer for Deltron) and approximately
38.4 per cent. to the average price for one month to the same date of 49.5 pence
per Deltron Share.
The Abacus Directors and the Deltron Directors believe that the Scheme is likely
to become effective in mid-January 2006.
The Acquisition has the unanimous support of the Boards of both Abacus and
Deltron who intend unanimously to recommend the Acquisition to their respective
shareholders.
3. Background to, reasons for and benefits of the Acquisition
The Board of Abacus believes that the Acquisition will enable the Enlarged Group
to offer a more comprehensive service to its customers and will facilitate
growth of the business within Europe. The overlapping business activities in the
UK, the Nordic Region and Italy will afford cost saving synergies, thereby
strengthening the financial position of the Enlarged Group.
The Abacus Directors and the Proposed Directors estimate that the Acquisition
will lead to a reduction in the annual operating costs of the Enlarged Group of
approximately #3.5 million in the first full financial year following completion
of the Acquisition and at least #5.0 million in the following financial year.
The cost of achieving these savings is not expected to exceed #6.0 million
(including #1.8 million of non-cash balance sheet adjustments but excluding
estimated transaction costs).(1)
The Abacus Directors and the Proposed Directors believe that the Acquisition
will be earnings enhancing in the first full financial year following completion
of the Acquisition.1
4. Principal terms and conditions of the Acquisition and implementation of
the Scheme
The Acquisition will be effected in accordance with the requirements of the City
Code and is conditional on, inter alia, the approval of Abacus Shareholders and
the admission of the New Abacus Shares to the Official List and to trading on
the London Stock Exchange's market for listed securities.
Deltron Shareholders will, in respect of their Deltron Shares, receive a second
interim dividend of 1.386 pence per Deltron Share in lieu of the final dividend
which the Deltron Directors would otherwise expect to declare in respect of the
year ended 30 September 2005. The second interim dividend will be payable to
Deltron Shareholders recorded on the register on the Scheme Record Date; the
second interim dividend will be paid as soon as reasonably practicable following
the Scheme becoming effective. Deltron Shareholders will not, in respect of the
New Abacus Shares to be issued pursuant to the Acquisition, be entitled to
receive any dividend relating to Abacus for the year ended 30 September 2005,
although they will, in respect of the New Abacus Shares which they hold, be
entitled to receive all future dividends declared by Abacus following completion
of the Acquisition.
Abacus Shareholders will, in respect of their Abacus Shares, receive a second
interim dividend of 3.6 pence per Abacus Share in lieu of the final dividend
which the Abacus Directors would otherwise expect to declare in respect of the
year ended 30 September 2005. The second interim dividend will be payable on 3
January 2006 to holders of Abacus Shares recorded on the register on 2 December
2005.
The New Abacus Shares will, when issued, be credited as fully paid and free from
all liens, charges and encumbrances and will rank pari passu in all respects
with the existing Abacus Shares. Application will be made to the UK Listing
Authority for the New Abacus Shares to be admitted to the Official List and to
the London Stock Exchange for the New Abacus Shares to be admitted to trading on
its market for listed securities.
Upon the Scheme becoming effective, fractions of New Abacus Shares will not be
issued to Deltron Shareholders but will be sold in the market for the benefit of
the Company. No compensation will be payable to Deltron Shareholders for these
fractions.
5. Profit estimates, current trading, trends and prospects
Abacus
On 19 July 2005, following challenging trading conditions, Abacus announced that
"profit for the year, before tax, exceptionals and goodwill, is expected to be
not less than #8.0 million".
Since 19 July 2005, current trading has continued in line with the Directors'
expectations. Notwithstanding the challenging trading conditions, the Abacus
Group has continued to perform well, gaining market share in the UK.
The Abacus Directors and the Proposed Directors estimate that, on the basis of
preparation set out in Appendix I(a) to this announcement, profit before tax,
exceptionals and goodwill, will be not less than #8.0 million for the year ended
30 September 2005. Further information in respect of the Abacus Profit Estimate
is set out in Appexdix I(a) to this announcement.
The Abacus Group intends to announce its preliminary results for the year ended
30 September 2005 on or around 22 November 2005.
Deltron
On 9 June 2005, Deltron announced that "the Board remains confident that the
Group's profit before tax, goodwill, amortisation and exceptional items over the
full financial year should show a marked improvement on the previous 12 months,
albeit less than current market expectations". Subsequently, on 28 September
2005, Deltron announced that trading had been in line with the Deltron
Directors' expectations that the Deltron Group's profit before tax, goodwill
amortisation and exceptional items for the full financial year should show a
marked improvement on the previous twelve months.
Since 28 September 2005, current trading has continued in line with the Deltron
Directors' expectations.
The Deltron Directors estimate that, on the basis of preparation and principal
assumptions set out in Appendix I(b) to this announcement, the Deltron Group's
profit before tax, goodwill amortisation and exceptional items for the financial
year ended 30 September 2005 will show a marked improvement on the previous
twelve months and will be not less than #2.5 million. Further information in
respect of the Deltron Profit Estimate is set out in Appendix I(b) to this
announcement.
The Deltron Group intends to announce its preliminary results for the year ended
30 September 2005 on or around 22 November 2005.
The Enlarged Group
The Abacus Directors and the Proposed Directors believe that the Acquisition
will enable the Enlarged Group to offer a more comprehensive service to its
customers and will facilitate growth of the business within Europe. The
overlapping business activities within the UK, the Nordic Region and Italy will
afford cost saving synergies, thereby strengthening the financial position of
the Enlarged Group.
Notwithstanding challenging trading conditions, the Abacus Directors and the
Proposed Directors view the Enlarged Group's prospects for the current financial
year with confidence.
6. Information relating to the Abacus Group
The Abacus Group is a leading franchised distributor of electronic components,
flat-panel displays, printers and related products and provides additional value
added services including technical support, cable and electromechanical
sub-assembly and the design and build of display systems.
The Abacus Group has nine principal trading businesses, operating in the UK,
Ireland, Benelux, the Nordic Region and Italy, as set out below:
* Abacus Polar distributes electronic components via a wide range of
franchises across all product technologies through sales operations in locations
covering the UK and Ireland;
* Micromark C&CD is a narrow line, broad based technology electronic
component distributor in the UK;
* Trident specialises in flat-panel displays and printers in the UK with
offices in Benelux and the Nordic Region;
* TDC specialises in wireless and wired products for embedded applications
in machine to machine, automotive, consumer electronic and telecommunication
products;
* Abacus Promax offers a comprehensive range of electronic technologies from
leading suppliers through a network of six sales offices in Scandinavia;
* ECC acts as a manufacturer's representative for a number of manufacturers
and holds franchises across many product groups through a network of regional
offices in Italy;
* CTL and CCS offer a range of sub-contract manufacturing services to the
electronics industry including standard cable assemblies, electromechanical
sub-assembly through to complex box build and associated testing in the UK and
Ireland; and
* Dubilier markets a comprehensive range of passive products and
electromechanical products in Europe selling both directly and through its
distribution network.
For the year ended 30 September 2004, the Abacus Group reported turnover of
#187.8 million (2003: #147.0 million), profit before goodwill and taxation of
#10.0 million (2003: #8.0 million) and basic earnings per share before goodwill
of 15.9 pence (2003: 13.5 pence). For the six months ended 31 March 2005, the
Abacus Group reported turnover of #87.1 million, profit before goodwill and
taxation of #4.0 million and basic earnings per share before goodwill of 6.3
pence. As at 31 March 2005, the Abacus Group had net assets of #45.0 million.
The Abacus Group employs approximately 750 people.
On 28 July 2005, the Abacus Group acquired certain intangible assets connected
with customer and supplier information from the administrator of Eurodis
Electronics UK Limited in the UK for a consideration of #1.6 million in cash.
7. Information relating to the Deltron Group
Deltron is a pan-European specialist distributor of electromechanical components
and solutions, and is a manufacturer of electromechanical components,
sub-assemblies and related tools and production aids.
The majority of Deltron's distribution businesses operate in the UK and mainland
Europe, primarily distributing switches, connectors, audible alarms and
magnetics.
The Deltron Group has operations in the UK, Denmark, France, Ireland, Germany,
Italy, Sweden, the Netherlands, Austria, Norway and China.
Deltron's manufacturing operations, Deltron Emcon and Deltron EMC (based in the
UK and France, respectively), principally make electromechanical products and
sub-assemblies comprising electromagnetic compatibility filters, a variety of
connectors and other interconnect devices.
The products manufactured and distributed by Deltron are used in a wide range of
industry applications, including heating systems, coffee machines, motor
vehicles and automotive parts, telecoms hardware, security systems, electronic
point of sale devices, military applications, professional broadcasting systems
and factory automation machinery.
Deltron focuses on incorporating its components within customers' products
during the design stage of new products at the customer's location.
Representatives from Deltron help customers select and incorporate the most
suitable component into the design during product development; the component is
then referred to as being ''designed-in''.
For the year ended 30 September 2004, the Deltron Group reported turnover of
#65.7 million (2003: #64.0 million), profit before goodwill amortisation,
operating exceptional items and taxation of #2.0 million (2003: #0.6 million),
profit before taxation of #1.1 million (2003: loss of #1.5 million) and adjusted
earnings per share before goodwill amortistion and operating exceptional items
of 3.7 pence (2003: 1.6 pence). For the six months ended 31 March 2005, the
Deltron Group reported turnover of #33.3 million, profit before goodwill
amortisation, operating exceptional items and taxation of #1.4 million and
adjusted earnings per share before goodwill amortistion and operating
exceptional items of 2.6 pence. As at 31 March 2005, the Deltron Group had net
assets of #19.3 million and gross assets of #42.6 million. The Deltron Group
employs approximately 350 people.
Deltron made the following two acquisitions in 2005:
* in August 2005 Deltron acquired Deltrona Vertriebsgesellschaft fur
elektronische Bauelemente GmbH of Germany, a specialist distributor of
electromechanical components to the manufacturing industry, for an aggregate
consideration of #2.5 million in cash; and
* in July 2005 Deltron acquired the media business and assets of BES
Electronics Limited, a specialist supplier of products to the media and
broadcasting industry, for an aggregate consideration of #0.5 million in cash.
8. New Bank Facilities
Abacus has entered into new banking arrangements with HSBC which comprise an #11
million revolving credit facility and a #4 million overdraft facility. The New
Bank Facilities are in addition to the existing bank facilities of Abacus and
will be used by Abacus, in part, to refinance the existing indebtedness of
Deltron following completion of the Acquisition.
9. Shareholder meetings
The implementation of the Scheme will require approval by a special resolution
of Deltron Shareholders to be proposed at the Deltron EGM. The Scheme will also
require separate approval by Deltron Shareholders at the Deltron Court Meeting
(at which voting will be conducted by way of a poll). The approval required at
the Deltron Court Meeting is a majority in number of those Deltron Shareholders
present and voting, whether in person or by proxy, representing not less than 75
per cent. in value of the Deltron Shares held by such shareholders.
The Acquisition will also require approval of the ordinary resolution by Abacus
Shareholders which will be proposed at the Abacus EGM.
The implementation of the Scheme can only take place if all the Conditions have
been satisfied or, where relevant, waived. Assuming the satisfaction or, where
appropriate, waiver of the Conditions, the Scheme will become effective on the
delivery to the Registrar of Companies in England and Wales by Deltron of the
Court Order sanctioning the Scheme (and related reduction of capital) and the
registration of such Court Order. Once the Scheme becomes effective, it will be
binding on all Deltron Shareholders whether or not they voted in favour.
The Scheme Document setting out full details of the Acquisition and the Scheme,
together with notices of the Court Meeting and the Deltron EGM and the expected
timetable, will be posted as soon as practicable to Deltron Shareholders. In
addition, Deltron Shareholders will receive the Prospectus in relation to the
New Abacus Shares. At the same time, Abacus will send the Circular, containing
a notice convening the Abacus EGM, to Abacus Shareholders together with a copy
of the Prospectus.
10. Implementation agreement
Abacus and Deltron have entered into an implementation agreement dated 26
October 2005 governing the conduct of the Scheme. Further details of this
agreement will be set out in the Prospectus and in the Scheme Document.
11. Directors and employees
Upon the Scheme becoming effective, the Proposed Directors will be appointed to
the Abacus Board. Jerry Vaughan, who has worked for Deltron since February 2004
and has considerable experience of the electronic and electromechanical
component industry, will be appointed to the Abacus Board as an executive
director with the title "Managing Director - Deltron" and David Weir will be
appointed to the Abacus Board as a non-executive director. It is expected that
the remainder of the Deltron Directors will resign from the board of Deltron at
that time, save that Christopher Sawyer will, pursuant to a compromise agreement
entered into between himself and the Deltron Group, remain as a director of
Deltron to assist the Enlarged Group with the integration of Deltron and Derek
O'Neill will, pursuant to a compromise agreement entered into between himself
and the Deltron Group, resign from the board of Deltron on 31 January 2006;
David Potter will on his resignation receive compensation in accordance with his
contractual entitlements. Further details of the compromise agreements are
contained in paragraph 19 of this announcement.
The Abacus Directors have confirmed that, following completion of the
Acquisition, the existing employment rights, including pension rights, of all
employees of Deltron will be fully safeguarded.
12. Undertakings
(a) Irrevocable undertakings to vote in favour of the Proposal
The Deltron Directors have entered into irrevocable undertakings to vote in
favour of the Scheme Resolutions in respect of their respective entire
beneficial and connected holdings of, in aggregate, 3,974,957 Deltron Shares,
representing approximately 9.6 per cent. of the existing issued share capital of
Deltron. These undertakings will continue to be binding even in the event of a
higher competing offer for Deltron being announced and cannot be withdrawn other
than in the event of the Scheme lapsing or being withdrawn.
(b) Irrevocable undertakings to vote in favour of the Acquisition at the
Abacus EGM
The Abacus Directors have entered into irrevocable undertakings to vote in
favour of the Resolution at the Abacus Extraordinary General Meeting in respect
of their respective entire beneficial and connected holdings of, in aggregate,
202,623 Abacus Shares, representing approximately 0.5 per cent. of the existing
issued share capital of Abacus.
13. Inducement fee arrangements
Abacus and Deltron have today entered into an inducement fee arrangement,
pursuant to which Deltron has agreed to pay Abacus a fee of #283,646 (being
approximately one per cent. of the value of the existing issued share capital of
Deltron calculated by reference to the Offer Price) in the event that the
Acquisition is not completed because another offer for Deltron is announced and
becomes unconditional in all respects or otherwise completes. Abacus has,
pursuant to another agreement with Deltron entered into today, agreed to pay
Deltron the same amount if an offer for Abacus is announced and becomes
unconditional in all respects or otherwise completes.
Abacus and Deltron have each undertaken to the other that, prior to the Scheme
becoming effective or being withdrawn neither of them, nor their subsidiary
undertakings, directors, agents, advisers or representatives will directly or
indirectly solicit, initiate, or provide information which encourages the
submission of, any proposals, or indications of interest for the purposes of
attracting an alternative offer for Deltron or an offer for Abacus respectively.
A party in breach of this obligation will be obliged to pay the other a fee of
#283,646 if, as a result of such a breach, the Scheme lapses, is withdrawn or is
otherwise no longer capable of becoming effective.
14. Share options
Participants under the Deltron Share Schemes will, to the extent that their
options are not already exercisable, become entitled to exercise all their
options when the Scheme is sanctioned by the Court. In addition to being able
to exercise their options in accordance with the rules of the Deltron Share
Schemes, the participants will be offered the opportunity to exchange their
options over Deltron Shares for options over Abacus Shares either in accordance
with the rules of the Deltron Share Schemes, in the case of Revenue approved
options (where applicable) or, in the case of unapproved options, on the basis
that they will receive new options on broadly equivalent terms over Abacus
Shares with an aggregate market value similar to that of the Deltron Shares
released and at a similar aggregate exercise price. However, no performance
conditions (to the extent that any currently apply) will apply to such new
options over Abacus Shares.
Participants under the Deltron Share Schemes will be sent details of the actions
they may take in respect of their outstanding options in due course.
15. Accounting policies of the Enlarged Group
The Enlarged Group will adopt the accounting policies of Abacus. The Board of
Abacus believes that the impact of the differences between the accounting
policies of Abacus and Deltron will not be significant.
16. Settlement, Admission and dealings
Settlement
Settlement of the consideration to which any Deltron Shareholder is entitled
under the Scheme will be implemented in full, in accordance with the terms of
the Scheme, free of any liens, right of set off, counterclaims or other
analogous rights to which Abacus may otherwise be, or claim to be, entitled
against such Deltron Shareholder.
Application will be made to the UK Listing Authority for the New Abacus Shares
to be admitted to the Official List and to the London Stock Exchange for the New
Abacus Shares to be admitted to trading on its market for listed securities. It
is expected that Admission will become effective and that dealings on the London
Stock Exchange, for normal settlement, will commence on the Effective Date.
The London Stock Exchange will be requested to cancel the trading in Deltron
Shares on the London Stock Exchange's market for listed securities with effect
from the close of business on the business day immediately prior to the
Effective Date and the UK Listing Authority will be requested to cancel the
listing of Deltron Shares from the Official List with effect from 8.00 a.m. on
the Effective Date. On the Effective Date, share certificates in respect of
Deltron Shares will cease to be valid and should, if so requested by Deltron, be
sent to Deltron. In addition, entitlements to Deltron Shares held within the
CREST system will be cancelled on the Effective Date.
Further details on settlement, listing and dealing will be included in the
documents to be sent to Abacus Shareholders and Deltron Shareholders.
17. Dividends and dividend policy
Deltron Shareholders will, in respect of their Deltron Shares, receive a second
interim dividend of 1.386 pence per share in lieu of the final dividend which
the Deltron Directors would otherwise expect to declare in respect of the year
ended 30 September 2005. The second interim dividend, which is in addition to
the consideration which Deltron Shareholders will receive under the Scheme, will
only be payable to Deltron Shareholders if the Scheme becomes effective. The
second interim dividend will be payable as soon as reasonably practicable
following the Scheme becoming effective to Deltron Shareholders recorded on the
register on the Scheme Record Date. Deltron Shareholders will not, in respect of
their New Abacus Shares, be entitled to receive any dividend relating to Abacus
for the year ended 30 September 2005 although they will, in respect of the New
Abacus Shares which they hold, be entitled to receive all future dividends
declared by Abacus following completion of the Acquisition.
Abacus Shareholders will receive a second interim dividend of 3.6 pence per
share in lieu of the final dividend which the Abacus Directors would otherwise
expect to declare in respect of the year ended 30 September 2005. The second
interim dividend will be payable on 3 January 2006 to holders of Abacus Shares
recorded on the register on 2 December 2005.
The Abacus Group's dividend policy is to ensure that Abacus Shareholders benefit
directly and smoothly from the successful growth of the business, while
providing sufficient funds for investment in future growth.
18. Interests in shares
Save for the irrevocable undertakings referred to in paragraph 12(a) above,
neither Abacus nor any director of Abacus, nor, so far as Abacus is aware, any
party acting in concert with Abacus, owns or controls any Deltron Shares or any
rights over securities convertible or exchangeable into, or any rights to
subscribe for or purchase, or any options to purchase, any Deltron Shares or
holds any derivatives referenced to Deltron Shares. In the interests of
confidentiality, Abacus has not made any enquiries in this respect of certain
parties who may be presumed under the City Code to be acting in concert with it
for the purposes of the Acquisition.
19. Additional information
Under the terms of a compromise agreement dated 26 October 2005, Deltron and
Christopher Sawyer have agreed that, if the Acquisition completes, the terms of
his service agreement will be amended to reflect his revised status and to
cancel any entitlement he may have for bonus related remuneration in return for
which agreement Mr Sawyer will receive a compensation payment of #150,000. It is
expected that Christopher Sawyer will remain with the Enlarged Group until 30
June 2006 when his contract will then be terminated in accordance with its
terms.
Under the terms of a compromise agreement dated 26 October 2005, Deltron and
Derek O'Neill agreed that, if the Acquisition completes, his service agreement
will terminate on 31 January 2006 when Mr O'Neill will receive a compensation
payment of #226,000 in settlement of his contractual entitlements.
The Scheme Document setting out full details of the the Acquisition and the
Scheme, together with notices of the Court Meeting and the Deltron EGM and the
expected timetable, will be posted as soon as practicable to Deltron
Shareholders. In addition, Deltron Shareholders will receive the Prospectus in
relation to the New Abacus Shares. At the same time, Abacus will send the
Circular, containing a notice convening the Abacus EGM, to Abacus Shareholders,
together with a copy of the Prospectus.
In accordance with Rule 2.10 for the City Code, the existing issued share
capital of Abacus comprises 42,583,507 ordinary shares of 5 pence each and the
International Securities Identification Number for Abacus Shares is
GB0000305796. The existing issued share capital of Deltron comprises 41,408,194
ordinary shares of 5 pence each and the International Securities Identification
Number for Deltron Shares is GB0002618410.
The expenses of, and incidental to, the Acquisition are estimated to amount, in
aggregate, to approximately #2.1 million (exclusive of VAT).
20. Recommendations
The Proposal has the unanimous support of the Boards of both Deltron and Abacus.
Deltron
The Board of Deltron, which has been so advised by Hawkpoint, considers the
terms of the Acquisition to be fair and reasonable. In providing advice to the
Deltron Directors, Hawkpoint has taken into account the commercial assessments
of the Deltron Directors. Accordingly, the Deltron Directors intend unanimously
to recommend that all Deltron Shareholders vote in favour of the Scheme
Resolutions to be proposed at the Deltron Court Meeting and the Deltron EGM, as
they have irrevocably undertaken to do in relation to their own respective
beneficial shareholdings amounting, in aggregate, to 3,974,957 Deltron Shares,
representing approximately 9.6 per cent. of the existing issued share capital of
Deltron.
Abacus
The Abacus Board, which has been advised by Hoare Govett, considers the
Acquisition and the Resolution to be in the best interests of Abacus and the
Abacus Shareholders as a whole. In providing its advice to the Board, Hoare
Govett has taken into account the Abacus Board's commercial assessment of the
Acquisition. Accordingly, the Abacus Board intend unanimously to recommend that
Abacus Shareholders vote in favour of the Resolution to be proposed at the
Abacus EGM, as the Abacus Directors have irrevocably undertaken to do in respect
of their own beneficial holdings which amount, in aggregate, to 202,623 Abacus
Shares, representing approximately 0.5 per cent. of the existing issued share
capital of Abacus.
Appendix I(a)
THE ABACUS PROFIT ESTIMATE
The Abacus Profit Estimate
On 19 July 2005, Abacus announced that "profit for the year, before tax, exceptionals and goodwill, is expected
to be not less than #8.0 million".
The Abacus Directors and the Proposed Directors estimate that, on the basis of preparation set out below, profit
before tax, exceptionals and goodwill, will be not less than #8.0 million for the year ended 30 September 2005.
The Abacus Directors have presented the Abacus Profit Estimate for profit before tax, goodwill amortisation and
exceptional items, rather than profit before tax, as it is the same basis of profit used by the Abacus Group at
the time it made its profit forecast on 19 July 2005. The Abacus Directors consider it to be more representative
of the Abacus Group's underlying performance.
Basis of preparation
The Abacus Profit Estimate has been prepared using the accounting policies normally adopted by the Abacus Group
and is based upon:
a) the unaudited interim results for the six months ended 31 March 2005; and
b) the unaudited management accounts for the six months ended 30 September 2005.
No account has been taken of the expenses incurred by both Abacus and Deltron in relation to the Acquisition
which are estimated to amount, in aggregate, to #2.1 million.
Set out below is a letter from Ernst & Young LLP in relation to the Abacus Profit Estimate:
"Ernst & Young LLP
Apex Plaza
Forbury Road
Reading RG1 1YE
The Directors and the Proposed Directors
Abacus Group plc
Abacus House
Bone Lane
Newbury
Berkshire RG14 5SF
The Directors
Hoare Govett Limited
250 Bishopsgate
London EC2M 4AA
26 October 2005
Dear Sirs
Abacus Group plc
We report on the profit estimate comprising an estimate of profit before tax, exceptionals and goodwill of Abacus
Group plc (the "Company") and its subsidiaries (together the "Group") for the year ended 30 September 2005 (the "
Abacus Profit Estimate"). The Abacus Profit Estimate and the basis on which it is prepared is set out in this
announcement dated 26 October 2005. This report is required by Rule 28.3(b) of The City Code on Takeovers and
Mergers (the "Code") and is given for the purpose of complying with that rule and for no other purpose.
Responsibilities
It is the responsibility of the directors of the Company to prepare the Abacus Profit Estimate in accordance with
the requirements of the Code.
It is our responsibility to form an opinion as required by the Code as to the proper compilation of the Abacus
Profit Estimate and to report that opinion to you.
Basis of preparation of the Abacus Profit Estimate
The Abacus Profit Estimate is based on the unaudited interim financial results for the six months ended 31 March
2005 and the unaudited management accounts for the six months ended 30 September 2005. The Abacus Profit
Estimate is required to be presented on a basis consistent with the accounting policies of the Group.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices
Board in the United Kingdom. Our work included evaluating the basis on which the historical financial
information included in the Abacus Profit Estimate has been prepared and considering whether the Abacus Profit
Estimate has been accurately computed using that information and consistent with the accounting policies of the
Group.
We planned and performed our work so as to obtain the information and explanations we considered necessary in
order to provide us with reasonable assurance that the Abacus Profit Estimate has been properly compiled on the
basis stated.
However, the Abacus Profit Estimate has not been audited. The actual results reported may be affected by
required revisions to accounting estimates due to changes in circumstances or the impact of unforeseen events and
we can express no opinion as to whether the actual results reported will correspond to those shown in the Abacus
Profit Estimate and differences may be material.
Opinion
In our opinion, the Abacus Profit Estimate has been properly compiled on the basis stated and the basis of
accounting used is consistent with the accounting policies of the Group.
Yours faithfully
Ernst & Young LLP"
Set out below is a letter from Hoare Govett in relation to the Abacus Profit Estimate:
"250 Bishopsgate
London
EC2M 4AA
The Directors and the Proposed Directors
Abacus Group plc
Abacus House
Bone Lane
Newbury
Berkshire RG14 5SF
26 October 2005
Dear Sirs
Abacus Group plc (the "Company")
We refer to the statement by the directors of the Company (the "Directors") that "profit for the year, before
tax, exceptionals and goodwill, is expected to be not less than #8.0 million" (the "Abacus Profit Estimate").
We have discussed the Abacus Profit Estimate, together with the basis upon which it has been made, with the
Directors and with Ernst & Young LLP, the reporting accountants. We have also considered the letter dated 26
October 2005 addressed to the Directors and ourselves from Ernst & Young LLP regarding the basis of compilation
and the accounting policies underlying the Abacus Profit Estimate.
On the basis of these discussions, and having regard to that letter, we consider that the Abacus Profit Estimate,
for which the Directors are solely responsible, has been made after due and careful enquiry by the
Company.
Yours faithfully for and on behalf of
Hoare Govett Limited
Justin Jones
Executive Director, Corporate Finance"
APPENDIX I(b)
THE DELTRON PROFIT ESTIMATE
The Deltron Profit Estimate
On 9 June 2005, Deltron announced that "the Board remains confident that the Group's profit before tax, goodwill,
amortisation and exceptional items over the full financial year should show a marked improvement on the previous 12
months, albeit less than current market expectations". Subsequently, on 28 September 2005, Deltron announced that
trading had been in line with the Deltron Directors' expectations that the Deltron Group's profit before tax, goodwill,
amortisation and exceptional items over the full financial year should show a marked improvement on the previous twelve
months.
The Deltron Directors estimate that, on the basis of preparation and principal assumptions set out below, the Deltron
Group's profit before tax, goodwill amortisation and exceptional items for the financial year ended 30 September 2005
will show a marked improvement on the previous twelve months and will be not less than #2.5 million.
The Deltron Directors have presented the Deltron Profit Estimate for profit before tax, goodwill amortisation and
exceptional items, rather than profit before tax, as it is the same basis of profit used by the Deltron Group at the
time it made its profit forecast on 9 June 2005. The Deltron Directors consider it to be more representative of the
Deltron Group's underlying performance.
Basis of preparation
The Deltron Profit Estimate has been prepared using the accounting policies normally adopted by the Deltron Group and is
based upon:
a) the unaudited interim results for the six months ended 31 March 2005;
b) the unaudited management accounts for the five months ended 31 August 2005; and
c) the Deltron Board's estimate for the month ended 30 September 2005.
No account has been taken of the expenses incurred by Deltron in relation to the Acquisition.
Principal assumptions
The principal assumptions that the Deltron Profit Estimate has been based upon, which are outside of the Deltron
Directors' control, are:
a) there will be no fundamental change in the political and economic environment that materially
affects the Deltron Group;
b) there will be no industrial disputes or business interruptions that materially affect the Deltron
Group or its principal customers and suppliers; and
c) there will be no material change in the basis of trading with customers or suppliers as a
consequence of any regulatory changes.
Set out below is a letter from Deloitte & Touche LLP in relation to the Deltron Profit Estimate
"Deloitte & Touche LLP
City House
126-130 Hills Road
Cambridge CB2 1RY
The Directors
Deltron Electronics plc
Cheveley House
Fordham Road
Newmarket
Suffolk CB8 7XN
The Directors
Hawkpoint Partners Limited
4 Great St Helen's
London EC3A 6HA
26 October 2005
Dear Sirs
Deltron Electronics plc
We report on the profit estimate comprising an estimate of profit before tax, goodwill amortisation and exceptional
items of Deltron Electronics plc ("Deltron") and its subsidiaries (together the "Deltron Group") for the year ended 30
September 2005 (the "Deltron Profit Estimate"). The Deltron Profit Estimate, the principal assumptions made by the
directors of Deltron and the basis on which it is prepared is set out in this announcement dated 26 October 2005. This
report is required by Rule 28.3(b) of The City Code on Takeovers and Mergers (the "Code") and is given for the purpose
of complying with that rule and for no other purpose.
Responsibilities
It is the responsibility of the directors of Deltron to prepare the Deltron Profit Estimate in accordance with the
requirements of the Code.
It is our responsibility to form an opinion as required by the Code as to the proper compilation of the Deltron Profit
Estimate and to report that opinion to you.
Basis of preparation of the Deltron Profit Estimate
The Deltron Profit Estimate is based on the unaudited interim financial results for the six months ended 31 March 2005,
the unaudited management accounts for the five months ended 31 August 2005 and the Deltron Board's estimate for the
month to 30 September 2005. The Deltron Profit Estimate is required to be presented on a basis consistent with the
accounting policies of the Deltron Group.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board in
the United Kingdom. Our work included evaluating the basis on which the historical financial information included in the
Deltron Profit Estimate has been prepared and considering whether the Deltron Profit Estimate has been accurately
computed based upon the disclosed assumptions and the accounting policies of the Deltron Group. Whilst the assumptions
upon which the Deltron Profit Estimate are based are solely the responsibility of the Directors, we considered whether
anything came to our attention to indicate that any of the assumptions adopted by the Directors which, in our opinion,
are necessary for a proper understanding of the Deltron Profit Estimate have not been disclosed or if any material
assumption made by the Directors appears to us to be unrealistic.
We planned and performed our work so as to obtain the information and explanations we considered necessary in order to
provide us with reasonable assurance that the Deltron Profit Estimate has been properly compiled on the basis stated.
However, the Deltron Profit Estimate has not been audited. The actual results may be affected by required revisions to
accounting estimates due to changes in circumstances or the impact of unforeseen events and we can express no opinion as
to whether the actual results reported will correspond to those shown in the Deltron Profit Estimate and differences may
be material.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in
jurisdictions outside the United Kingdom, including the United States, and accordingly should not be relied upon as if
it had been carried out in accordance with those standards and practices.
Opinion
In our opinion, the Deltron Profit Estimate has been properly compiled on the basis stated together with the principal
assumptions made by the directors of Deltron and the basis of accounting used is consistent with the accounting policies
of the Deltron Group.
Yours faithfully
Deloitte & Touche LLP
Chartered Accountants"
Set out below is a letter from Hawkpoint in relation to the Deltron Profit Estimate:
"Hawkpoint Partners Limited
4 Great St Helen's
London EC3A 6HA
The Directors
Deltron Electronics plc
Cheveley House
Fordham Road
Newmarket
Suffolk CB8 7XN
26 October 2005
Dear Sirs
Deltron Electronics plc
We refer to the statement by the directors of Deltron (the "Deltron Directors") that they estimate that "profit
before tax, goodwill amortisation and exceptional items for the financial year ended 30 September 2005 will show
a marked improvement on the previous twelve months and will not be less than #2.5 million" (the "Deltron Profit
Estimate").
We have discussed the Deltron Profit Estimate, together with the basis and assumptions upon which it has been
made, with the Deltron Directors and with Deloitte & Touche LLP, the reporting accountants. We have also
considered the letter dated 26 October 2005 addressed to the Deltron Directors and ourselves from Deloitte &
Touche LLP regarding the basis of compilation and the accounting policies underlying the Deltron Profit Estimate.
On the basis of these discussions, and having regard to that letter, we consider that the Deltron Profit
Estimate, for which the Deltron Directors are solely responsible, has been made after due and careful enquiry by
Deltron.
Yours faithfully
For and on behalf of
Hawkpoint Partners Limited
Jonathan Coddington
Director"
Appendix II
Conditions of the ACQUISITION and Implementation of the Scheme
The Scheme will not become effective and the Acquisition will not be completed unless all the conditions in this
Appendix II have been satisfied (or, if capable of waiver, waived) by the close of business (London time) on 28
February 2006, or such later date as Abacus and Deltron may agree and the Court may approve.
1. The Scheme is conditional on:
(a) the approval by a majority in number of the holders of Deltron Shares present and voting and eligible to vote
at the Deltron Court Meeting, either in person or by proxy, or at any adjournment of that meeting representing not
less than three-fourths in value of the Deltron Shares held by such holders;
(b) any resolutions required to approve and implement the Scheme being duly passed by the requisite majority at
the Deltron Extraordinary General Meeting, or at any adjournment of such extraordinary general meeting; and
(c) the sanction of the Scheme and confirmation of the reduction of capital involved therein by the Court (in both
cases with or without modifications, on terms reasonably acceptable to Abacus and Deltron) and an office copy of the
Order of the Court sanctioning the Scheme and confirming the cancellation of share capital which forms part of it
being delivered for registration to the Registrar of Companies in England and Wales and being registered by him.
2. Deltron and Abacus have agreed that, subject as stated in paragraph 3 below, application to the Court to
sanction the Scheme will not be made unless conditions 2(a), 2(b) and 2(c) have been fulfilled and unless immediately
prior to the hearing of the petition the following conditions are satisfied or waived:
(a) the passing at the Abacus Extraordinary General Meeting, or at any adjournment of such extraordinary general
meeting, of any resolution or resolutions which are necessary or, in the reasonable opinion of Abacus and with the
agreement of Deltron desirable to approve, effect and implement the Proposal and the Acquisition;
(b) the Office of Fair Trading not having indicated to Abacus that it intends to refer the proposed acquisition of
Deltron by Abacus, or any aspect of it, to the Competition Commission pursuant to Section 33 of the Enterprise Act
2002;
(c) the UK Listing Authority agreeing or confirming its decision to admit the New Abacus Shares to the Official
List and the London Stock Exchange agreeing to admit such shares to trading on its market for listed securities in
accordance with the Admission Standards subject only to (i) the allotment of the New Abacus Shares and/or (ii) the
Scheme becoming effective (other than with respect to this condition (c));
(d) no central bank, government or governmental, quasi-governmental, supranational, statutory or regulatory body,
or any court, institution, investigative body, association, trade agency or professional or environmental body or
(without prejudice to the generality of the foregoing) any other person or body in any jurisdiction (each, a "Relevant
Authority") having decided to take, institute, implement or threaten any action, proceedings, suit, investigation or
enquiry or enacted, made or proposed any statute, regulation or order or otherwise taken any other step or done any
thing, that could reasonably be expected to (in each case to an extent which is material and adverse in the context of
the wider Deltron Group and the wider Abacus Group, in each case taken as a whole):
(i) restrict, restrain, prohibit, delay, impose additional conditions or obligations with respect to, or
otherwise interfere with the implementation of, the Proposal or the acquisition of any Deltron Shares by Abacus;
(ii) require, prevent, materially delay or materially affect the divestiture by Abacus or any member of the wider
Abacus Group or Deltron or any member of the wider Deltron Group of all or any portion of their businesses, assets or
property or of any Deltron Shares or other securities in Deltron or impose any limitation on the ability of any of
them to conduct their respective businesses or own their respective assets or properties or any part thereof;
(iii) impose any material limitation on the ability of any member of the wider Abacus Group to hold or exercise
effectively, directly or indirectly, all rights of all or any of the Deltron Shares (whether acquired pursuant to the
Proposal or otherwise);
(iv) other than pursuant to the Proposal, require any member of the wider Abacus Group or the wider Deltron Group
to offer to acquire any shares or other securities or rights thereover in any member of the wider Deltron Group owned
by any third party;
(v) make the Acquisition or its implementation or the proposed acquisition of Deltron or any member of the wider
Deltron Group or of any Deltron Shares or any other shares or securities in, or control of, Deltron, illegal, void or
unenforceable in or under the laws of any jurisdiction; or
(vi) otherwise materially and adversely affect any or all of the businesses, assets or financial condition of any
member of the wider Abacus Group or the wider Deltron Group or the exercise of rights over shares of any company in
the Deltron Group (to an extent which is material in the context of the wider Abacus Group taken as a whole or, as the
case may be, the wider Deltron Group taken as a whole);
(e) all authorisations, orders, grants, consents, clearances, licences, permissions and approvals (other than in
each such case relating to anti-trust or competition law matters) in any jurisdiction necessary for or in respect of
the Proposal, the proposed acquisition of any shares or securities in, or control of, Deltron or any member of the
wider Deltron Group by any member of the wider Abacus Group or the carrying on of the business of any member of the
wider Deltron Group or the wider Abacus Group or any matters arising therefrom ("Authorisations") being obtained in
terms reasonably satisfactory to Abacus and Deltron from all appropriate Relevant Authorities or (without prejudice to
the generality of the foregoing) from any persons or bodies with whom any members of the wider Deltron Group has
entered into contractual arrangements and such Authorisations remaining in full force and effect and there being no
notification of any intention to revoke, amend or not to renew the same and all necessary filings in respect of such
Authorisations having been made (in each case where the absence, revocation, amendment or non-renewal of such
Authorisation or filing would have a material and adverse effect on the wider Deltron Group taken as a whole);
(f) save as Disclosed or Publicly Announced, there being no provision of any agreement, instrument, permit,
licence or other arrangement to which any member of the wider Deltron Group is a party or by or to which it or any of
its assets may be bound or subject which, as a consequence of the Proposal or the acquisition of Deltron or because of
a change in the control or management of Deltron or any member of the Deltron Group, could reasonably be expected to
have the result that (in each case to an extent which is material and adverse in the context of the wider Deltron
Group and the wider Abacus Group, in each case taken as a whole):
(i) any moneys borrowed by, or other indebtedness, actual or contingent, of, or grant available to, any member of
the wider Deltron Group becomes or is capable of being declared repayable immediately or earlier than the repayment
date stated in such agreement, instrument or other arrangement or the ability of any member of the wider Deltron Group
to borrow moneys or incur indebtedness is withdrawn, inhibited or adversely affected;
(ii) any mortgage, charge or other security interest is created over the whole or any material part of the
business, material property or material assets of any member of the wider Deltron Group or any such security (whenever
created, or arising or having arisen) being enforced or becomes enforceable;
(iii) any such agreement, instrument, permit, licence or other arrangement, or any right, interest, liability or
obligation of any member of the wider Deltron Group therein, is terminated or materially adversely modified or
affected or onerous obligation arises thereunder;
(iv) the value of any member of the wider Deltron Group or its financial or trading position is prejudiced or
adversely affected;
(v) any asset of the wider Deltron Group being or falling to be charged or disposed of or ceasing to be available
to any member of the wider Deltron Group or any right arising under which any such asset or interest could be required
to be disposed of or charged or ceasing to be available to any member of the Deltron Group (in each case other than in
the ordinary course of business);
(vi) the rights, liabilities, obligations or interests or business of any member of the wider Deltron Group in or
with any other person, firm or company (or any arrangement relating to such interest or business) is terminated,
modified or adversely affected;
(vii) any member of the wider Deltron Group ceases to be able to carry on business under any name under which it
currently does so;
(viii) any change in or effect on the ownership or use of any intellectual property rights owned or used by any
member of the wider Deltron Group; or
(ix) the creation of any material liability, actual or contingent, of any such member;
and except as Disclosed or Publicly Announced, no event having occurred which under any provision of any such
arrangement, agreement, licence or other instrument, might reasonably be expected to result in any of the events
referred to in this condition (f).
(g) save as Disclosed or Publicly Announced, since 30 September 2004 (being the date to which Deltron's last
published audited accounts were made up) no member of the wider Deltron Group having (in each case to an extent which
is material and adverse in the context of the wider Deltron Group, taken as a whole):
(i) issued or agreed to issue or authorised or proposed the issue of additional shares of any class or issued or
authorised or proposed the issue of or granted securities convertible into or rights, warrants or options to subscribe
for or acquire such shares or convertible securities or redeemed, purchased or reduced or announced any intention to
do so or made any other change to any part of its share capital (save as between Deltron and wholly owned subsidiaries
of Deltron and for the grant of options pursuant to the terms of the Deltron Share Schemes or the issue of Deltron
Shares on the exercise of options pursuant to the terms of the Deltron Share Schemes to the extent that any such grant
or issue has been Disclosed or Publicly Announced);
(ii) save for the second interim dividend of 1.386 pence per Deltron Share to be paid to Deltron Shareholders
conditional upon the Scheme becoming effective, recommended, declared, paid or made or proposed to recommend, declare,
pay or make any dividend, bonus or other distribution whether payable in cash or otherwise, other than any
distribution by any wholly owned subsidiary;
(iii) (save for transactions between two or more wholly owned members of the Deltron Group) authorised or announced
its intention to propose any material merger or acquisition or disposal or transfer of any material assets or shares
or any material change in its share or loan capital;
(iv) (save for transactions between two or more wholly owned members of the Deltron Group) issued or authorised the
issue of any debentures or incurred or, save in the ordinary course of business, increased any material indebtedness
or contingent liability;
(v) disposed of or transferred, mortgaged or encumbered any material asset or any right, title or interest in any
such asset or entered into or varied any material contract, commitment or arrangement (whether in respect of capital
expenditure or otherwise) which is of a long term or unusual nature or which involves or could involve an obligation
of a nature or magnitude which is material and adverse in the context of the wider Deltron Group, taken as a whole or
authorised, proposed or announced any intention to do so other than in the ordinary course of business;
(vi) entered into, or varied the terms of, any material contract or agreement with any of the directors, senior
employees, former directors or former senior employees of Deltron or made any proposal to make any change or addition
to any employment-related benefit or in respect of any of the directors, senior employees, former directors or former
employees, other than in the ordinary course of business;
(vii) taken or proposed any corporate action or had any legal proceedings started or threatened against it for its
winding-up, dissolution or reorganisation or for the appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of all or any of its assets and revenues;
(viii) waived or compromised any material claim other than in the ordinary course of business;
(ix) made any amendment to its memorandum or articles of association;
(x) entered into any material contract, transaction or arrangement which is or may be materially restrictive on
the business of any member of the wider Deltron Group or the wider Abacus Group;
(xi) save as between Deltron and its wholly-owned subsidiaries granted any lease or material third party rights in
respect of any of the leasehold or freehold property owned or occupied by it or transferred or otherwise disposed of
any property;
(xii) been unable or admitted in writing that it is unable to pay its debts or having stopped or suspended (or
threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a
substantial part of its business; and
(xiii) entered into any material contract, commitment or agreement with respect to any of the transactions or events
referred to in this condition (g).
(h) since 30 September 2004 (being the date to which Deltron's last published audited accounts were made up) and
save as Disclosed or Publicly Announced:
(i) no litigation, arbitration, prosecution or other legal proceedings having been instituted, announced or
threatened or become pending or remained outstanding by or against any member of the wider Deltron Group or to which
any member of the wider Deltron Group is a party (whether as claimant, respondent or otherwise) which in any case
would be likely to have a material adverse effect on the financial position of the wider Deltron Group taken as a
whole;
(ii) no material adverse change having occurred in the business, assets, financial position or profits of the
wider Deltron Group which in any case would be likely to have a material adverse effect on the financial position of
the wider Deltron Group, taken as a whole;
(iii) no investigation by any Relevant Authority having been threatened, announced, implemented or instituted or
remaining outstanding against any member of the wider Deltron Group which in any case would be likely to have a
material adverse effect on the financial position of the wider Deltron Group, taken as a whole;
(iv) no contingent or other liability having arisen or become apparent or increased which would be reasonably
likely in either case to have a material adverse effect on the wider Deltron Group taken as a whole; or
(i) save as Disclosed or as Publicly Announced, Abacus not having discovered that:
(i) any business, financial or other information concerning any member of the Deltron Group disclosed, publicly
or otherwise at any time to Abacus, by or on behalf of any member of the Deltron Group, either contains a material
misrepresentation of fact or omits to state a material fact necessary to make the information contained therein not
misleading in any material respect; and
(ii) there is any liability, actual or contingent, which might reasonably be expected to have a material adverse
effect on the financial position of the wider Deltron Group taken as a whole to make good, repair, reinstate or clean
up any property now or previously owned, occupied or made use of by any past or present member of the wider Deltron
Group or any controlled waters under any environmental legislation, regulation, notice, circular or order of any
Relevant Authority or third party or otherwise.
3. Abacus reserves the right to waive all or any of conditions 2(d) to 2(i) (inclusive) above, in whole or in
part.
Save with the consent of the Panel, the Proposal will lapse and the Scheme will not proceed if, before the date of the
Court Meeting (i) the Acquisition or any part of it is referred to the Competition Commission; or (ii) following a
request to the European Commission under Article 22(3) of Council Regulation (EEC) 4064/89 (as amended by Council
Regulation (EC) 1310/97) (the "Regulation") in relation to the Acquisition or any part of it, which request is
accepted by the European Commission, the European Commission initiates proceedings under Article 6(1)(c) of the
Regulation.
The Proposal and the Scheme will be governed by English law and will be subject to the jurisdiction of the English
Courts.
Appendix III
DEFINITIONS
The following definitions apply throughout this announcement, unless the context
otherwise requires:
"Abacus" or the "Company" Abacus Group plc, together, where the context so requires, with
its existing subsidiaries and subsidiary undertakings
"Abacus Directors" the directors of Abacus and "Abacus Director" means any one of
them
"Abacus Extraordinary General Meeting" or an extraordinary general meeting of Abacus to be held, inter
"Abacus EGM" alia, to approve the Acquisition
"Abacus Group" Abacus and its subsidiaries and subsidiary undertakings
"Abacus Profit Estimate" the profit estimate for Abacus for the year ended 30 September
2005 set out in the section entitled "Profit estimate, current
trading, trends and prospects" in paragraph 5 of this
announcement
"Abacus Shares" or "Ordinary Shares" the ordinary shares of 5 pence each in the share capital of
Abacus
"Act" or "Companies Act" the Companies Act 1985 (as amended)
"Acquisition" the acquisition or proposed acquisition by Abacus of Deltron
Shares pursuant to the Scheme, details of which are set out in
this announcement and will be set out in the Scheme Document
"Admission" the admission of the New Abacus Shares to the Official List and
to trading on the London Stock Exchange's market for listed
securities becoming effective in accordance with the Listing
Rules and the Admission Standards
"Admission Standards" the admission and disclosure standards for companies published
from time to time by the London Stock Exchange
"authorisations" authorisations, orders, recognitions, grants, consents,
licences, confirmations, clearances, permissions and approvals
"Benelux" Belgium, the Netherlands and Luxembourg
"Board" or "Directors" the directors of either Abacus or Deltron, as the context
requires
"business day" a day (other than a Saturday, Sunday or public holiday) when
clearing banks are open for business in the City of London
"Circular" the circular to be sent to Abacus Shareholders summarising the
background to and reasons for the Acquisition and containing a
notice convening the Abacus Extraordinary General Meeting
"Closing Price" the closing middle market quotation of a share as derived from
the Daily Official List of the London Stock Exchange
"Code" or "City Code" the City Code on Takeovers and Mergers as amended or interpreted
from time to time by the Panel
"Conditions" the conditions of the Acquisition and the implementation of the
Scheme and the Acquisition as set out in Appendix II to this
announcement and "Condition" means any of them
"Court" the High Court of Justice of England and Wales
"Court Hearing" the hearing by the Court of the petition to sanction the Scheme
and confirm the reduction of capital provided for by the Scheme
"Court Order" the order of the Court granted at the Court Hearing sanctioning
the Scheme under section 425 of the Companies Act and confirming
the reduction of capital provided for by the Scheme under section
137 of the Companies Act
"Deltron" Deltron Electronics plc
"Deltron Court Meeting" the meeting of Deltron Shareholders (and any adjournment thereof)
to be convened pursuant to an order of the Court pursuant to
section 425 of the Companies Act for the purpose of considering
and if thought fit approving the Scheme (with or without
amendment) notice of which will be set out in the Scheme Document
"Deltron Extraordinary General Meeting" the extraordinary general meeting of Deltron Shareholders (and
any adjournment thereof) to be convened in connection with the
Scheme, notice of which will be set at the end of the Scheme
Document
"Deltron Group" Deltron, its subsidiaries and subsidiary undertakings
"Deltron Directors" the directors of Deltron and "Deltron Director" means any one of
them
"Deltron Optionholders" holders of Deltron options under the Deltron Share Schemes
"Deltron Profit Estimate" the profit estimate for Deltron for the year ended 30 September
2005 set out in the section entitled "Profit estimate, current
trading, trends and prospects" in paragraph 5 of this
announcement
"Deltron Shares" the existing unconditionally allotted or issued and fully paid
ordinary shares of 5 pence each in the capital of Deltron and any
further such shares which are unconditionally allotted or issued
fully paid, or credited as fully paid, before the date on which
the Scheme becomes effective
"Deltron Share Schemes" the Deltron 1993 Share Option Scheme, the Deltron 1996 Executive
Share Option Scheme and the Deltron 1996 Employee Share Option
Scheme
"Deltron Voting Record Time" the time fixed by the Court and Deltron for determining the
entitlement to vote, respectively, at the Deltron Court Meeting
and the Deltron Extraordinary General Meeting to be set out in
the notices thereof
"Disclosed" any fact, matter, event or circumstance disclosed to the wider
Abacus Group (or any of their professional advisers) by the wider
Deltron Group (or any of their professional advisers) and
disclosed, for these purposes, shall solely mean if and to the
extent that such fact, matter, event or circumstance was
reasonably evident from the contents of the document disclosed
and was in sufficient detail to enable the recipient to
understand and evaluate the matter in question and its material
implications
"Effective Date" the date on which the Scheme becomes effective in accordance with
its terms
"Enlarged Group" Abacus and its subsidiary undertakings following the acquisition
of Deltron pursuant to the Proposal
"Exchange Act" the US Securities Exchange Act of 1934, as amended
"Forms of Proxy" the respective forms of proxy for use in connection with the
Abacus Extraordinary General Meeting, the Deltron Extraordinary
General Meeting and the Deltron Court Meeting, or any of them as
the context requires
"FSMA" the Financial Services and Markets Act 2000
"Group" the Company and each of its subsidiaries (within the meaning of
the Act)
"Hawkpoint" Hawkpoint Partners Limited
"Hearing Date" the date of the commencement of the hearing of the petition to
sanction the Scheme and of the petition to confirm the reduction
of the capital provided for by the Scheme
"Hoare Govett" Hoare Govett Limited
"HSBC" HSBC Bank plc
"Listing Rules" the Listing Rules of the UK Listing Authority made under Part VI
of FSMA
"London Stock Exchange" London Stock Exchange plc
"New Abacus Shares" the Abacus Shares to be issued pursuant to the Scheme
"New Bank Facilities" the new banking arrangements with HSBC which comprise an #11
million revolving credit facility and a #4 million overdraft
facility
"Nordic Region" Scandinavia and Finland
"Offer Price" 68.5 pence
"Official List" the official list maintained by the FSA in accordance with
section 74(1) of FSMA for the purposes of the UK Listing
Authority pursuant to Part VI of FSMA
"Panel" the Panel on Takeovers and Mergers
"Proposal" the proposal for Deltron to become a wholly owned subsidiary of
Abacus pursuant to the Scheme, details of which are set out in
this announcement and will be set out in the Scheme Document, and
other related matters to be considered at the Deltron Court
Meeting and the Deltron EGM
"Proposed Directors" Jerry Vaughan and David Weir
"Prospectus" the prospectus to be sent to Abacus Shareholders and Deltron
Shareholders in respect of the New Abacus Shares
"Publicly Announced" disclosed in the annual report and accounts of Deltron for the
year ended 30 September 2004 or in this announcement or in any
other announcement made to a Regulatory Information Service since
the date of publication of such report and accounts and prior to
this announcement
"Regulations" the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)
"Regulatory Information Service" as defined in the Listing Rules
"relevant asset" land, property or other assets now or previously owned, occupied
or made use of by any past or present member of the wider Deltron
Group
"relevant persons" governments, governmental, quasi-governmental, supranational,
statutory, investigative, regulatory or administrative bodies or
trade agencies, associations, institutions or courts, or
professional or environmental bodies, or any other persons or
bodies whatsoever in any jurisdiction
"Resolution" the resolution to be proposed at the Abacus EGM to be set out in
the notice of the Abacus EGM at the end of the Circular
"Scandinavia" Sweden, Denmark and Norway
"Scheme" or "Scheme of Arrangement" the proposed scheme of arrangement under section 425 of the
Companies Act between Deltron and Deltron Shareholders to be set
out in the Scheme Document, with or subject to any modification
thereof or in addition thereto or condition approved or imposed
by the Court and agreed by Deltron and Abacus and which the Court
may think fit to approve or impose
"Scheme Document" the document to be sent to Deltron Shareholders explaining the
terms of the Scheme and, for information purposes only, to
Deltron Optionholders
"Scheme Record Date" 6.00 p.m. on the last business day immediately prior to the
Effective Date
"Scheme Resolutions" the resolutions to be considered at the Deltron EGM and the
Deltron Court Meeting
"Shareholder" a holder of either Abacus Shares or Deltron Shares, as the
context requires
"substantial interest" a direct or indirect interest in 20 per cent. or more of the
equity capital of an undertaking
"third party" a person, firm, company or body
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"UK Listing Authority" the Financial Services Authority acting in its capacity as the
competent authority for the purposes of Part VI of the Financial
Services and Markets Act 2000
"United States" or "US" the United States of America, its territories and possessions,
any state of the United States of America and the District of
Columbia and all other areas subject to its jurisdiction
"wider Abacus Group" Abacus and its subsidiaries, subsidiary undertakings, associated
undertakings and any other undertakings in which Abacus and/or
such subsidiaries or undertakings (aggregating their interests)
have a substantial interest
"wider Deltron Group" Deltron and its subsidiaries, subsidiary undertakings, associated
undertakings and any other undertakings in which Deltron and/or
such subsidiaries or undertakings (aggregating their interests)
have a substantial interest
Save where otherwise stated, for the purpose of this announcement, the
expressions "associated undertaking", "subsidiary", "subsidiary undertaking" and
"undertaking" have the meanings given by the Companies Act (but for this purpose
ignoring paragraph 20(1) (b) of Schedule 4A to the Companies Act) and references
to time are to London time.
In this announcement, the singular includes the plural and vice versa, unless
the context otherwise requires.
--------------------------
(1) However, this statement should not be interpreted to mean that earnings per
share in the first full financial year following completion of the Acquisition,
or in any subsequent period, will necessarily match or be higher than those for
the relevant preceding financial period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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