TIDMMRO
RNS Number : 6941T
Melrose Industries PLC
26 March 2021
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT
JURISDICTION
26 March 2021
Melrose Industries PLC
Regulatory filing: Standard annual confirmation of post-offer
undertakings in relation to the acquisition of GKN plc ("GKN") by
Melrose Industries PLC ("Melrose") in compliance with Rule 19.5(h)
of the Takeover Code
BACKGROUND
In relation to the acquisition of GKN by Melrose on 19 April
2018 (the "Effective Date"), Melrose has given post-offer
undertakings under Rule 19.5 of the Takeover Code (each a "Post-
Offer Undertaking" and together the "Post-Offer Undertakings"),
full details of which were set out in an RIS announcement dated 28
March 2018, a copy of which is attached to this report as Appendix
A.
Pursuant to Rule 19.5(e) of the Takeover Code, Melrose must
comply with the terms of the Post-Offer Undertakings for the
periods of time specified in the Post-Offer Undertakings and must
complete any course of action committed to by the dates specified
in the Post-Offer Undertakings.
This report is provided in accordance with Rule 19.5(h) of the
Takeover Code, pursuant to which Melrose must submit written
reports to the Panel at such intervals (of not more than 12 months)
as the Panel may require in relation to its compliance with the
Post-Offer Undertakings.
Unless otherwise defined in this report, capitalised terms in
this report shall have the same meanings given to them in the
Post-Offer Undertakings.
SUBMISSION
1. Throughout the period from the Effective Date until 31 December 2020:
(a) Melrose maintained the Melrose Group headquarters in the UK
by Melrose occupying a designated area in one or more buildings in
the UK, one of which buildings was publicly designated as the
Melrose Group headquarters and was the registered office of
Melrose;
(b) the Melrose Shares remained listed on the Official List
maintained by the UKLA and admitted to trading on the London Stock
Exchange's main market for listed securities;
(c) no director was appointed or reappointed, or recommended to
be appointed or reappointed, to the Melrose Board such that
following such appointment or reappointment a majority of the
Melrose Directors was not resident in the UK; and
(d) the GKN Aerospace businesses and the GKN Driveline
businesses retained the same rights (if any) which they had as at
26 March 2018 (and which they continued to have as at the Effective
Date) to use the GKN Trade Marks.
2. During the period from 1 January 2019 to 31 December 2020,
the expensed research and development spend of the GKN Group was at
least 2.2% of the aggregate of GKN Group sales.
3. From the Effective Date until 31 December 2020, Melrose did not:
(a) undertake a reorganisation of the Melrose Group the effect
of which was for Melrose to be absorbed into another entity or
otherwise cease to exist as a legal entity; or
(b) insert any entity above Melrose as a holding company of the Melrose Group.
4. This report is submitted to the Panel in accordance with Rule
19.5(h) of the Takeover Code and has been approved by the board of
directors of Melrose.
APPIX A - POST-OFFER UNDERTAKINGS
LEI: 213800RGNXXZY2M7TR85
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM THE UNITED STATES OR ANY JURISDICTION WHERE TO DO
SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS
OF THAT JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR IMMEDIATE
RELEASE
28 March 2018
Melrose Industries PLC ("Melrose")
Final Offer for GKN plc ("GKN") - Adoption of Post-Offer
Undertakings
Further to the announcement made by Melrose on 27 March 2018
confirming that it had reached agreement with the Panel in respect
of the form of certain legally binding post-offer undertakings in
connection with its Final Offer for GKN, Melrose is today pleased
to announce the full terms and detailed mechanics of the post-offer
undertakings agreed with the Panel.
Post-Offer Undertakings
Melrose makes the following post-offer undertakings pursuant to
Rule 19.5 of the City Code, subject to the qualifications and
conditions set out below (each of the post-offer undertakings in
paragraphs 1(a), 1(b), 1(c), 1(d), 2(a), 2(b), 3(a) and 3(b) being
a "Post-Offer Undertaking" and, together, the "Post- Offer
Undertakings").
1. Melrose undertakes that throughout the period of five years
from the Effective Date (the "Undertaking Period"):
(a) Melrose will maintain the Melrose Group headquarters in the
UK by Melrose occupying a designated area in one or more buildings
in the UK, one of which buildings is publicly designated as the
Melrose Group headquarters and is the registered office of
Melrose;
(b) the Melrose Shares will remain listed on the Official List
maintained by the UKLA and admitted to trading on the London Stock
Exchange's main market for listed securities;
(c) no director will be appointed or reappointed, or recommended
to be appointed or reappointed, to the Melrose Board if following
such appointment or reappointment a majority of the Melrose
Directors would not be resident in the UK; and
(d) the GKN Aerospace businesses and the GKN Driveline
businesses will retain the same rights (if any) which they have as
at 26 March 2018 (and which they continue to have as at the
Effective Date) to use the GKN Trade Marks.
2. Melrose undertakes that:
(a) subject to paragraph 2(b) below, it will procure that the
expensed research and development spend of the GKN Group during the
period from 1 January 2019 to 31 December 2023 will be at least 2.2
per cent. of the aggregate of GKN Group sales (1) for the financial
years ending 31 December 2019, 31 December 2020, 31 December 2021,
31 December 2022 and 31 December 2023; and
(b) in the event that the expensed research and development
spend of the GKN Group during the period from 1 January 2019 to 31
December 2023 is not at least 2.2 per cent. of the aggregate of GKN
Group sales for the financial years ending 31 December 2019, 31
December 2020, 31 December 2021, 31 December 2022 and 31 December
2023,
Melrose will procure that the amount of any shortfall shall be
spent by the GKN Group as expensed research and development spend
by 30 June 2024.
(1) Note that GKN Group sales are calculated by reference to the
GKN Group from time to time. Accordingly, since the Post-Offer
Undertakings contain no restrictions on acquiring businesses into
or selling businesses out of the GKN Group during the period of the
Post-Offer Undertakings, GKN Group sales may go up or down as a
result.
3. Melrose undertakes that during the Undertaking Period it will not:
(a) undertake a reorganisation of the Melrose Group the effect
of which is for Melrose to be absorbed into another entity or
otherwise cease to exist as a legal entity; or
(b) insert an entity ("Newco") above Melrose as a holding company of the Melrose Group unless:
(i) Newco is a company incorporated and registered in England and Wales;
(ii) the nature of the arrangements for the insertion of Newco
are such as to permit the giving of undertakings pursuant to Rule
19.5 of the City Code;
(iii) Melrose has procured that Newco has given post-offer
undertakings pursuant to Rule 19.5 of the City Code (the "Newco
Undertakings") in the same terms as, and for the remainder of the
respective periods of, the Post-Offer Undertakings at paragraphs
1(a), 1(b), 1(c), 1(d), 2(a), 2(b) and this paragraph 3 (in its
entirety) but with references throughout to Melrose replaced by
references to Newco (and with any other consequential changes to
which the Panel has given prior written consent); and
(iv) Newco has entered into reporting and monitoring
arrangements relating to the Newco Undertakings in a form
satisfactory to the Panel.
For the avoidance of doubt, in the event that a Newco is
inserted in compliance with the Post- Offer Undertaking in
paragraph 3(b), Melrose will continue to be bound by the Post-Offer
Undertakings in paragraphs 1(a), 1(c), 1(d), 2(a), 2(b) and this
paragraph 3 (in its entirety).
Qualifications and Conditions All Post-Offer Undertakings
Subject to consulting the Panel in advance and obtaining the
Panel's consent to rely on such qualifications or conditions
pursuant to Rule 19.5(f) of the City Code, each of the Post-Offer
Undertakings will no longer apply where the Panel determines that
Melrose is unable to comply with the relevant Post-Offer
Undertaking as a result of an event, act or circumstance beyond
Melrose's control.
Post-Offer Undertaking 1(b): Melrose Listing
Subject to consulting the Panel in advance and obtaining the
Panel's consent to rely on such qualifications or conditions
pursuant to Rule 19.5(f) of the City Code, Melrose will not be in
breach of the Post-Offer Undertaking in paragraph 1(b) above if the
Melrose Shares cease to remain listed on the Official List and/or
admitted to trading on the London Stock Exchange's main market for
listed securities as a result of:
(i) the approval by Melrose Shareholders of a resolution to
delist the Melrose Shares, which resolution has not been proposed
or recommended by the Melrose Board or any Melrose Director;
(ii) the UKLA otherwise delists the Melrose Shares, save where
the delisting results from the acts or omissions of Melrose, any
Melrose Director or any officer of Melrose;
(iii) an offer by a Third Party Offeror for the entire issued
and to be issued share capital of Melrose becomes wholly
unconditional or a scheme of arrangement to effect the acquisition
of the entire issued and to be issued share capital of Melrose by a
Third Party Offeror becomes effective; or
(iv) the insertion of a Newco above Melrose in compliance with
the Post-Offer Undertaking in paragraph 3(b) above.
Post-Offer Undertaking 1(c): Melrose Board
Subject to consulting the Panel in advance and obtaining the
Panel's consent to rely on such qualifications or conditions
pursuant to Rule 19.5(f) of the City Code, Melrose will not be in
breach of the Post-Offer Undertaking in paragraph 1(c) above if an
appointment or reappointment to the Melrose Board of one or more
directors who are not resident in the UK is made as a result of a
resolution proposed by one or more Melrose Shareholders (other than
Melrose Directors) to appoint or reappoint directors to the Melrose
Board, provided such appointments are not recommended by, proposed
by, or at the request of the Melrose Board or any Melrose
Director.
Definitions
The following definitions apply for the purposes of the
Post-Offer Undertakings. Words and expressions not defined in this
announcement shall have the meaning given to them in the offer
document published by Melrose on 1 February 2018, as amended by the
final offer document published by Melrose on 13 March 2018.
expensed research and development spend means expenditure on
Research and Development (as each term is defined pursuant to IAS
38: Intangible Assets as at 31 December 2017) which is charged to
the income statement in accordance with GKN's IAS accounting
policies and accounting practices in force as at 31 December
2017;
GKN Aerospace businesses means each of the businesses and
companies comprising the GKN Aerospace business including, as
announced by GKN on 14 February 2018 in its 'Project Boost'
announcement, all of the businesses and companies comprising
Speciality Aerostructures, Aero Aftermarket, Aero Specialist
Positions, Aero Engines, Aero Additive Manufacturing, US Standard
Aerostructures, Fuel and Flotation Tanks and Engine and Aircraft
Servicing, together with GKN Group's interest in SABCA, in each
case as at the Effective Date;
GKN Driveline businesses means each of the businesses and
companies comprising the GKN Driveline business including, as
announced by GKN on 14 February 2018 in its 'Project Boost'
announcement, all of the businesses and companies comprising the
Driveshafts, All-Wheel Drive, Driveline China and eDrive Systems,
Wheels, Cylinder Liners and Off-Highway Powertrain divisions of GKN
Driveline, in each case as at the Effective Date;
GKN Group means (i) GKN and its subsidiaries and subsidiary
undertakings and each of their businesses from time to time,
together with (ii) each of GKN and its subsidiaries and subsidiary
undertakings and each of their businesses as at the Effective Date,
which, from time to time, are in the Melrose Group;
GKN Group sales means revenues generated by the GKN Group as
recognised in accordance with IFRS and as determined in accordance
with GKN's IAS accounting policies and accounting practices in
force as at 31 December 2017;
GKN Trade Marks means all trade marks, registered and
unregistered, in the term "GKN";
Melrose Shares means the ordinary shares of 48/7 pence each in
the capital of Melrose or such ordinary shares as Melrose may have
in issue from time to time;
SABCA means Société Anonyme Belge de Constructions
Aéronautiques;
resident means, in respect of an individual, that their
principal private residence is in the UK, and that they perform the
majority of their role and duties as a director whilst located in
the UK; and
Third Party Offeror means any person other than (i) a member of
the Melrose Group and (ii) any person acting in concert with
Melrose or a Melrose Director.
Further Information regarding the Post-Offer Undertakings
The Post-Offer Undertakings set out in this announcement are in
a form acceptable to the Panel, are legally binding commitments
and, should the Final Offer become wholly unconditional, Melrose
must comply with the terms of each Post-Offer Undertaking and
complete any courses of action committed to within the relevant
time periods set out.
Melrose has appointed RSM Corporate Finance LLP (the
"Supervisor") to monitor its compliance with the Post-Offer
Undertakings. In respect of its appointment, the Supervisor has
agreed a work-plan with the Panel in order to monitor the
compliance of Melrose with the Post-Offer Undertakings.
Melrose and the Supervisor will be required to submit periodic
reports to the Panel, in accordance with the provisions of Rule
19.5(h) and (i) of the City Code, in respect of the Post-Offer
Undertakings.
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END
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