TIDMRGO TIDMBROC
RNS Number : 8338M
2 ergo Group plc
05 February 2009
THIS ANNOUNCEMENT IS 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 OF SUCH JURISDICTION.
5 February 2009
RECOMMENDED PROPOSAL FOR THE ALL SHARE ACQUISITION
by
2 ergo Group plc
of
Broca plc
(to be effected by means of a scheme of arrangement)
Summary
The 2 ergo Independent Directors and the Broca Independent Directors announce
that they have reached an agreement on the terms of a recommended all share
acquisition of the entire issued and to be issued ordinary share capital of
Broca.
Highlights
* Existing Broca Shareholders will be entitled to receive 0.0909 of a New 2 ergo
Share in exchange for the cancellation of each of their existing Ordinary Shares
based on 2 ergo's Closing Price at 4 February 2009 of 137.5p
* The Acquisition values each Ordinary Share at approximately 12.5p and the
existing issued ordinary share capital of Broca at approximately GBP4.9 million,
* The consideration represents a premium of:
*
* approximately 25.0 per cent. to 10.0p per Ordinary Share, being the Closing
Price on 14 January 2009, the last dealing day prior to commencement of the
Offer Period; and
* approximately 3.3 per cent. to 12.1p per Ordinary Share, being the average
Closing Price for the three months prior to 14 January 2009, the last dealing
day prior to commencement of the Offer Period.
* Assuming no further Ordinary Shares are issued in the period between the date of
this announcement and the Effective Date, existing 2 ergo Shares will constitute
approximately 91.23 per cent. of the issued ordinary share capital of 2 ergo as
enlarged by the Acquisition with the New 2 ergo Shares issued to Broca
Shareholders constituting approximately 8.77 per cent.
* The Acquisition will be effected by means of a scheme of arrangement under Part
26 of the 2006 Act, conditional, amongst other things, upon the approval of the
Scheme at the Court Meeting and passing of the Special Resolution at the General
Meeting of Broca Shareholders. The Acquisition is also conditional on the
passing of a resolution at the 2 ergo AGM to approve the acquisition of New 2
ergo Shares by Barry Sharples, Neale Graham and Keith Seeley for the purposes of
section 190 of the 2006 Act pursuant to the implementation of the Scheme.
* It is expected that the Court Meeting and the General Meeting will be held on or
around 13 March 2009 and the Scheme will become effective on or around 7 April
2009.
* It is expected that the Scheme Document will be posted to Broca Shareholders as
soon as is reasonably practicable.
Commenting on the Acquisition, Barry Sharples, Joint CEO of 2 ergo, said:
"The 2 ergo Board believes that Broca's technology has significant potential to
generate future earnings as part of the 2 ergo Group and to provide added value
to our customers by enhancing our range of products and services. Whilst we
believe that this technology could provide security solutions for most mobile
phone networks globally, it has particularly strong potential in emerging
markets such as Asia, Africa and South America and should see significant
opportunities emerging from the recent partnership that we announced with
ActiveMedia Technologies in India. Broca was originally demerged from 2 ergo in
March 2007 as we felt its value was not fully recognised as part of the 2 ergo
Group, and felt, at the time, that it would be better placed to achieve its
goals as a separate entity. However, in the current market environment, we
believe that we can better enhance Broca's prospects and value as part of the
Enlarged Group."
Commenting on the Acquisition on behalf of the Broca Independent Directors,
Peter Harvey, Non-Executive Chairman of Broca said:
"As announced towards the end of last year, although we have seen growing
interest in, and market readiness for, our patented technology, we have
experienced delays in the completion of a number of key licence contracts. In
the current environment, we believe that being part of the Enlarged Group should
ease the development constraints that we have experienced and provide the best
vehicle to fully exploit Broca's technology going forward. This should allow
Broca Shareholders to benefit from taking our technology to the next stage of
commercialisation. We believe the terms of the Acquisition to be fair and
reasonable and recommend Broca Shareholders to vote in favour of the
Resolutions."
Numis and RSM Bentley Jennison are acting as financial advisers to 2 ergo and
Grant Thornton UK LLP and Littlejohn are acting as financial advisers to Broca.
This summary and the Appendices should be read in conjunction with the
accompanying full text of the following announcement which sets out further
details of the Acquisition and which forms an integral part of this
announcement. The Acquisition will be subject to the conditions set out in
Appendix A to this announcement and the further terms, which will be set out in
the Scheme Document. Appendix B contains further details of the Broca
Shareholders which have given irrevocable undertakings to vote in favour of the
Scheme and the Resolutions at the Court Meeting and the General Meeting.
Appendix C contains a description of the bases of calculation and sources of
information used in this announcement. Appendix D contains details of relevant
securities of Broca and 2 ergo in which 2 ergo, 2 ergo Directors and their
related parties have an interest or right to subscribe. Appendix E contains
definitions of certain expressions used in this summary and the following
announcement.
Enquiries:
+----------------------------------------------------+----------------------+
| 2 ergo Group plc | Tel: +44 (0) 1706 |
| | 221 777 |
+----------------------------------------------------+----------------------+
| Neale Graham, Joint Chief Executive | |
+----------------------------------------------------+----------------------+
| Barry Sharples, Joint Chief Executive | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Numis Securities Limited (financial adviser, | Tel: +44 (0) 20 7260 |
| nominated adviser and broker to 2 ergo) | 1000 |
+----------------------------------------------------+----------------------+
| Stuart Skinner (as Nominated Adviser) | |
| David Poutney (as Corporate Broker) | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| RSM Bentley Jennison (financial adviser to 2 ergo) | Tel: +44 (0) 161 819 |
| | 3030 |
+----------------------------------------------------+----------------------+
| David Simmons | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Broca plc | Tel: +44 (0) 845 006 |
| | 6661 |
+----------------------------------------------------+----------------------+
| Ian Price, Chief Executive | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Grant Thornton UK LLP (financial adviser and | Tel: +44 (0) 20 7383 |
| nominated adviser to Broca) | 5100 |
+----------------------------------------------------+----------------------+
| Fiona Owen | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Littlejohn LLP (financial adviser to Broca) | Tel: +44 (0) 20 7516 |
| | 2210 |
+----------------------------------------------------+----------------------+
| Claire Palmer | |
+----------------------------------------------------+----------------------+
In accordance with Rule 2.10 of the City Code, Broca confirms that it has
39,093,108 ordinary shares of 1 pence each in issue. The International
Securities Identification Number (ISIN) for Broca's ordinary shares is
GB00B1R2V686.
In accordance with Rule 2.10 of the City Code, 2 ergo confirms that is has
29,883,838 ordinary shares of 1 pence each in issue. The International
Securities Identification Number (ISIN) for 2 ergo's ordinary shares is
GB0034312214.
Numis, which is authorised and regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for 2 ergo and no-one else in
connection with the Acquisition and will not be responsible to anyone other than
2 ergo for providing the protections afforded to clients of Numis, nor for
providing advice in relation to the Acquisition, the content of this
announcement, or any matter referred to herein. Numis is 2 ergo's nominated
adviser for the purposes of the AIM Rules and as nominated adviser, its
responsibilities are owed solely to the London Stock Exchange and are not owed
to 2 ergo or any 2 ergo Director or any other entity or person.
RSM Bentley Jennison, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for 2 ergo and no one
else in connection with the Acquisition and will not be responsible to anyone
other than 2 ergo for providing the protections afforded to clients of RSM
Bentley Jennison nor for providing advice in relation to the Acquisition, the
contents of this announcement, or any matter referred to herein.
Grant Thornton UK LLP, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for Broca and no-one
else in connection with the Acquisition and will not be responsible to anyone
other than Broca for providing the protections afforded to clients of Grant
Thornton UK LLP nor for providing advice in relation to the Acquisition, the
content of this announcement, or any matter referred to herein. Grant Thornton
UK LLP is Broca's nominated adviser for the purposes of the AIM Rules and as
nominated adviser, its responsibilities are owed solely to the London Stock
Exchange and are not owed to Broca or any Director or any other entity or
person.
Littlejohn is acting exclusively for Broca and no-one else in connection with
the Acquisition and will not be responsible to anyone other than Broca for
providing the protections afforded to clients of Littlejohn nor for providing
advice in relation to the Acquisition, the contents of this announcement or any
matter referred to herein.
This announcement is not intended to and does not constitute or form any part
of, an offer to sell or an invitation to purchase or the solicitation of an
offer to subscribe for any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Acquisition or otherwise.
The distribution of this announcement in jurisdictions other than the UK may be
restricted by law and therefore any persons who are subject to the laws of any
jurisdiction other than the UK should inform themselves about, and observe any
applicable requirements. In particular, the Offer is not being made, directly or
indirectly, in the United States, Canada, Australia, the Republic of South
Africa or Japan. This announcement has been prepared for the purpose of
complying with English law and the City Code and the information disclosed may
not be the same as that which would have been disclosed if this announcement had
been prepared in accordance with the laws of jurisdictions outside England.
Dealing disclosure requirements
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes
"interested" (directly or indirectly) in one per cent. or more of any class of
"relevant securities" of Broca or 2 ergo, all dealings in any "relevant
securities" of that company (including by means of an option in respect of, or a
"derivative" referenced to, any such "relevant securities") must be publicly
disclosed by no later than 3.30 p.m. (London time) on the business day following
the date of the relevant transaction. This requirement will continue until the
Effective Date or until the date on which the Scheme lapses or is otherwise
withdrawn or on which the "Offer Period" otherwise ends. If two or more persons
act together pursuant to an agreement or understanding, whether formal or
informal, to acquire an "interest" in "relevant securities" of Broca or 2 ergo,
they will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant
securities" of 2 ergo or Broca by 2 ergo or Broca or by any of their respective
"associates" must also be disclosed by no later than 12.00 noon (London time) on
the business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" dealings should be disclosed and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should consult the Panel.
Forward-looking statements
This announcement contains statements about 2 ergo, Broca and the Enlarged Group
that are or may be forward looking statements. All statements other than
statements of historical facts included in this announcement may be forward
looking statements. Forward looking statements often use words such as "target",
"plan", "believe", "expect", "aim", "intend", "will", "should", "could",
"would", "may", "consider", "anticipate", "estimate", "synergy", "cost saving",
"project", "goal" or "strategy" or words or terms of similar substance or the
negative thereof. Forward looking statements include statements relating to the
following: (i) the expected timetable for implementing the Acquisition, future
capital expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses and
future prospects of 2 ergo, Broca or the Enlarged Group; (ii) business and
management strategies and the expansion and growth of 2 ergo's, Broca's or the
Enlarged Group's operations and potential synergies resulting from the
acquisition of Broca by 2 ergo; and (iii) the effects of government regulation
on 2 ergo's, Broca's or the Enlarged Group's business.
These forward looking statements are not guarantees of future performance. They
have not been reviewed by the auditors of 2 ergo or Broca. These forward looking
statements involve known and unknown risks, uncertainties and other factors
which may cause them to differ from the actual results, performance or
achievements expressed or implied by such forward looking statements. These
forward looking statements are based on numerous assumptions regarding the
present and future business strategies of such persons and the environment in
which each will operate in the future. Investors are cautioned not to place
undue reliance on the forward looking statements, which speak only as of the
date they were made. All subsequent oral or written forward looking statements
attributable to 2 ergo, Broca or the Enlarged Group or any of their respective
members, directors, officers or employees or any persons acting on their behalf
are expressly qualified in their entirety by the cautionary statement above. All
forward looking statements included in this announcement are based on
information available to 2 ergo and Broca on the date hereof. Undue reliance
should not be placed on such forward looking statements. Subject to compliance
with the City Code, neither Broca nor 2 ergo intends, or undertakes any
obligation, to update any information contained in this announcement.
THIS ANNOUNCEMENT IS 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 OF SUCH JURISDICTION.
RECOMMENDED PROPOSAL FOR THE ALL SHARE ACQUISITION
by
2 ergo Group plc
of
Broca plc
(to be effected by means of a scheme of arrangement)
1Introduction
The 2 ergo Independent Directors and the Broca Independent Directors are pleased
to announce that they have reached agreement on the terms of a recommended all
share acquisition of Broca by 2 ergo, to be effected by means of a scheme of
arrangement under Part 26 of the 2006 Act.
In view of the involvement of Barry Sharples and Neale Graham as Non-Executive
Directors of Broca and Executive Directors of 2 ergo, and the resulting
conflicts or potential conflicts of interest, a committee of the Board
comprising the Broca Independent Directors has been formed to consider the terms
of the Acquisition on behalf of Broca Shareholders.
2Recommendation
The Broca Independent Directors, who have been so advised by Littlejohn,
consider the terms of the Acquisition to be fair and reasonable for Scheme
Shareholders.
Littlejohn is acting as the independent financial adviser to Broca pursuant to
Rule 3.1 of the City Code. Grant Thornton UK LLP is also acting as financial
adviser to Broca. Grant Thornton UK LLP has an audit relationship with Broca and
2 ergo and, as a consequence, with respect to the Acquisition, is not an
independent adviser in accordance with Rule 3.1 of the City Code. In providing
advice to the Broca Independent Directors, Littlejohn and Grant Thornton UK LLP
have taken into account the Broca Independent Directors' commercial assessments.
Accordingly, the Broca Independent Directors unanimously recommend all Scheme
Shareholders to vote in favour of the Resolutions to be proposed at the Court
Meeting and the General Meeting as each of the Broca Independent Directors has
irrevocably undertaken to do in respect of their entire beneficial holdings of
766,706 Ordinary Shares, representing approximately 1.96 per cent. of Broca's
issued share capital (and 3.65 per cent. of Broca's issued share capital
expected to be in issue and entitled to vote at the Court Meeting and the
General Meeting).
3Summary of the terms of the Acquisition and the Scheme
The Acquisition is proposed to be implemented by means of a scheme of
arrangement between Broca and Scheme Shareholders under Part 26 of the 2006 Act
(although 2 ergo may, with the consent of the Panel, elect to effect the
Acquisition by way of an Offer). The Acquisition will not be completed unless
all the Conditions have been satisfied, or, if permitted, waived by close of
business on 5 May 2009, or such later date as (subject to the City Code) Broca
and 2 ergo may agree and, if required, the Court may approve. 2 ergo has agreed
to undertake to the Court to be bound by the terms of the Scheme.
Under the terms of the Scheme, and subject to the satisfaction or (where
permitted) waiver of the Conditions, Scheme Shareholders will be entitled to
receive New 2 ergo Shares in exchange for the cancellation of their Ordinary
Shares on the following basis:
+-----------------------------------------------------------+------------------------------+
| for | 0.0909 of a New 2 ergo Share |
| each | |
| Scheme | |
| Share | |
+-----------------------------------------------------------+------------------------------+
Based on the Closing Price of 137.5p per 2 ergo Share on 4 February 2009 (being
the last practicable date prior to this announcement), the Acquisition values
each Ordinary Share at approximately 12.5p and the existing issued ordinary
share capital of Broca at approximately GBP4.9 million. The consideration
represents a premium of:
* approximately 25.0 per cent. to 10.0p per Ordinary Share, being the Closing
Price on 14 January 2009, the last dealing day prior to commencement of the
Offer Period; and
* approximately 3.3 per cent. to 12.1p per Ordinary Share, being the average
Closing Price for the three months prior to 14 January 2009, the last dealing
day prior to commencement of the Offer Period.
Based on the number of Ordinary Shares and 2 ergo Shares in issue as at 4
February 2009 (being the last practicable date prior to the posting of this
announcement), it is assumed that existing 2 ergo Shares will represent
approximately 91.23 per cent. of the issued ordinary share capital of 2 ergo as
enlarged by the Acquisition with the New 2 ergo Shares to be issued pursuant to
the Scheme representing approximately 8.77 per cent.
These exchange ratios assume that Broca has not undertaken a Broca Share Capital
Change and that 2 ergo has not undertaken a 2 ergo Share Capital Change since
the date of this announcement. In the event of a 2 ergo Share Capital Change
and/or a Broca Share Capital Change (as the case may be) after the date of this
announcement but before the Effective Date, such adjustments shall be made to
the Exchange Ratio as RSM Bentley Jennison, on behalf of 2 ergo, and Littlejohn
on behalf of Broca, agree are fair and reasonable (and, if required, the Court
may approve) such that the Exchange Ratio is the same as it would have been had
the relevant 2 ergo Share Capital Change and/or the relevant Broca Share Capital
Change (as the case may be) occurred immediately prior to the date of the Scheme
Document.
No fractions of a New 2 ergo Share will be allotted to Broca Shareholders.
Fractional entitlements to New 2 ergo Shares will not be allotted or issued and
will be rounded down to the nearest whole number.
4Background to and reasons for the recommendation
The Broca Independent Directors believe that a combination of 2 ergo and Broca
will benefit Broca's Business for the following reasons:
(a)Opportunity to expand internationally and improved credibility
While Broca has had tangible success with substantial brands such as T-Mobile
and Sony Ericsson, it has been constrained by the limited size of its sales team
and their network. As an independent entity, it has also lacked stature in
competitive bids where trading history and financials have been a factor in
decisions by customers. The Broca Independent Directors believe that the most
fertile market for Broca's technology is outside the UK and have therefore
pursued international partnerships. The Acquisition will deliver greater scale
to sales activity and will also provide a significantly more credible profile in
bid situations. The 2 ergo Independent Directors expect 2 ergo's existing and
developing partnerships to help accelerate the technology's uptake in key
developing markets. 2 ergo has built significant mobile operator relationships
and has expanded its reach geographically, most recently into India, where Broca
has also been developing new business opportunities. The Broca Independent
Directors believe that leveraging 2 ergo's sales expertise and relationships
with an integrated hierarchy of messaging solutions will accelerate the
monetisation of Broca's technology.
The Broca Independent Directors believe that given 2 ergo's recent track record
in winning significant bids along with its larger marketing and PR presence, the
Enlarged Group will be able to present a highly credible and established
platform from which to market and sell Broca's products and services.
(b)Highly complementary markets
The business logic for the Acquisition of Broca by 2 ergo is evident in a number
of areas. 2 ergo's current target markets, customer segmentation and the
development of its solutions sales capability all suggest a closer fit with
Broca's portfolio than was the case at the time of demerger in March 2007.
It is the belief of the Broca Independent Directors that 2 ergo's emphasis on
and success in generating sales in sectors such as financial services,
entertainment and customer relationship management all suggest a strong fit with
Broca's target market.
(c)Operational synergies
The Broca Independent Directors believe that, while the integrated Broca team
will continue ongoing development of the technology, better integration with 2
ergo's products and services will be achieved within a combined business, since
experience and expertise will be shared more closely than is the case with
separate entities.
In terms of infrastructure, there is a significant amount of existing
commonality between the two companies both in terms of technological
infrastructure and facilities. While there will be little change in activities
as a function of the Acquisition, there will be cost savings as a result of the
reduction in administration and simplification of processes, including the
elimination of certain central costs associated with Broca's listing on AIM.
(d)Opportunity to hold shares in a larger company
The Acquisition provides Broca Shareholders with an opportunity to hold shares
in a quoted company with a significantly greater market capitalisation. The
Broca Independent Directors believe this will afford Broca Shareholders a better
opportunity to realise their investment or to continue their involvement in the
mobile communication sector and the patented Broca technology through an
investment in 2 ergo.
In line with Broca's trading update of 22 December 2008 stating an anticipated
requirement for further cash by March 2009, the Acquisition by 2 ergo
constitutes Broca's only realistic opportunity to continue as a going concern.
If the Scheme is not implemented, and notwithstanding the extension of the 2
ergo Facility, capital will be required in the short term. On the basis of the
Directors' recent efforts to secure additional funds through a range of sources,
this is not something that can be readily achieved given the current market
conditions.
Accordingly, after full consideration of all the relevant factors, the Broca
Independent Directors have come to the unanimous conclusion that the Scheme
should be recommended to Broca Shareholders.
5Effect of the Scheme on the interests of the Directors
The Broca Independent Directors have confirmed that they intend to vote in
favour of the Scheme and the Resolutions at the Court Meeting and the General
Meeting in respect of their entire beneficial holdings of 766,706 Ordinary
Shares representing at the date of this announcement approximately 1.96 per
cent. of Broca's issued share capital. The Directors who are not Independent
Directors will not vote to approve the Scheme and the Resolutions at the Court
Meeting and the General Meeting (but have consented to be bound by the Scheme).
The effect of the Scheme on the interests of the Directors does not differ from
its effect on the like interests of any other Scheme Shareholder.
62 ergo Facility
Further to Broca's trading update of 22 December 2008, in which it stated an
anticipated requirement for additional funding by March 2009, Broca
Communications Limited has entered into an agreement on 4 February 2009 with 2
ergo Limited to extend its current loan facility from GBP1 million to GBP1.3
million. This extended facility is repayable on the date 18 months following 28
July 2008 (the date of the original loan agreement), or, if earlier, on the
first written demand made by 2 ergo Limited, being the same terms which apply to
the original loan agreement details of which were announced by Broca on 30 July
2008. The additional facility of GBP300,000 may be drawn down in instalments as
may be requested by Broca Communications Limited and agreed with 2 ergo Limited.
Neale Graham and Barry Sharples, Non-Executive Directors of Broca, are also 2
ergo Directors. 2 ergo currently holds in excess of 10 per cent. of the issued
share capital of Broca and is considered to be a substantial shareholder for the
purposes of the AIM Rules. The extension of the 2 ergo Facility is therefore
classified as a related party transaction for the purposes of the AIM Rules.
Accordingly, the Broca Independent Directors, having consulted with Grant
Thornton UK LLP (in its capacity as the Company's nominated adviser), confirm
that they are satisfied that the terms of the extension of the 2 ergo Facility
are fair and reasonable insofar as Broca Shareholders are concerned.
7Broca management and employees
2 ergo has confirmed that it has no current plans to change the operations or
strategy of Broca or its fixed assets although these matters may be reviewed in
the future. 2 ergo and Broca's businesses are re-locating in early 2009 to
elsewhere in the Manchester area.
The 2 ergo Board has given assurances to the Broca Independent Directors that
the existing contractual employment rights, including pension rights, of all
employees of the Broca Group will continue to be safeguarded. Save as set out
below, it is not envisaged that redundancies or other changes to employment will
result from implementation of the Scheme.
It is proposed that, upon the Scheme becoming Effective, each of Peter Harvey
and Roger Alexander, who are current Non-Executive Directors of Broca, and Ian
Price, who is the current Chief Executive of Broca, will resign from the Board.
However, Ian Price will continue to be employed by Broca until the business is
integrated into 2 ergo, and each of Neale Graham, Barry Sharples and Michael
Hawkes, who are currently Broca Directors, will remain appointed to the Board.
Save as set out above, the 2 ergo Board does not intend to change the terms and
conditions of employment of the Broca Directors.
Michael Hawkes has agreed to sign a lock-in and orderly market agreement in
respect of the New 2 ergo Shares to be allotted to him on completion of the
Acquisition. The lock-in provisions will expire on 1 August 2010 and the orderly
market provisions will expire 1 August 2011. Further details of these agreements
will be set out in the Scheme Document.
8Irrevocable undertakings
2 ergo has received irrevocable undertakings to vote in favour of the Scheme and
the Resolutions at the Court Meeting and the General Meeting from:
* each of the Broca Independent Directors in respect of their entire beneficial
holdings of 766,706 Ordinary Shares representing at the date of the announcement
approximately 1.96 per cent. of Broca's issued share capital (and 3.65 per cent.
of Broca's issued share capital expected to be in issue and entitled to vote at
the Court Meeting and the General Meeting);
* an institutional Broca Shareholder, in respect of its entire holding of
2,920,000 Ordinary Shares to which it has been granted voting authority over
representing at the date of the announcement approximately 7.47 per cent. of
Broca's issued share capital (and 13.90 per cent. of Broca's issued share
capital expected to be in issue and entitled to vote at the Court Meeting and
the General Meeting).
In aggregate, therefore, 2 ergo has received irrevocable undertakings to vote in
favour of the Scheme and the Resolutions in respect of a total of 3,686,706
Ordinary Shares representing at the date of this announcement approximately 9.43
per cent. of the issued share capital of Broca (and 17.56 per cent. of Broca's
issued share capital expected to be in issue and entitled to vote at the Court
Meeting and the General Meeting). Further details of these irrevocable
undertakings are set out in Appendix B to this announcement.
9Information on Broca and current trading
Broca completed its demerger from 2 ergo and listed on AIM on 6 March 2007.
Broca's business is the development and exploitation of technology with the
intention of enabling M-commerce to be carried out securely via digital
services, principally by extending conventional SMS messaging from existing
mobile telecommunications equipment. The technology is based upon Broca's
innovative, patented key-cycling protocol.
The Directors believe that the technology is capable of securing mobile data
through message encryption, PIN protection and recorded delivery. This level of
security is not currently available to mobile device users in connection with
M-payments. Additional benefits include the user-friendly data capture facility
that has been used successfully in market research programmes with Sony Ericsson
and T-Mobile (UK).
Furthermore, the ability to update message formats using Broca's Studio tool
ensures that the technology is particularly relevant for high-growth markets in
developing economies that do not have widespread or reliable GPRS coverage.
Whilst the initial technology has been optimised for use with SMS, the Directors
believe the Protocol should ultimately be applicable to other forms of digital
messaging and also E-commerce.
As set out in Broca's trading statement of 22 December 2008, Broca continues to
negotiate new project opportunities with significant potential. However, despite
securing additional revenues from pilot activity for mobile banking services in
partnership with Telnet in Africa, and growing interest in, and market readiness
for, Broca's technology, there has been slippage in the completion of a number
of key licence contracts. Notwithstanding this slippage, Broca has observed an
accelerating market readiness for its technology. With specific regard to
security of data in mobile communications, there is an increasing awareness of
the risks of data interception among police forces, Governments, and regulatory
bodies. The market for systems dealing with the security and management of
privacy of information, particularly with respect to mobile communications, is
set to increase globally.
The Directors also believe that there is a growing trend towards 'paperless'
integrated payment, transportation and ticketing systems via mobile telephones.
This is particularly prevalent in the UK where there is a drive to make events
such as the 2012 Olympics paperless. Broca's technology is well positioned to
address the security concerns inherent in 'paperless' systems, as evidenced by a
number of pipeline opportunities in various parts of the world. However, whilst
the economic environment continues to be uncertain, Broca remains cautious in
its outlook.
10Information on 2 ergo and current trading
(a)Overview
2 ergo is a leading provider of integrated and converged mobile products and
services. 2 ergo employs 'Multiserve', its proprietary core technology platform
which integrates voice, data, text, email, video and mobile internet channels to
form the intelligence layer between network operators, the internet and
customer-facing applications.
Through its product suite, 2 ergo enables its customer base of multinational
businesses, mobile network operators and marketing agencies to take advantage of
integrated mobile communications to mobilise their business processes, reduce
costs, increase sales and enhance their customer experience.
While 2 ergo's growth has principally been organic, it has made selected
acquisitions including 2 ergo Americas Inc, formerly Proteus Inc, which was
acquired in September 2006, and has developed the scale of the business in North
America, as well as expanding activities into Latin America. The Broca Business
was established through the acquisition of certain intellectual property from
Sure on Sight Limited in June 2005. The demerger of Broca was completed in March
2007.
Since the demerger with Broca, 2 ergo has continued to enjoy growth in its
business and has successfully increased its operating margins from 7.2 per cent.
to 9.2 per cent. 2 ergo has also announced an intention to grow by the
acquisition of other businesses within its wider market place as and when such
opportunities arise.
(b)Rationale for the Acquisition
The 2 ergo Independent Directors believe that the intellectual property assets
of Broca can be exploited more effectively by the business becoming part of the
Enlarged Group. The existing routes to market, sales networks and geography of
the 2 ergo Group will, in addition to the existing sales network of Broca,
enable Broca's products to be marketed more effectively across Europe, the
Americas and (following 2 ergo's partnership announcement on 26 January 2009)
Asia.
The 2 ergo Independent Directors consider the technology developed within Broca
to have significant potential to generate future earnings as part of the 2 ergo
Group and to complement, and further differentiate, the existing suite of
services that 2 ergo currently offers to its customer base. The 2 ergo
Independent Directors believe that in the current economic climate the
development constraints experienced by Broca will be eased within the Enlarged
Group.
In addition, whilst the 2 ergo Board believe that Broca's patented technology
could provide security solutions for most mobile phone networks globally, it has
recognised demand and feels that there is particularly strong potential in
emerging markets such as Asia, Africa and South America. For example, in Asia
the 2 ergo Independent Directors believe these opportunities will be best
exploited via 2 ergo's partnership with ActiveMedia Technologies, a partner with
direct connectivity to the Indian mobile network operators, which opens access
for 2 ergo to over 300 million subscribers, a number which is increasing by up
to 10 million subscribers per month.
The Acquisition is also expected to enable material cost savings to be made in
the operation of Broca's existing business, including the elimination of certain
central costs associated with Broca's listing on AIM.
The 2 ergo Independent Directors expect further acquisitions to be made pursuant
to 2 ergo's stated acquisition strategy, the execution of which should bring
further complementary benefits to the Broca product suite.
(c)Current trading
On 19 November 2008, 2 ergo announced its preliminary results for the year ended
31 August 2008, reporting turnover of GBP32.6m (2007: GBP33.3m) and gross profit
of GBP9.8m (2007: GBP8.6m). The reduction in turnover and increase in gross
profit was due to a focus on higher margin business. Overall, 2 ergo made a
pre-tax profit of GBP3.4m (2007: GBP2.6m). This equated to an adjusted earnings
per share (applying 2008 tax rates to the historic 2007 figure to exclude one
off tax benefits enjoyed in 2007) of 8.5p (2007: 6.7p). Net cash as at 31 August
2008 was GBP9.1m with a net cash inflow from operating activities of GBP1.2m. 2
ergo remains cash generative and debt free.
2 ergo's trading for the first half of the current year is in line with the 2
ergo Board's expectations for the year.
11Structure of the Acquisition and the Scheme
The Acquisition is being effected by means of a scheme of arrangement between
Broca and Scheme Shareholders under Part 26 of the 2006 Act (although 2 ergo
may, with the consent of the Panel, elect to effect the Acquisition by way of an
Offer). The procedure involves an application by Broca to the Court to sanction
the Scheme and to confirm the cancellation of the Scheme Shares. The reserve
arising on cancellation of the Scheme Shares will be applied in paying up the
New Broca Shares to be issued to 2 ergo with the result that 2 ergo will own the
entire issued share capital of Broca.
In consideration of the cancellation of their Scheme Shares, on terms that the
reserve arising on such cancellation is applied in paying up the New Broca
Shares to be issued to 2 ergo, Scheme Shareholders who are on the Register of
Members at the Scheme Record Time will receive New 2 ergo Shares from 2 ergo
credited as fully paid.
The Acquisition will only be implemented if all the Conditions have been
satisfied or, if permitted, waived. In summary, the implementation of the
Scheme, and therefore the Acquisition, is conditional upon, inter alia:
* the Scheme becoming Effective by not later than the Long Stop Date, or such
later (if any) as, subject to the City Code, 2 ergo and Broca may agree and, if
required, the Court may allow;
* approval of the Scheme by a majority in number representing 75 per cent. or more
in value of the Scheme Shareholders present and voting, either in person or by
proxy, at the Court Meeting, or at any adjournment thereof;
* the Special Resolution being duly passed by the requisite majority at the
General Meeting, or at any adjournment thereof;
* the passing at the 2 ergo AGM, or at any adjournment thereof, of such
resolutions as may be necessary to approve and effect the Acquisition and
implement the Scheme;
* the other Conditions to the implementation of the Scheme set out in Part 1 of
Appendix A to this announcement, being satisfied or, where permitted, waived;
and
* the sanction (with or without modification agreed by Broca and 2 ergo) of the
Scheme and the confirmation of the associated reduction of the share capital of
Broca by the Court and the delivery of certified copies of the Court Orders
together with the minute of the Capital Reduction of Broca approved by the Court
to, and the registration of the Reduction Court Order by, the Registrar of
Companies.
It is expected that dealings in Ordinary Shares will be suspended with effect
from 6 April 2009 (the business day before the Scheme Record Time) and that
cancellation of admission of the Ordinary Shares trading on AIM will occur at
7.00 a.m. on the business day following the Effective Date.
On the Effective Date, share certificates in respect of Ordinary Shares will
cease to be valid and should, if so requested by Broca, be sent to Broca for
cancellation. In addition, on the Effective Date, entitlements to Ordinary
Shares held within CREST will be cancelled. It is also proposed that, following
the Effective Date and after the Ordinary Shares are delisted, Broca will be
re-registered as a private company.
Further details of the Scheme will be contained in the Scheme Document.
The Scheme will require the approval of Scheme Shareholders at the Court Meeting
and the passing of the Special Resolution at the separate General Meeting, both
of which are expected to be held at the offices of Halliwells LLP, 3 Hardman
Square, Spinningfields, Manchester, M3 3EB on 13 March 2009. The Acquisition is
also conditional on the of passing a resolution at the 2 ergo AGM to approve the
acquisition of New 2 ergo Shares by Barry Sharples, Neale Graham and Keith
Seeley for the purposes of section 190 of the 2006 Act pursuant to the
implementation of the Scheme.
12Broca Share Options
The Broca Share Options have an exercise price in excess of the price offered by
2 ergo for each Scheme Share, such that exercise of these options would be
uneconomical. The relevant holders of these options will be informed in writing
of the effect of the Scheme on their rights under the Broca Share Options.
Although these options will continue to be exercisable in accordance with their
terms and holders of such options will be given the opportunity to exercise
their options which have vested, it is not expected that such holders will wish
to exercise them. No further or additional proposals will therefore be made to
holders of options under the Broca Share Options.
13Alternative implementation of the Acquisition by way of an Offer
2 ergo reserves the right, with the consent of the Panel, to elect to implement
the Acquisition by way of an Offer. Any such Offer will be implemented on
substantially the same terms (subject to appropriate amendments) as those which
would apply to the Scheme and will represent no diminution in the value of the
offer. Any such Offer will be subject to a 90 per cent. acceptance condition or
such lower percentage, being more than 50 per cent., as 2 ergo may decide with
the consent of the Panel. Furthermore, if sufficient acceptances of such Offer
are received and/or sufficient Ordinary Shares are otherwise acquired, it is the
intention of 2 ergo to apply the provisions of sections 979 to 982 (inclusive)
of the 2006 Act to acquire compulsorily any outstanding Ordinary Shares to which
the Offer relates.
14Implementation Agreement
Broca and 2 ergo have agreed the terms on which they will co-operate with regard
to the implementation of the Scheme and pursuant to which Broca has undertaken
to implement the Scheme as a scheme of arrangement under Part 26 of the 2006
Act.
Broca has undertaken to 2 ergo to convene the Court Meeting and the General
Meeting. Further details of the Implementation Agreement will be set out in the
Scheme Document.
15Description of New 2 ergo Shares
The New 2 ergo Shares to be issued and delivered as consideration under the
Acquisition will be fully paid, will rank pari passu for any dividend declared
or paid by 2 ergo by reference to a record date on or after the Effective Date
and will otherwise rank pari passu in all respects with 2 ergo Shares in issue
at the time the New 2 ergo Shares are delivered under the Acquisition. The New 2
ergo Shares will be issued free from all liens, right of set-off, counterclaim,
charges, equitable interests, encumbrances and other third party rights and
interests of any nature whatsoever which 2 ergo may otherwise be, or claim to
be, entitled against such Broca Shareholder.
Application will be made by 2 ergo for the New 2 ergo Shares to be admitted to
trading on AIM. It is expected that Admission will become effective and that
dealings, for normal settlement, will commence at 8.00 a.m. on the business day
after the Effective Date which, subject to the sanction of the Scheme, the
delivery of the Scheme Court Order to the Registrar of Companies and the
satisfaction (or waiver, if permitted) of the Conditions, is expected to be on 8
April 2009.
16Overseas Shareholders
As regards Overseas Shareholders, the Acquisition may be effected by the laws of
their relevant jurisdiction. 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 with the Acquisition, including
the obtaining of any governmental, exchange control or other consents which may
be required, or the compliance with other necessary formalities which are
required to be observed, and the payment of any issue, transfer or other taxes
due in such jurisdiction.
The Acquisition does not constitute an offer to sell or issue or the
solicitation of an offer to buy or subscribe for shares in any jurisdiction in
which such offer or solicitation is or would be unlawful.
This announcement has been prepared for the purposes of complying with English
law, the City Code and the AIM Rules and the information disclosed may not be
the same as that which would have been disclosed if this announcement had been
prepared in accordance with the laws of jurisdictions outside the United
Kingdom. Overseas Shareholders should consult their own legal and tax advisers
with respect to the legal and tax consequences of the Scheme in their particular
circumstances.
17Rule 3.2 of the City Code
Barry Sharples and Neale Graham are Non-Executive Directors of Broca. Barry
Sharples, Neale Graham and Keith Seeley also have material shareholdings in
Broca. There are also significant other cross-shareholdings in 2 ergo and Broca.
In such circumstances, Rule 3.2 of the City Code requires that the 2 ergo
Independent Directors obtain independent advice as to whether or not the
Acquisition is in the interests of the 2 ergo Shareholders. Numis is acting as
financial adviser to 2 ergo in relation to the Acquisition but as Numis also has
a broking relationship with Broca, it is not deemed to be an independent adviser
in accordance with the City Code. RSM Bentley Jennison is therefore acting as
the independent financial adviser to 2 ergo in relation to the Acquisition
pursuant to Rule 3.2 of the City Code. The 2 ergo Independent Directors, having
been so advised by RSM Bentley Jennison, consider the terms of the Acquisition
to be fair and reasonable and in the best interests of 2 ergo Shareholders. In
providing advice to the 2 ergo Independent Directors, RSM Bentley Jennison has
taken into account the commercial assessments of the 2 ergo Independent
Directors.
Enquiries:
+----------------------------------------------------+----------------------+
| 2 ergo Group plc | Tel: +44 (0) 1706 |
| | 221 777 |
+----------------------------------------------------+----------------------+
| Neale Graham, Joint Chief Executive | |
+----------------------------------------------------+----------------------+
| Barry Sharples, Joint Chief Executive | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Numis Securities Limited (financial adviser, | Tel: +44 (0) 20 7260 |
| nominated adviser and broker to 2 ergo) | 1000 |
+----------------------------------------------------+----------------------+
| Stuart Skinner (as Nominated Adviser) | |
| David Poutney (as Corporate Broker) | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| RSM Bentley Jennison (financial adviser to 2 ergo) | Tel: +44 (0) 161 819 |
| | 3030 |
+----------------------------------------------------+----------------------+
| David Simmons | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Broca plc | Tel: +44 (0) 845 006 |
| | 6661 |
+----------------------------------------------------+----------------------+
| Ian Price, Chief Executive | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Grant Thornton UK LLP (financial adviser and | Tel: +44 (0) 20 7383 |
| nominated adviser to Broca) | 5100 |
+----------------------------------------------------+----------------------+
| Fiona Owen | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Littlejohn (financial adviser to Broca) | Tel: +44 (0) 20 7516 |
| | 2210 |
+----------------------------------------------------+----------------------+
| Claire Palmer | |
+----------------------------------------------------+----------------------+
In accordance with Rule 2.10 of the City Code, Broca confirms that it has
39,093,108 ordinary shares of 1 pence each in issue. The International
Securities Identification Number (ISIN) for Broca's ordinary shares is
GB00B1R2V686.
In accordance with Rule 2.10 of the City Code, 2 ergo confirms that is has
29,883,838 ordinary shares of 1 pence each in issue. The International
Securities Identification Number (ISIN) for 2 ergo's ordinary shares is
GB0034312214.
Numis, which is authorised and regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for 2 ergo and no-one else in
connection with the Acquisition and will not be responsible to anyone other than
2 ergo for providing the protections afforded to clients of Numis, nor for
providing advice in relation to the Acquisition, the content of this
announcement, or any matter referred to herein. Numis is 2 ergo's nominated
adviser for the purposes of the AIM Rules and as nominated adviser, its
responsibilities are owed solely to the London Stock Exchange and are not owed
to 2 ergo or any 2 ergo Director or any other entity or person.
RSM Bentley Jennison, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for 2 ergo and no one
else in connection with the Acquisition and will not be responsible to anyone
other than 2 ergo for providing the protections afforded to clients of RSM
Bentley Jennison nor for providing advice in relation to the Acquisition, the
contents of this announcement, or any matter referred to herein.
Grant Thornton UK LLP, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for Broca and no-one
else in connection with the Acquisition and will not be responsible to anyone
other than Broca for providing the protections afforded to clients of Grant
Thornton UK LLP nor for providing advice in relation to the Acquisition, the
content of this announcement, or any matter referred to herein. Grant Thornton
UK LLP is Broca's nominated adviser for the purposes of the AIM Rules and as
nominated adviser, its responsibilities are owed solely to the London Stock
Exchange and are not owed to Broca or any Director or any other entity or
person.
Littlejohn is acting exclusively for Broca and no-one else in connection with
the Acquisition and will not be responsible to anyone other than Broca for
providing the protections afforded to clients of Littlejohn nor for providing
advice in relation to the Acquisition, the contents of this announcement or any
matter referred to herein.
This announcement is not intended to and does not constitute or form any part
of, an offer to sell or an invitation to purchase or the solicitation of an
offer to subscribe for any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Acquisition or otherwise.
The distribution of this announcement in jurisdictions other than the UK may be
restricted by law and therefore any persons who are subject to the laws of any
jurisdiction other than the UK should inform themselves about, and observe any
applicable requirements. In particular, the Offer is not being made, directly or
indirectly, in the United States, Canada, Australia, the Republic of South
Africa or Japan. This announcement has been prepared for the purpose of
complying with English law and the City Code and the information disclosed may
not be the same as that which would have been disclosed if this announcement had
been prepared in accordance with the laws of jurisdictions outside England.
Dealing disclosure requirements
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes
"interested" (directly or indirectly) in one per cent. or more of any class of
"relevant securities" of Broca or 2 ergo, all dealings in any "relevant
securities" of that company (including by means of an option in respect of, or a
"derivative" referenced to, any such "relevant securities") must be publicly
disclosed by no later than 3.30 p.m. (London time) on the business day following
the date of the relevant transaction. This requirement will continue until the
Effective Date or until the date on which the Scheme lapses or is otherwise
withdrawn or on which the "Offer Period" otherwise ends. If two or more persons
act together pursuant to an agreement or understanding, whether formal or
informal, to acquire an "interest" in "relevant securities" of Broca or 2 ergo,
they will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant
securities" of 2 ergo or Broca by 2 ergo or Broca or by any of their respective
"associates" must also be disclosed by no later than 12.00 noon (London time) on
the business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" dealings should be disclosed and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should consult the Panel.
Forward-looking statements
This announcement contains statements about 2 ergo, Broca and the Enlarged Group
that are or may be forward looking statements. All statements other than
statements of historical facts included in this announcement may be forward
looking statements. Forward looking statements often use words such as "target",
"plan", "believe", "expect", "aim", "intend", "will", "should", "could",
"would", "may", "consider", "anticipate", "estimate", "synergy", "cost saving",
"project", "goal" or "strategy" or words or terms of similar substance or the
negative thereof. Forward looking statements include statements relating to the
following: (i) the expected timetable for implementing the Offer, future capital
expenditures, expenses, revenues, earnings, synergies, economic performance,
indebtedness, financial condition, dividend policy, losses and future prospects
of 2 ergo, Broca or the Enlarged Group; (ii) business and management strategies
and the expansion and growth of 2 ergo's, Broca's or the Enlarged Group's
operations and potential synergies resulting from the acquisition of Broca by 2
ergo; and (iii) the effects of government regulation on 2 ergo's, Broca's or the
Enlarged Group's business.
These forward looking statements are not guarantees of future performance. They
have not been reviewed by the auditors of 2 ergo or Broca. These forward looking
statements involve known and unknown risks, uncertainties and other factors
which may cause them to differ from the actual results, performance or
achievements expressed or implied by such forward looking statements. These
forward looking statements are based on numerous assumptions regarding the
present and future business strategies of such persons and the environment in
which each will operate in the future. Investors are cautioned not to place
undue reliance on the forward looking statements, which speak only as of the
date they were made. All subsequent oral or written forward looking statements
attributable to 2 ergo, Broca or the Enlarged Group or any of their respective
members, directors, officers or employees or any persons acting on their behalf
are expressly qualified in their entirety by the cautionary statement above. All
forward looking statements included in this announcement are based on
information available to 2 ergo and Broca on the date hereof. Undue reliance
should not be placed on such forward looking statements. Subject to compliance
with the City Code, neither Broca nor 2 ergo intends, or undertakes any
obligation, to update any information contained in this announcement.
APPENDIX A: CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE ACQUISITION
Part 1: Conditions to the Acquisition
The Acquisition is conditional upon the Scheme becoming unconditional and
effective by no later than the Long Stop Date, or such later date (if any) as,
subject to the requirements of the City Code, 2 ergo and Broca may agree and, if
required, the Court may allow.
1 The Scheme is subject to the following conditions:
(a)the Scheme is approved by a majority in number representing 75 per cent. or
more in value of the holders of Scheme Shares present and voting, either in
person or by proxy, at the Court Meeting or at any adjournment thereof;
(b)the resolutions required to approve and implement the Scheme being duly
passed by the requisite majority at the General Meeting or at any adjournment
thereof;
(c)the sanction (with or without modification, but subject to any modification
being on terms acceptable to Broca and 2 ergo) of the Scheme and the
confirmation of any reduction of capital involved therein by the Court and the
minute book of such reduction attached thereto being delivered to the Registrar
of Companies and, in relation to the reduction of capital, being registered by
him; and
(d)the passing at the 2 ergo AGM (or at any adjournment of such meeting) of such
resolutions as may be necessary to approve and effect the Acquisition and
implement the Scheme.
2 2 ergo and Broca have agreed that, subject to the provisions of paragraph 4
below, the Scheme is also conditional upon, and, accordingly, the necessary
actions to give effect to the Scheme will only be taken on, the satisfaction or
waiver of the following conditions:
(a)Admission of the New 2 ergo Shares becoming effective in accordance with the
AIM Rules or, if 2 ergo and Broca so determine and subject to the consent of the
Panel (if required), the London Stock Exchange agreeing to admit the New 2 ergo
Shares to AIM subject only to (i) the allotment of such shares and/or (ii) the
Scheme becoming effective;
(b)except as Disclosed, there being no provision of any agreement, arrangement,
licence, permit or other instrument to which any member of the wider Broca Group
is a party or by or to which any such member or any of its assets may be bound,
entitled or subject, which in consequence of the Acquisition or the proposed
acquisition of any shares or other securities in Broca by 2 ergo or because of a
change in the control or management of Broca or otherwise, could reasonably be
expected to result (in each case to an extent which is material in the context
of the wider Broca Group taken as a whole) in:
(i) any moneys borrowed by or any other indebtedness (actual or contingent)
of, or grant available to any member of the wider Broca Group, being or becoming
repayable or capable of being declared repayable immediately or earlier than
their or its stated maturity date or repayment date or the ability of any such
member to borrow moneys or incur any indebtedness being withdrawn or inhibited
or being capable of becoming or being withdrawn or inhibited;
(ii) any such agreement, arrangement, licence, permit or instrument or the
rights, liabilities, obligations or interests of any member of the wider Broca
Group thereunder being terminated or adversely modified or affected or any
obligation or liability arising or any adverse action being taken thereunder;
(iii) any assets or interests of any member of the wider Broca Group being or
falling to be disposed of or charged or ceasing to be available to such member
or any right arising under which any such asset or interest could be required to
be disposed of or charged otherwise than in the ordinary course of business;
(iv) the creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or assets of any
member of the wider Broca Group;
(v) the rights, liabilities, obligations or interests of any member of the
wider Broca Group in, or the business of any such member with, any person, firm
or body (or any arrangement or arrangements relating to any such interest or
business) being terminated, adversely modified or adversely affected;
(vi) the value of any member of the wider Broca Group or its financial or
trading position or prospects being materially prejudiced or materially
adversely affected;
(vii) any member of the wider Broca Group ceasing to be able to carry on
business under any name under which it presently does so; or
(viii) the creation of any liability, actual or contingent, by any member of
the wider Broca Group other than in the ordinary course of business,
and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
wider Broca Group is a party or by or to which any such member or any of its
assets may be bound, entitled or subject, would result in or could reasonably be
expected to result in any of the events or circumstances as are referred to in
sub-paragraphs (i) to (viii) of this condition 2(b) (in each case to an extent
which is material in the context of the wider Broca Group as a whole);
(c)no government or governmental, quasi-governmental, supranational, statutory,
regulatory, environmental or investigative body, court, trade agency,
association, institution or any other body or person whatsoever in any
jurisdiction (each a "Third Party") having decided to take, institute, implement
or threaten any action, proceeding, suit, investigation, enquiry or reference,
or enacted or made any statute, regulation, decision or order, or having taken
any other steps which would or could reasonably be expected to (in each case to
an extent which is material in the context of the wider Broca Group as a whole):
(i)require, prevent or delay the divestiture, or alter the terms envisaged for
any proposed divestiture by any member of the wider 2 ergo Group or any member
of the wider Broca Group of all or any portion of their respective businesses,
assets or property or impose any limitation on the ability of any of them to
conduct their respective businesses (or any of them) or to own any of their
respective assets or properties or any material part thereof;
(ii)require, prevent or delay the divestiture by any member of the wider 2 ergo
Group of any shares or other securities in Broca;
(iii)impose any limitation on, or result in a delay in, the ability of any
member of the wider 2 ergo Group directly or indirectly to acquire or to hold or
to exercise effectively any rights of ownership in respect of shares or loans or
securities convertible into shares or any other securities (or the equivalent)
in any member of the wider Broca Group or the wider 2 ergo Group or to exercise
management control over any such member;
(iv)impose any limitation on the ability of any member of the wider Broca Group
or the wider 2 ergo Group to integrate or co-ordinate the business of any member
of the wider 2 ergo Group, or any part of it, with that member of the wider
Broca Group and/or any other member of the wider 2 ergo Group;
(v)otherwise adversely affect the business, assets or profits of any member of
the wider Broca Group;
(vi)make the Acquisition or the Scheme or their implementation or the
acquisition or proposed acquisition by 2 ergo or any member of the wider 2 ergo
Group of any shares or other securities in, or control of, Broca void, illegal,
and/or unenforceable under the laws of any jurisdiction, or otherwise, directly
or indirectly, restrain, restrict, prohibit, delay or otherwise interfere with
the same, or impose additional conditions or obligations with respect thereto,
or otherwise challenge or interfere therewith; or
(vii)other than pursuant to the implementation of the Acquisition require any
member of the wider 2 ergo Group or the wider Broca Group to offer to acquire
any shares or other securities or interest in any member of the wider Broca
Group or the wider 2 ergo Group owned by any third party,
and all applicable waiting and other time periods during which any such Third
Party could institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference or any other step under the laws of any
jurisdiction in respect of the Acquisition having expired, lapsed or been
terminated;
(d)all necessary filings or applications having been made in connection with the
Acquisition and the Scheme and all statutory or regulatory obligations in any
jurisdiction having been complied with in all material respects in connection
with the Acquisition and the Scheme or the acquisition by any member of the
wider 2 ergo Group of any shares or other securities in, or control of, Broca
and all authorisations, orders, grants, consents, licences, confirmations,
clearances, permissions and approvals (collectively "Consents") reasonably
deemed necessary by 2 ergo for or in respect of, the Acquisition and the Scheme
or the proposed acquisition of any shares or other securities in, or control of,
Broca by any member of the wider 2 ergo Group having been obtained in terms and
in a form reasonably satisfactory to 2 ergo from all appropriate Third Parties
or persons with whom any member of the wider Broca Group has entered into
contractual arrangements in each case where the absence of such Consent would
have a material adverse effect on the wider Broca Group taken as a whole and all
such Consents together with all material Consents reasonably necessary to carry
on the business of any member of the wider Broca Group which is material
remaining in full force and effect and all filings reasonably necessary for such
purpose having been made and there being no notice or intimation of any
intention to revoke or not to renew any of the same at the time at which the
Acquisition and the Scheme otherwise become Effective and all necessary
statutory or regulatory obligations in any jurisdiction having been complied
with in all material respects;
(e)except as Disclosed, no member of the wider Broca Group having since 31
August 2008:
(i)save as between Broca and wholly-owned subsidiaries of Broca, issued,
authorised or proposed the issue of additional shares of any class;
(ii)save as between Broca and wholly-owned subsidiaries of Broca, issued or
agreed to issue, authorised or proposed the issue of securities convertible or
exchangeable into shares of any class or rights, warrants or options to
subscribe for, or acquire, any shares or such convertible securities;
(iii)other than to another member of the Broca Group, recommended, declared,
paid or made or proposed to recommend, declare, pay or make any dividend or
other distribution whether payable in cash or otherwise;
(iv)save for intra-Broca Group transactions, merged or demerged with any body
corporate or acquired or disposed of or transferred, mortgaged or charged or
created any security interest over any assets or any right, title or interest in
any asset (including shares and trade investments) or authorised or proposed or
announced any intention to propose any merger, demerger, acquisition, disposal,
transfer, mortgage, charge or security interest, in each case, other than in the
ordinary course of business and to an extent which is material in the context of
the Broca Group taken as a whole;
(v)save for intra-Broca Group transactions, made or authorised or proposed or
announced an intention to propose any change in its loan capital or issued,
authorised or proposed the issue of any debentures;
(vi)save for intra-Broca Group transactions and save in the ordinary course of
business, become subject to any guarantee or contingent liability;
(vii)save for intra-Broca Group transactions, purchased, redeemed or repaid or
announced any proposal to purchase, redeem or repay any of its own shares or
other securities or reduced or, save in respect of the reorganisation of Broca's
share capital in connection with the Scheme, made any other change to its share
capital;
(viii)entered into, implemented, authorised, proposed or announced its intention
to implement, any reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of business and
otherwise than in respect of this Scheme which in each case is material in the
context of the Broca Group taken as a whole;
(ix)save in the ordinary course of business entered into or varied or
authorised, proposed or announced its intention to enter into or vary any
contract, transaction or commitment (whether in respect of capital expenditure
or otherwise) which is of a long term, onerous or unusual nature or magnitude or
which is or could be reasonably likely to be materially restrictive on the
businesses of the wider Broca Group taken as a whole or the wider 2 ergo Group
taken as a whole or which involves or could involve an obligation of such a
nature or magnitude, and in each such case is or would be reasonably likely to
be material in the context of the Broca Group taken as a whole;
(x)entered into or varied or authorised, proposed or announced its intention to
enter into or vary any contract with any of the Directors, and in each such case
is or would be reasonably likely to be material in the context of the Broca
Group taken as a whole;
(xi)other than in respect of a member which is dormant and was solvent at the
relevant time, taken or proposed any corporate action or had any legal
proceedings started or threatened against it for its winding-up (voluntary or
otherwise), dissolution or reorganisation or for the appointment of a receiver,
administrative receiver, administrator, trustee or similar officer of all or any
of its assets or revenues or any analogous proceedings in any jurisdiction or
had any such person appointed which in each case is material in the context of
the Broca Group taken as a whole;
(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 the whole or a
substantial part of its business or entered into or proposed any composition or
voluntary arrangement with its creditors (or any class of them) or filed at
court any documentation in order to obtain a moratorium prior to any such
voluntary arrangement or, by reason of actual or anticipated financial
difficulties, commenced negotiations with one or more of its creditors with a
view to rescheduling any of its indebtedness;
(xiii)made, or announced any proposal to make, any material favourable change or
addition to any retirement, death or disability benefit or any other employment
related benefit of or in respect of any of its directors, employees, former
directors or former employees;
(xiv)other than in connection with the Scheme made any amendment to its
memorandum or articles of association;
(xv)waived or compromised any claim, or authorised any such waiver or
compromise, otherwise than in the ordinary course of business which in each case
is material in the context of the Broca Group as a whole; or
(xvi)entered into any contract, commitment, arrangement or agreement otherwise
than in the ordinary course of business or passed any resolution or made any
offer (which remains open for acceptance) with respect to or announced any
intention to, effect any of the transactions, matters or events referred to in
this condition 2(e),
and, for the purposes of sub-paragraphs (iii), (iv), (v), (vi), and (vii) of
this condition 2(e), the term "Broca Group" shall mean Broca and its
wholly-owned subsidiaries.
3 For the purposes of these conditions, the "wider Broca Group" means Broca
and its subsidiary undertakings, associated undertakings and any other
undertaking in which Broca and/or such undertakings (aggregating their
interests) have a significant interest and the "wider 2 ergo Group" means 2 ergo
and its subsidiary undertakings, associated undertakings and any other
undertaking in which 2 ergo and/or such undertakings (aggregating their
interests) have a significant interest, and for these purposes "subsidiary
undertaking" and "undertaking" have the meanings given by the 2006 Act, and
"associated undertaking" has the meaning given by the 1985 Act, other than
paragraph 20(1)(b) of Schedule 4A to the 1985 Act which shall be excluded for
this purpose, and "significant interest" means a direct or indirect interest in
10 per cent. or more of the equity share capital (as defined in that Act).
4 Subject to the requirements of the Panel or the Court, 2 ergo reserves the
right to waive, in whole or in part, all or any of the above conditions except,
save in the circumstances set out in Part 2 of Appendix A below, the conditions
in paragraph 1.
Part 2: Certain further terms of the Acquisition
1The Acquisition and the Scheme are governed by English law and are subject to
the jurisdiction of the English courts and to the terms and conditions set out
in this Appendix A.
2Subject to the consent of the Panel, 2 ergo reserves the right to elect to
implement the Acquisition by way of a contractual offer. In such event, such
offer will be implemented on the same terms (subject to appropriate amendments
including (without limitation) an acceptance condition set at 90 per cent. (or
such lower percentage not being less than 50 per cent. as 2 ergo may decide with
the consent of the Panel) of the shares to which the offer relates) so far as
applicable as those which would apply to the Scheme.
3Persons resident in, or citizens or nationals of, jurisdictions outside the UK,
or persons or custodians, nominees or trustees for citizens or nationals or
residents of jurisdictions outside the UK ("overseas persons") may be subject to
certain prohibitions or may be affected by the laws of the relevant overseas
jurisdiction. Such overseas persons should inform themselves about and observe
any applicable requirements.
APPENDIX B: IRREVOCABLE UNDERTAKINGS
The following Broca Independent Directors have given irrevocable undertakings to
vote in favour of the Scheme and the Resolutions at the Court Meeting and the
General Meeting.
+--------------------+--------------+--------------------+----------------------+
| Directors | | | |
+--------------------+--------------+--------------------+----------------------+
| Name | No. of | % of Broca's | % of Broca's issued |
| | Ordinary | issued share | share capital |
| | Shares | capital | expected to be in |
| | | | issue and entitled |
| | | | to vote at the Court |
| | | | Meeting and General |
| | | | Meeting |
+--------------------+--------------+--------------------+----------------------+
| Peter Harvey | 25,000 | 0.06% | 0.12% |
+--------------------+--------------+--------------------+----------------------+
| Roger Alexander | 10,000 | 0.03% | 0.05% |
+--------------------+--------------+--------------------+----------------------+
| Michael Hawkes | 731,706 | 1.87% | 3.48% |
+--------------------+--------------+--------------------+----------------------+
| Total | 766,706 | 1.96% | 3.65% |
+--------------------+--------------+--------------------+----------------------+
These irrevocable undertakings will remain binding in the event of a higher
competing offer being made for Broca, unless the Scheme lapses or is withdrawn.
The Broca Shareholder listed below has given an irrevocable undertaking to vote
in favour of the Scheme and the Resolutions at the Court Meeting and the General
Meeting.
+-------------------------+------------+------------+--------------------------+
| Institutional | | | |
| shareholder | | | |
+-------------------------+------------+------------+--------------------------+
| | | | |
+-------------------------+------------+------------+--------------------------+
| Irrevocable Undertaking | | | |
+-------------------------+------------+------------+--------------------------+
| Name | No. of | % of | % of Broca's issued |
| | Ordinary | Broca's | share capital expected |
| | Shares | issued | to be in issue and |
| | | share | entitled to vote at the |
| | | capital | Court Meeting and |
| | | | General Meeting |
+-------------------------+------------+------------+--------------------------+
| Majedie Investments plc | 2,920,000 | 7.47% | 13.90% |
+-------------------------+------------+------------+--------------------------+
This undertaking will lapse on the Scheme being withdrawn or lapsing or if the
Scheme does not proceed if, after release of this Announcement, either: the
Panel consents to 2 ergo not implementing the Scheme; an event occurs which
means that 2 ergo is no longer required by the City Code to implement the
Scheme; or 2 ergo becomes aware that any term or condition of the Scheme as set
out in this Announcement has or may become incapable of being fulfilled or
satisfied. In addition, if at any time prior to the Scheme becoming effective,
lapsing or being withdrawn, a third party makes a materially higher competing
offer to acquire the entire issued and to be issued share capital of Broca,
where material in respect of a higher competing offer means an offer which
exceeds the price per Broca Share offered under the Scheme by more than 10%,
this undertaking may be revoked by the above institutional shareholder serving
written notice on 2 ergo.
APPENDIX C: BASES OF CALCULATION AND SOURCES OF INFORMATION
(a) The value attributed to the entire issued share capital of Broca is based
upon the 39,093,108 Broca Shares in issue as at the date of this announcement.
(b) Unless otherwise stated, all prices for Broca Shares and 2 ergo Shares
have been derived from the AIM Appendix to the Daily Official List and represent
the Closing Prices on the relevant date.
(c) The financial information relating to 2 ergo is extracted from the
announcement by 2 ergo of its preliminary results for the year ended 31 August
2008, prepared in accordance with IFRS, announced on 19 November 2008.
APPENDIX D: RELEVANT SECURITIES OF BROCA AND 2 ERGO IN WHICH 2 ERGO, 2 ERGO
DIRECTORS AND THEIR RELATED PARTIES HAVE AN INTEREST OR RIGHT TO SUBSCRIBE
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| | | | | | | Legal | | Beneficial |
+------------+------------+---------+-----------+----------+--+------------------------+--+-----------------------+
| | Broca | % of | Broca | Exercise | | 2 ergo | % of 2 | | 2 ergo | % of 2 |
| | Shares | Broca's | share | price | | Shares | ergo's | | Shares | ergo's |
| | | issued | options | (GBP) | | | issued | | | issued |
| | | share | | | | | share | | | share |
| | | capital | | | | | capital | | | capital |
| | | | | | | | (net of | | | (net of |
| | | | | | | | treasury) | | | treasury) |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| 2 ergo | 7,487,542 | 19.15% | - | - | | - | - | | - | - |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| Neale | 4,797,711 | 12.27% | 500,000 | 0.52 | | 4,797,711 | 16.05% | | 2,597,711 | 8.69% |
| Graham | | | | | | | | | | |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| Barry | 4,797,711 | 12.27% | 500,000 | 0.52 | | 4,797,711 | 16.05% | | 2,597,711 | 8.69% |
| Sharples | | | | | | | | | | |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| Lammtara | 862,426 | 2.21% | - | - | | 705,861 | 2.36% | | 1,005,861 | 3.37% |
| Industries | | | | | | | | | | |
| EBT | | | | | | | | | | |
| Trustees | | | | | | | | | | |
| Limited | | | | | | | | | | |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| Keith | 798,725 | 2.04% | - | - | | 798,725 | 2.67% | | 798,725 | 2.67% |
| Seeley | | | | | | | | | | |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| Martin | 120,000 | 0.31% | - | - | | 120,000 | 0.40% | | 120,000 | 0.40% |
| Caller | | | | | | | | | | |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| Jill | 90,858 | 0.23% | 500,000 | 0.52 | | 90,858 | 0.30% | | 1,090,858 | 3.65% |
| Collighan | | | | | | | | | | |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| Total | 18,954,973 | 48.49% | 1,500,000 | | | 11,310,866 | 37.85% | | 8,210,866 | 27.48% |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| | | | | | | | | | | |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| Number | 39,093,108 | | | | | | | | | |
| of | | | | | | | | | | |
| Ordinary | | | | | | | | | | |
| Shares | | | | | | | | | | |
| in issue | | | | | | | | | | |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
| Number | 29,883,838 | | | | | | | | | |
| of 2 | | | | | | | | | | |
| ergo | | | | | | | | | | |
| shares | | | | | | | | | | |
| in issue | | | | | | | | | | |
+------------+------------+---------+-----------+----------+--+------------+-----------+--+-----------+-----------+
APPENDIX E: DEFINITIONS
The following definitions apply throughout this announcement unless the context
require otherwise:
+-------------------------+---------------------------------------------------+
| "1985 Act" | the Companies Act 1985, as amended; |
+-------------------------+---------------------------------------------------+
| "2006 Act" | the Companies Act 2006, as amended; |
+-------------------------+---------------------------------------------------+
| "2 ergo" | 2 ergo Group plc, a public limited company |
| | incorporated in England and Wales under |
| | registered number 05010663 whose registered |
| | office is situated at St Mary's Chambers, |
| | Haslingden Road, Rawtenstall, Lancashire BB4 6QX; |
+-------------------------+---------------------------------------------------+
| "2 ergo AGM" | the annual general meeting of 2 ergo to be held |
| | at 10 a.m. on 3 March 2009 (or any adjournment |
| | thereof) convened to consider and, if thought |
| | fit, approve such resolutions as may be necessary |
| | to approve and effect the Acquisition and |
| | implement the Scheme; |
+-------------------------+---------------------------------------------------+
| "2 ergo Board" or "2 | the directors of 2 ergo at the date of this |
| ergo Directors" | announcement; |
+-------------------------+---------------------------------------------------+
| "2 ergo Facility" | the loan made by 2 ergo Limited to Broca |
| | Communications Limited; |
+-------------------------+---------------------------------------------------+
| "2 ergo Group" | 2 ergo and its subsidiaries and subsidiary |
| | undertakings from time to time, or any of them, |
| | as the context requires; |
+-------------------------+---------------------------------------------------+
| "2 ergo Independent | the independent directors of 2 ergo: Martin |
| Directors" | Caller, Keith Seeley and Jill Collighan; |
+-------------------------+---------------------------------------------------+
| "2 ergo Share Capital | (i) any change to 2 ergo's share capital other |
| Change" | than any 2 ergo Shares purchased and cancelled |
| | pursuant to any existing repurchase facility, any |
| | 2 ergo Shares issued pursuant to 2 ergo share |
| | option schemes or any 2 ergo Shares issued |
| | following the conversion of securities |
| | convertible into 2 ergo Shares which are |
| | outstanding as at the date of the Scheme |
| | Document, or (ii) the making of an extraordinary |
| | distribution by 2 ergo (but excluding, for the |
| | avoidance of doubt, any dividends made in the |
| | ordinary course) in cash or specie other than in |
| | exchange for fair value in cash or specie; |
+-------------------------+---------------------------------------------------+
| "2 ergo Shareholders" | registered holders of 2 ergo Shares and "2 ergo |
| | Shareholder" means any one of them; |
+-------------------------+---------------------------------------------------+
| "2 ergo Shares" | ordinary shares of 1p each in the capital of 2 |
| | ergo and "2 ergo Share" means any one of them; |
+-------------------------+---------------------------------------------------+
| "Acquisition" | the proposed acquisition by 2 ergo of Broca by |
| | means of the Scheme; |
+-------------------------+---------------------------------------------------+
| "Admission" | the admission of the New 2 ergo Shares to trading |
| | on AIM in accordance with the AIM Rules; |
+-------------------------+---------------------------------------------------+
| "AIM" | the market of that name operated and regulated by |
| | the London Stock Exchange; |
+-------------------------+---------------------------------------------------+
| "AIM Rules" | the AIM rules for companies whose shares are |
| | admitted to trading on AIM published by the |
| | London Stock Exchange; |
+-------------------------+---------------------------------------------------+
| "Board" or "Directors" | the directors of Broca at the date of this |
| | announcement; |
+-------------------------+---------------------------------------------------+
| "Broca" | Broca plc, a public limited company incorporated |
| | in England and Wales under registered number |
| | 06079040 whose registered office is situated at |
| | St Mary's Chambers, Haslingden Road, Rawtenstall, |
| | Lancashire BB4 6QX; |
+-------------------------+---------------------------------------------------+
| "Broca Articles" | the articles of association of Broca in force |
| | from time to time; |
+-------------------------+---------------------------------------------------+
| "Broca Business" | inter alia the SMS/MMS, M-commerce and M-payment |
| | business carried on by the Broca Group as at the |
| | date of admission to trading on AIM; |
+-------------------------+---------------------------------------------------+
| "Broca Group" | Broca and its subsidiaries and subsidiary |
| | undertakings from time to time, or any of them, |
| | as the context requires; |
+-------------------------+---------------------------------------------------+
| "Broca Independent | the independent directors of Broca: Peter Harvey, |
| Directors" | Roger Alexander, Ian Price and Michael Hawkes; |
+-------------------------+---------------------------------------------------+
| "Broca Share Capital | (i) any change to Broca's share capital other |
| Change" | than any Ordinary Shares issued pursuant to any |
| | Broca Share Scheme, or (ii) the making of any |
| | distribution by Broca whether in cash or |
| | otherwise; |
+-------------------------+---------------------------------------------------+
| "Broca Share Options" | options over Ordinary Shares granted pursuant to |
| | the Broca Share Schemes; |
+-------------------------+---------------------------------------------------+
| "Broca Share Schemes" | the Broca plc Executive Share Option Scheme and |
| | the Broca plc EMI Scheme; |
+-------------------------+---------------------------------------------------+
| "Broca Shareholders" | the registered holders of Ordinary Shares and |
| | "Broca Shareholder" means any one of them; |
+-------------------------+---------------------------------------------------+
| "Capital Reduction" | the proposed reduction of share capital of Broca |
| | pursuant to the Scheme; |
+-------------------------+---------------------------------------------------+
| "City Code" | the City Code on Takeovers and Mergers; |
+-------------------------+---------------------------------------------------+
| "Closing Price" | the closing middle market quotations of an |
| | Ordinary Share or a 2 ergo Share as derived from |
| | the AIM Appendix of the Daily Official List (as |
| | the context requires); |
+-------------------------+---------------------------------------------------+
| "Conditions" | the conditions to the implementation of the |
| | Scheme and the Acquisition set out in Part 1 of |
| | Appendix A to this announcement and "Condition" |
| | means any one of them; |
+-------------------------+---------------------------------------------------+
| "Court" | the High Court of Justice in England and Wales; |
+-------------------------+---------------------------------------------------+
| "Court Meeting" | the meeting (including any adjournment thereof) |
| | of the Broca Shareholders convened by an order of |
| | the Court under section 896 of the 2006 Act, to |
| | consider, and if thought fit, vote on the Scheme, |
| | with or without notification; |
+-------------------------+---------------------------------------------------+
| "Court Orders" | the Scheme Court Order and the Reduction Court |
| | Order; |
+-------------------------+---------------------------------------------------+
| "CREST Regulations" | the Uncertified Securities Regulations 2001 (SI |
| | 2001) No. 3755); |
+-------------------------+---------------------------------------------------+
| "CREST" | a relevant system (as defined in the CREST |
| | Regulations) in respect of which Euroclear UK & |
| | Ireland Limited is operator (as defined in the |
| | CREST Regulations); |
+-------------------------+---------------------------------------------------+
| "Daily Official List" | the Daily Official List of the London Stock |
| | Exchange; |
+-------------------------+---------------------------------------------------+
| "Disclosed" | (i) disclosed in any public announcement by Broca |
| | to a Regulatory Information Service prior to 5 |
| | February 2009, (ii) disclosed in the annual |
| | report and accounts of Broca for the financial |
| | year ended 31 August 2008, or (iii) fairly |
| | disclosed in writing or in any documents |
| | delivered by or on behalf of Broca to 2 ergo or |
| | its advisers prior to 5 February 2009; |
+-------------------------+---------------------------------------------------+
| "Enlarged Group" | the 2 ergo Group as enlarged by the Acquisition; |
+-------------------------+---------------------------------------------------+
| "Effective" | the Scheme having become effective in accordance |
| | with its terms; |
+-------------------------+---------------------------------------------------+
| "Effective Date" | the date on which the Scheme becomes Effective |
| | (which is expected to be on 7 April 2009); |
+-------------------------+---------------------------------------------------+
| "Exchange Ratio" | the ratio of 0.0909 of a New 2 ergo Share for |
| | every 1 Scheme Share; |
+-------------------------+---------------------------------------------------+
| "Financial Services | the Financial Services Authority of the United |
| Authority" or "FSA" | Kingdom; |
+-------------------------+---------------------------------------------------+
| "General Meeting" | the general meeting of Broca (including any |
| | adjournment thereof) convened to consider and, if |
| | thought fit, approve the Special Resolution; |
+-------------------------+---------------------------------------------------+
| "Grant Thornton | a non-practicing, non-trading international |
| International" | umbrella organisation comprising a network of |
| | independent member and correspondent firms |
| | throughout the world. Grant Thornton |
| | International is not an |
| | international/global/worldwide partnership either |
| | in relation to all of the members collectively or |
| | any two or more members together. In particular, |
| | Grant Thornton UK LLP does not carry on business |
| | in the United States of America or Canada and is |
| | a separately owned and managed business from |
| | entities known as Grant Thornton LLP carrying on |
| | business in those territories; |
+-------------------------+---------------------------------------------------+
| "Grant Thornton UK LLP" | Grant Thornton UK LLP, limited liability |
| | partnership incorporated under registered number |
| | OC307742 whose registered office is situated at |
| | Grant Thornton House, Melton Street, Euston |
| | Square, London NW1 2EP and which is the UK member |
| | firm of Grant Thornton International; |
+-------------------------+---------------------------------------------------+
| "IFRS" | International Financial Reporting Standards as |
| | issued by the International Accounting Standard |
| | Board; |
+-------------------------+---------------------------------------------------+
| "Implementation | the agreement entered into between Broca and 2 |
| Agreement" | ergo dated 4 February 2009 in relation to the |
| | Acquisition; |
+-------------------------+---------------------------------------------------+
| "Littlejohn" | Littlejohn LLP, a limited liability partnership |
| | incorporated under registered number OC342572 |
| | whose registered office is situated at 1 |
| | Westferry Circus, Canary Wharf, London E14 4HD; |
+-------------------------+---------------------------------------------------+
| "London Stock Exchange" | London Stock Exchange plc; |
+-------------------------+---------------------------------------------------+
| "Long Stop Date" | 5 May 2009; |
+-------------------------+---------------------------------------------------+
| "M-payments" | mobile payments; |
+-------------------------+---------------------------------------------------+
| "Meetings" | together the Court Meeting and the General |
| | Meeting; |
+-------------------------+---------------------------------------------------+
| "New 2 ergo Shares" | the 2 ergo Shares proposed to be issued and |
| | credited as fully paid pursuant to the |
| | Acquisition and "New 2 ergo Share" means any one |
| | of them; |
+-------------------------+---------------------------------------------------+
| "New Broca Shares" | the new ordinary shares of 1p each in the capital |
| | of Broca to be issued in accordance the Scheme |
| | and "New Broca Share" means any one of them; |
+-------------------------+---------------------------------------------------+
| "Numis" | Numis Securities Limited, a private limited |
| | company incorporated in England and Wales under |
| | registered number 02285918 whose registered |
| | office is situated at 10 Paternoster Square, |
| | London, EC4M 7LT; |
+-------------------------+---------------------------------------------------+
| "Offer" | should 2 ergo elect to make the Acquisition by |
| | way of a contractual offer, that contractual |
| | offer for the shares in Broca made by 2 ergo, and |
| | where the context admits, any subsequent revision |
| | or variation of such offer which represents no |
| | diminution in the value of such offer; |
+-------------------------+---------------------------------------------------+
| "Offer Period" | the period commencing on 15 January 2008 until |
| | the later of the date of announcement that the |
| | Scheme has become Effective or that the Scheme |
| | has lapsed or been withdrawn; |
+-------------------------+---------------------------------------------------+
| "Ordinary Shares" | issued ordinary shares of 1p each in the capital |
| | of Broca and "Ordinary Share" means any one of |
| | them; |
+-------------------------+---------------------------------------------------+
| "Overseas Shareholders" | Broca Shareholders who have registered addresses |
| | outside the UK and "Overseas Shareholder" means |
| | any one of them; |
+-------------------------+---------------------------------------------------+
| "Panel" | The Panel on Takeovers and Mergers; |
+-------------------------+---------------------------------------------------+
| "pounds Sterling", | the lawful currency of the United Kingdom; |
| "GBP", "pence" or "p" | |
+-------------------------+---------------------------------------------------+
| "Protocol" | the Broca Group's communications standard (being |
| | the Broca Group's set of techniques for the |
| | transmission of data) which is intended to |
| | deliver secure guaranteed messaging between |
| | digital devices; |
+-------------------------+---------------------------------------------------+
| "Reduction Court | the hearing at which the Court's confirmation of |
| Hearing" | the reduction of capital provided for by the |
| | Scheme will be sought under section 137 of the |
| | 1985 Act; |
+-------------------------+---------------------------------------------------+
| "Reduction Court Order" | the order of the Court confirming under section |
| | 137 of the 1985 Act the reduction of capital |
| | provided for by the Scheme; |
+-------------------------+---------------------------------------------------+
| "Register of Members" | the register of members of Broca maintained by |
| | the Registrar on behalf of the Company; |
+-------------------------+---------------------------------------------------+
| "Registrar" | Computershare Investor Services PLC, a public |
| | limited company incorporated in England and Wales |
| | under registered number 3498808 whose registered |
| | office is situated at PO Box 1075, The Pavilion, |
| | Bridgwater Road, Bristol BS99 3FA; |
+-------------------------+---------------------------------------------------+
| "Registrar of | the Registrar of Companies in England and Wales; |
| Companies" | |
+-------------------------+---------------------------------------------------+
| "Regulatory Information | any of the services authorised from time to time |
| Service" or "RIS" | by the FSA for the purposes of disseminating |
| | regulatory announcements; |
+-------------------------+---------------------------------------------------+
| "Reorganisation Record | the time at which a certified copy of the Scheme |
| Time" | Court Order is delivered to the Registrar of |
| | Companies; |
+-------------------------+---------------------------------------------------+
| "Resolutions" | the resolution to be proposed at the Court |
| | Meeting to approve the Scheme and the Special |
| | Resolution; |
+-------------------------+---------------------------------------------------+
| "Scheme" or "Scheme of | the proposed scheme of arrangement under Part 26 |
| Arrangement" | of the 2006 Act between Broca and the Scheme |
| | Shareholders with any modification, addition or |
| | condition agreed by Broca and 2 ergo and which |
| | the Court may think fit to approve or impose; |
+-------------------------+---------------------------------------------------+
| "Scheme Court Hearing" | the hearing by the Court of the application to |
| | sanction the Scheme; |
+-------------------------+---------------------------------------------------+
| "Scheme Court Order" | the order of the Court sanctioning the Scheme |
| | under section 899 of the 2006 Act; |
+-------------------------+---------------------------------------------------+
| "Scheme Document" | the document to be sent to the Broca Shareholders |
| | containing and setting out the Scheme and the |
| | notices convening the Court Meeting and General |
| | Meeting; |
+-------------------------+---------------------------------------------------+
| "Scheme Record Time" | 6.00 p.m. on the business day immediately |
| | preceding the Reduction Court Hearing; |
+-------------------------+---------------------------------------------------+
| "Scheme Shareholders" | holders of Scheme Shares and "Scheme Shareholder" |
| | means any one of them; |
+-------------------------+---------------------------------------------------+
| "Scheme Shares" | the Ordinary Shares: |
| | (i) in issue at the date of the Scheme; |
| | (ii) issued after the date of the Scheme Document |
| | and prior to the Voting Record Time; and |
| | (iii) issued at or after the Voting Record Time |
| | but before the Scheme Record Time either on terms |
| | that the original or any subsequent holder |
| | thereof shall be bound by the Scheme or, in the |
| | case of any such shares issued prior to the |
| | adoption of the amendment to the Broca Articles |
| | to be adopted at the General Meeting, in respect |
| | of which the original or any subsequent holder |
| | thereof is, or shall have agreed in writing to |
| | be, bound by the Scheme, |
| | and "Scheme Share" means any one of them; |
+-------------------------+---------------------------------------------------+
| "SDRT" | Stamp Duty Reserve Tax; |
+-------------------------+---------------------------------------------------+
| "SMS" | Short Message Service; |
+-------------------------+---------------------------------------------------+
| "Special Resolution" | the special resolution to be proposed at the |
| | General Meeting to approve certain matters |
| | related to the Scheme; |
+-------------------------+---------------------------------------------------+
| "UK" or "United | the United Kingdom of Great Britain and Northern |
| Kingdom" | Ireland and its dependent territories; and |
+-------------------------+---------------------------------------------------+
| "Voting Record Time" | 6.00 p.m. on 11 March 2009 being the day which is |
| | two days before the date of the Court Meeting or, |
| | if such Court Meeting is adjourned, 6.00 p.m. on |
| | the day which is two days before such adjourned |
| | meeting. |
+-------------------------+---------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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