TIDMMDM
RNS Number : 1870C
MDM Engineering Group Ltd
13 March 2014
13 March 2014
THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR
PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF
SOUTH AFRICA OR NEW ZEALAND OR ANY JURISDICTION IN WHICH SUCH
PUBLICATION RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.
MDM Engineering Group Limited
("MDM Engineering", "MDM" or "the Company")
Recommended Takeover Offer from Foster Wheeler
Highlights
-- Recommended takeover offer from global engineering and construction group Foster Wheeler
-- Offer price of GBP1.70 cash per MDM share
-- Foster Wheeler to acquire all of the ordinary shares and
options in issue in a cash transaction of approximately GBP65.3
million (US$109 million)
-- Cash offer represents an attractive premium to recent share
price trading levels and provides realisation of value for MDM
shareholders
-- Shareholders representing 42.4% of the issued ordinary shares
of MDM have executed agreements under which they have agreed to
vote in favour of the Offer
-- Offer subject to MDM shareholder approval and other
conditions including competition approval
MDM Engineering Group Limited (AIM:MDM) is pleased to announce
that it has entered into a merger implementation agreement ("MIA")
with Foster Wheeler AG (Nasdaq: FWLT) ("Foster Wheeler") under
which Foster Wheeler's BVI subsidiary, Foster Wheeler M&M
Limited, will acquire all of the ordinary shares in MDM, subject to
MDM shareholder approval and certain other conditions (the "Offer",
the "Transaction" or the "Merger").
Under the terms of the Merger, MDM shareholders will be offered
GBP1.70 cash for each MDM share they hold (the "Offer Price").
The Offer Price of GBP1.70 cash per share represents:
-- A premium of 14.5% to MDM's closing price on 12 March 2014 of GBP1.485;
-- A premium of 17.4% to the 30-day VWAP prior to 12 March 2014 of GBP1.45; and
-- A premium of 17.3% to the 90-day VWAP prior to 12 March 2014 of GBP1.45.
Each of the directors of the MDM Board recommends to the MDM
shareholders that, in the absence of a superior proposal, which has
been defined in the MIA, they vote in favour of the Merger. Each of
the MDM directors who are shareholders in MDM has undertaken to
vote in favour of the Merger in respect of their own MDM shares
pursuant to their respective voting deeds.
MDM shareholders representing approximately 42.4% of the total
number of MDM shares in issue have executed voting deeds, pursuant
to which they undertake to vote in favour of any resolution
submitted to MDM shareholders for their approval in connection with
the Merger, provided that the MIA has not been terminated in
accordance with its terms (including in the event of a superior
proposal).
The Transaction is subject to certain conditions precedent
including obtaining MDM shareholder approval of the Merger at an
extraordinary general meeting of the Company ("EGM"), securing
required regulatory approvals (including clearances from the South
African Competition authority and the Tanzanian Fair Competition
Commission) and no material adverse changes or certain prescribed
events (as defined in the MIA) having occurred in relation to MDM's
business. A summary of the key terms of the MIA is set out in
Appendix I to this announcement.
The MIA also contains customary deal protection mechanisms,
including no shop and no talk provisions, a matching right for
Foster Wheeler in the event of a competing proposal and a mutual
break fee payable in certain circumstances of 1% of the aggregate
of the total consideration offered by Foster Wheeler to implement
the Merger (see paragraph 7 of Appendix I). The MIA also contains
customary restrictions on the conduct of MDM's business prior to
implementation of the Merger, which will take effect on the
issuance of a certificate of merger by the BVI Registrar of
Companies ("Registrar") following the filing of the Articles of
Merger with the Registrar ("Completion").
Foster Wheeler will also make an offer to acquire all
outstanding options held over the shares of MDM ("MDM Options").
The MDM Options shall be cancelled upon implementation of the
Merger and each option holder shall be paid cash consideration for
their MDM Options calculated in accordance with the formula set out
in Appendix I.
The Notice of EGM containing information relating to the
proposed Merger and details of the EGM is expected to be despatched
to MDM shareholders by the end of March 2014, with the EGM in
relation to the Merger expected to be held on or around 11 April
2014. Subject to the approval of the Merger by MDM shareholders and
timely satisfaction of the conditions precedent, MDM expects the
Transaction to be completed in late August 2014.
It is intended that, immediately following the implementation of
the Merger the admission to trading on the AIM Market of the London
Stock Exchange of MDM's ordinary shares will be cancelled. Further
details of the timetable for such cancellation will be advised in
due course.
As announced, on February 13, 2014 Foster Wheeler entered into a
definitive agreement with AMEC plc ("AMEC") concerning a possible
business combination of Foster Wheeler and AMEC. Foster Wheeler has
informed AMEC of the Transaction. Foster Wheeler does not expect
the Transaction to affect the timing of completion of the business
combination of Foster Wheeler and AMEC.
Commenting on the Transaction, MDM Chairman, Mr Bill Nairn said:
"The MDM Board view the offer from Foster Wheeler as providing MDM
shareholders with the certainty of 100% cash at a significant
premium to MDM's prevailing share price. Foster Wheeler is a
pre-eminent global engineering company and we believe that this
offer endorses the quality of the MDM business and its prospects in
Africa. "
Commenting on the Transaction, MDM Chief Executive Officer, Mr
Martin Smith said: "The merger with Foster Wheeler provides an
unparalleled opportunity for continued growth of MDM and its staff
via the ability to leverage Foster Wheeler's global network of
world class engineering specialists, systems and procedures, and
significant balance sheet strength. We see the merger as providing
MDM's employees and clients enhanced opportunities for ongoing
development and growth as well as an excellent opportunity for
shareholders to crystallise value at a significant premium."
Kent Masters, Foster Wheeler's Chief Executive Officer, said,
"MDM Engineering is a strong fit for Foster Wheeler's minerals and
metals strategy to enhance global capability and capacity."
Advisors
GMP Securities is acting as MDM's exclusive financial advisor in
relation to the Transaction.
Memery Crystal LLP and Carey Olsen are acting as MDM's legal
advisors in the United Kingdom and British Virgin Islands
respectively in relation to the Transaction.
Canaccord is MDM's Nominated Advisor and Broker.
Barclays is serving as exclusive financial advisor and Latham
& Watkins LLP and Conyers Dill & Pearman are serving as
legal advisors to Foster Wheeler.
Enquiries:
MDM Engineering Group Limited Tel: +27 11 993 4300
Martin Smith (CEO)
George Bennett (Executive Director)
Canaccord Genuity Limited Tel: +44 (0) 207 523 8000
Neil Elliot/Chris Fincken
Tavistock Communications Tel: +44 (0) 207 920 3150
Emily Fenton/Jos Simson
About Foster Wheeler
Foster Wheeler AG (Nasdaq: FWLT) is a global engineering and
construction company and power equipment supplier delivering
technically advanced, reliable facilities and equipment. The
company employs approximately 13,000 talented professionals with
specialized expertise dedicated to serving its clients through one
of its two primary business groups. The company's Global
Engineering and Construction Group designs and constructs
leading-edge processing facilities for the upstream oil and gas,
LNG and gas-to-liquids, refining, chemicals and petrochemicals,
power, minerals and metals, environmental, pharmaceuticals,
biotechnology and healthcare industries. The company's Global Power
Group is a world leader in combustion and steam generation
technology that designs, manufactures and erects steam generating
and auxiliary equipment for power stations and industrial
facilities and also provides a wide range of aftermarket services.
The company is based in Zug, Switzerland, and its operational
headquarters office is in Reading, United Kingdom. For more
information about Foster Wheeler, please see www.fwc.com.
Barclays Bank PLC, which is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority, is acting
exclusively for Foster Wheeler and no one else in connection with
the Transaction and will not be responsible to anyone other than
Foster Wheeler for providing the protections afforded to its
clients or for providing advice in relation to the Transaction or
in relation to the contents of this announcement or any transaction
or any other matters referred to herein.
About MDM:
MDM Engineering Group Limited is a minerals process and project
management company focused on the mining industry. The Company
provides a wide range of services from preliminary and final
feasibility studies, through to plant design, construction and
commissioning. To date, the Company's clients have largely been
junior and mid-tier mining corporations with operations in
Africa.
The MDM Engineering core technical team has a 25 year track
record of completing a wide range of studies and execution projects
across a variety of minerals, including precious metals, base
metals, ferrous and non-ferrous metals, uranium and diamonds.
The Company has adopted an approach to project execution based
on an open-book Engineering, Procurement, and Construction
Management ("EPCM") or "cost-plus" basis and on an Engineering,
Procurement and Construct ("EPC") basis. With a core focus on
Africa, MDM Engineering is setting the benchmark standard for best
practice in the mining services industry through its commitment to
providing the highest quality services and actively engaging with
clients to ensure maximum transparency.
MDM Engineering has a longstanding commitment to the safety of
its employees, contractors and clients which is embodied in its
Zero Harm approach to health and safety.
For more information about MDM, please see
www.mdm-engineering.com
This announcement contains 'forward-looking statements'
concerning MDM and Foster Wheeler that are subject to risks and
uncertainties. Generally, the words 'will', 'may', 'should',
'continue', 'believes', 'targets', 'plans', 'expects', 'aims',
'intends', 'anticipates' or similar expressions or negatives
thereof identify forward-looking statements. Forward looking
statements include statements relating to the following: (i) future
capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend
policy, losses and future prospects; (ii) business and management
strategies and the expansion and growth of MDM and Foster Wheeler's
operations and potential synergies resulting from the
Transaction.
These forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those
expressed in the forward-looking statements. Many of these risks
and uncertainties relate to factors that are beyond MDM and Foster
Wheeler's ability to control or estimate precisely, such as future
market conditions, changes in regulatory environment and the
behaviour of other market participants. Neither MDM nor Foster
Wheeler can give any assurance that such forward-looking statements
will prove to have been correct. The reader is cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date of this announcement. Neither MDM nor
Foster Wheeler undertakes any obligation to update or revise
publicly any of the forward-looking statements set out herein,
whether as a result of new information, future events or otherwise,
except to the extent legally required.
Nothing contained herein shall be deemed to be a forecast,
projection or estimate of the future financial performance of MDM,
Foster Wheeler or any other person following the implementation of
the Transaction or otherwise.
Canaccord Genuity Limited, which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting as
nominated adviser to the Company and no-one else in connection with
the arrangements referred to herein and will not be responsible to
anyone other than MDM Engineering Group Limited for providing the
protections afforded to the clients of Canaccord Genuity Limited or
for affording advice in relation to the contents of this
announcement or any matters referred to herein. Canaccord Genuity
Limited has not authorised the contents of, or any part of, this
announcement, is not making any representation or warranty, express
or implied, as to the contents of this announcement and nor shall
it have any liability whatsoever (in negligence or otherwise) for
any loss whatsoever arising from any use of this announcement, its
contents or otherwise arising in connection with this announcement
(including any omission of any information from this announcement).
Nothing in this paragraph shall serve to exclude or limit any
responsibilities which Canaccord Genuity Limited may have under
FSMA or the regulatory regime established thereunder.
Appendix I - Key Terms of Merger Implementation Agreement
Key terms of the Merger Implementation Agreement dated 12 March
2014 between Foster Wheeler Limited ("Foster Wheeler"), Foster
Wheeler M&M Limited ("FW BVI") (a wholly owned subsidiary of
Foster Wheeler) and MDM Engineering Group Limited ("MDM")
("MIA").
1 Introduction
1.1 The MIA sets out the terms on which FW BVI will acquire MDM
by way of a merger under the provisions of the BVI Business
Companies Act 2004 (as amended) ("BVI Act") ("Merger"), and the
obligations of the parties with respect to the implementation of
the Merger. Foster Wheeler has agreed to guarantee the obligations
of FW BVI under the MIA.
2 Merger Consideration
The Merger consideration payable to MDM shareholders under the
MIA is as follows:
(1) each issued share of MDM shall be cancelled in exchange for
payment of cash consideration of GBP1.70 per MDM share; and
(2) each share option held under the MDM Global Share Option
Plan shall be cancelled upon Completion and each option holder
shall be paid cash consideration calculated in accordance with
following formula:
C = ((A - E) x N) - T
where
C = Option Cancellation Consideration
A = Merger Consideration (per share)
E = exercise price per share of each share under that MDM
Option
N = the number of MDM Shares that may be validly purchased on
exercise of that MDM Option
T = the tax and social security liability that arises on
cancellation of that MDM Option, to the extent that payment of such
tax or social security liability would be for the account of MDM,
or to the extent that MDM is otherwise required to withhold such
tax or social security liability under applicable law.
MDM will enter into deeds of release and cancellation with each
option holder to effect the release and cancellation.
3 Conditions Precedent
There are a number of both customary and specific conditions
precedent which need to be satisfied before the Merger will be
implemented. The key conditions to the Merger are as follows:
(1) Regulatory Approvals - All required regulatory approvals
being received including approval by the South African Competition
Commission and the Tanzanian Fair Competition Commission.
(2) Merger Approval - MDM shareholder approval being obtained by
the requisite majority (set out in section 5 below).
(3) The issued and outstanding MDM Options having been
surrendered or cancelled by each MDM Optionholder entering into an
option release.
(4) No MDM prescribed events or material adverse change events having occurred.
(5) Working Capital - The working capital and cash position of
MDM being maintained at certain agreed levels.
Please note that the list above is not exhaustive.
4 Voting Agreements
MDM, Foster Wheeler and FW BVI have entered into Voting
Agreements with certain Key Shareholders. Under those agreements,
the Key Shareholders have irrevocably agreed to vote all of their
MDM shares in favour of the Merger at the MDM shareholder meeting
in consideration for receiving the Merger Consideration. The Voting
Agreements will terminate on termination of the MIA (including in
the event of a superior proposal).
5 MDM Shareholder Approval of the Plan of Merger
5.1 The Merger must be authorised by a special resolution of MDM
shareholders entitled to vote on the Merger (a resolution passed by
a majority of in excess of 75% of the votes of those MDM
shareholders entitled to vote and voting on the MDM resolution). If
the requisite percentage approves the Merger, the remaining
shareholders will effectively be deemed to have consented to the
Merger and will be compelled to participate.
5.2 Notice of the EGM, accompanied by a copy of the Plan of
Merger, must be given to each MDM shareholder, whether or not
entitled to vote on the Merger, at least 14 days prior to the date
of the meeting.
6 Exclusivity
Under the MIA, MDM has agreed to certain restrictions during the
Exclusivity Period (being the period from the date of the MIA to
the earlier of termination of the MIA and the date following seven
months after the date of the MIA including not to:
(1) make, solicit, initiate, encourage or promote (including by
way of furnishing information, permitting any visit to facilities
or properties of the MDM Group) any inquiries or proposals
regarding, constituting or that may reasonably be expected to lead
to an acquisition proposal or potential acquisition proposal or
communicate to any person an intention to do any of these
things;
(2) enter into, restart or facilitate, continue or participate,
directly or indirectly, in any discussions or negotiations
regarding, or furnish to any person any information or otherwise
co-operate with, respond to, assist or participate in, any
acquisition proposal or potential acquisition proposal even if the
acquisition proposal was:
(a) not directly or indirectly solicited; or
(b) publicly announced;
(3) accept, enter into, or propose publicly to accept or enter
into, any agreement, understanding or arrangement related to any
acquisition proposal or potential acquisition proposal; or
(4) make any public announcement or take any other action inconsistent with the Merger.
However some of these obligations are subject to the right of
the MDM board to consider, and if thought fit approve (i.e. change
their recommendation in relation to the Foster Wheeler offer) a
superior proposal, as defined in the MIA.
7 Reimbursement of costs/Break Fee
Under the MIA, the parties have agreed that, in certain
circumstances, either Foster Wheeler or MDM may be required to
reimburse the other, for certain costs incurred, up to an amount
equal to 1% of the Merger Consideration ("the Break Fee").
The Break Fee will be payable by MDM if (for example) it changes
its recommendation of the Foster Wheeler offer, in the event of a
successful hostile bid, and in the event of a definitive agreement
regarding a superior proposal.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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