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RNS Number : 5520B
Kyowa Hakko Kirin Co., Ltd
21 February 2011
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
21 February 2011
RECOMMENDED CASH ACQUISITION
OF
PROSTRAKAN GROUP PLC
BY
KYOWA HAKKO KIRIN CO., LTD.
Summary of the Acquisition
l The boards of Kyowa Hakko Kirin Co., Ltd. ("KHK") and
ProStrakan Group plc ("ProStrakan") are pleased to announce that
they have reached agreement on the terms of the recommended cash
acquisition by KHK (or by a wholly-owned subsidiary of KHK) of the
entire issued and to be issued share capital of ProStrakan (the
"Acquisition").
l Under the terms of the Acquisition, ProStrakan Shareholders
will be entitled to receive 130 pence in cash for each ProStrakan
Share, valuing the entire issued and to be issued ordinary share
capital of ProStrakan at approximately GBP292 million (Yen39,420
million).
l The price of 130 pence per ProStrakan Share represents a
premium of approximately:
-- 41 per cent. to the closing price of 92.5 pence per
ProStrakan Share on 12 November 2010, being the last business day
immediately prior to the start of ProStrakan's current offer
period; and
-- 100 per cent. to 64.9 pence, being the volume weighted
average closing price per ProStrakan Share over the 6 months prior
to 12 November 2010, being the last business day immediately prior
to the start of ProStrakan's current offer period.
l Based in Galashiels, UK, ProStrakan is a fast-growing
specialty pharmaceutical company engaged in the development and
commercialisation of prescription medicines for the treatment of
unmet therapeutic needs in major markets. ProStrakan's development
capabilities are centred in Galashiels and Bedminster, New Jersey,
US. Sales and marketing of ProStrakan's portfolio of products are
handled by commercial subsidiaries in the UK, US, France, Germany,
Spain, Italy and other EU countries.
l The Acquisition would represent a new opportunity for
ProStrakan's continued development and could, through the
complementary nature of ProStrakan and KHK, in terms of products,
geography and infrastructure, allow ProStrakan to grow at a faster
pace and to offer to patients and clinicians across Europe and the
US, in time, a broader range of medicines.
l KHK, based in Tokyo, Japan was incorporated on 1 July 1949
under the name of Kyowa Hakko Kogyo Co., Ltd. Following its merger
with Kirin Pharma Co., Ltd in October 2008, KHK established itself
as an R&D-based global specialty pharmaceutical company. KHK is
dedicated to the creation of new value in the life sciences,
especially in its core business segments of Pharmaceuticals and
Bio-Chemicals, and strives to contribute to the health and
well-being of people around the world.
l KHK believes that the Acquisition would represent a key
strategic milestone in KHK's development and could:
l provide KHK with an established European and US marketing and
sales platform, together with a portfolio of proprietary products.
ProStrakan's strong management team and talented and motivated
sales force would be able to assist with the launch and marketing
of KHK's key pipeline products, including therapeutic antibodies,
in the European and US markets;
l enhance KHK's existing clinical development capabilities with
ProStrakan's solid track record of successful new drug approvals
and regulatory expertise in the US and Europe;
l allow KHK to leverage the clinical, regulatory, and marketing
expertise of ProStrakan for certain medicines whose regional rights
are already partially held by KHK; and
l reinforce KHK's expertise in utilising cutting-edge
biotechnologies, based mainly on antibody engineering technology,
to create new pharmaceuticals in the core therapeutic areas of
oncology, nephrology and immunology/allergy.
l It is intended that the Acquisition will be implemented by way
of a Court sanctioned scheme of arrangement under sections 895 to
899 of the Companies Act, further details of which are contained in
the full text of this announcement.
l The ProStrakan Directors, who have been so advised by J.P.
Morgan Cazenove and Numis, consider the terms of the Acquisition to
be fair and reasonable. In providing their advice to the ProStrakan
Directors, J.P. Morgan Cazenove and Numis have taken into account
the commercial assessments of the ProStrakan Directors. For the
purposes of Rule 3 of the Code, J.P. Morgan Cazenove is deemed not
to be sufficiently independent of KHK and, accordingly, Numis is
providing the independent financial advice to the ProStrakan
Directors on the Acquisition for such purposes.
l Accordingly, the ProStrakan Directors unanimously recommend
that ProStrakan Shareholders vote in favour of the Scheme, as the
ProStrakan Directors have irrevocably undertaken to do in respect
of their entire holdings, of, in aggregate, 279,880 ProStrakan
Shares, representing as at the Announcement Date approximately 0.14
per cent. of the existing issued share capital of ProStrakan.
l KHK has also received irrevocable undertakings from certain
institutional shareholders, Warburg Pincus, Aberforth, LMS Capital
and Schroders, to vote or procure the vote in favour of the Scheme
in respect of holdings or shares over which they have discretionary
voting control (as applicable) representing, in aggregate,
approximately 47.57 per cent. of the existing issued share capital
of ProStrakan. KHK has therefore received total irrevocable
undertakings in respect of ProStrakan Shares representing
approximately 47.71 per cent. of the existing issued share capital
of ProStrakan, further details of which are set out in Appendix III
to this announcement.
l The Acquisition will be put to ProStrakan Shareholders at the
Meetings. In order to become effective, the Scheme must be approved
by a majority in number of the holders of Scheme Shares present and
voting at the Court Meeting, either in person or by proxy,
representing not less than 75 per cent. in value of the Scheme
Shares held by such ProStrakan Shareholders. In addition, a special
resolution implementing the Scheme and approving the related
reduction of capital must be passed by ProStrakan Shareholders
representing at least 75 per cent. of the votes cast at the
ProStrakan General Meeting. A special resolution will also be
proposed at the ProStrakan General Meeting to approve related
amendments to the articles of association of ProStrakan.
l It is expected that the Scheme Document will be posted to
ProStrakan Shareholders in March 2011, that the Meetings will be
held in April 2011 and that the Scheme will become effective by
early June 2011, subject to the satisfaction of regulatory and all
other relevant conditions, including the Conditions as set out in
Appendix I to this announcement.
Commenting on today's announcement, Yuzuru Matsuda, President
and CEO of KHK, said:
"We are delighted that the board of ProStrakan is today
unanimously recommending our offer to its shareholders. The
combination of KHK and ProStrakan represents a highly attractive
and strategically complementary fit. This transaction provides KHK
with ProStrakan's established sales and marketing platform in the
US and Europe, strengthening our global business and future growth
prospects. We look forward to working with ProStrakan's highly
skilled team to contribute to worldwide human health and well-being
through innovative drug discovery and global
commercialisation."
Commenting on today's announcement, Peter Allen, Chairman and
Acting Chief Executive of ProStrakan, said:
"The board of ProStrakan is confident that this offer is in the
best interests of ProStrakan's shareholders, our staff and our
partners. The fit between ProStrakan and KHK is unmistakeable in
terms of products, geography and infrastructure and we believe that
the price being offered by KHK fully values ProStrakan's ongoing
growth prospects. We are enthused by KHK's plans for the business
and, in particular, with its intentions regarding ProStrakan's
infrastructure in Europe and the US. As previously announced,
ProStrakan has received a number of approaches, with varying levels
of conditionality, and has been evaluating these over the past few
months. As a result of this process, the ProStrakan Directors
consider that the Acquisition proposed by KHK is the one which is
in the best interests of shareholders and, as a result, have
unanimously recommended it to the ProStrakan Shareholders."
BofA Merrill Lynch is acting as sole financial adviser and
corporate broker to KHK. J.P. Morgan Cazenove is acting as lead
financial adviser and joint corporate broker to ProStrakan. Numis
is acting as Rule 3 adviser and joint corporate broker to
ProStrakan.
This summary should be read in conjunction with, and is subject
to, the full text of the announcement and the Appendices. The
Acquisition will be subject to the conditions and further terms set
out in Appendix I to the full announcement. Appendix II to this
announcement contains the bases and sources of certain information
contained in this announcement. Appendix III to this announcement
contains details of the irrevocable undertakings that have been
provided to KHK. Appendix IV to this announcement contains a
description of the principal terms of the Implementation Agreement.
Appendix V contains the definitions of certain terms used in this
summary and the full announcement.
Enquiries:
KYOWA HAKKO KIRIN CO., LTD. Telephone: +81 3 3282
Tetsuro Kuga, General Manager, Corporate 0009
Communications
Yasuhiro Yamamoto, Corporate Communications
BOFA MERRILL LYNCH Telephone: +81 3 6225
(Sole Financial Adviser and Corporate 7000
Broker to KHK) Telephone: +44 20 7996
Tokyo 1000
Akihiko Manaka
Isana Endo
London
Rupert Hill
Glenn Rewick
PROSTRAKAN GROUP PLC Telephone: +44 189 666
Peter Allen, Chairman and Acting Chief 4000
Executive
Allan Watson, Chief Financial Officer
Callum Spreng, Corporate Communications
J.P. Morgan Cazenove Telephone: +44 20 7742
(Lead Financial Adviser and Joint Corporate 4000
Broker to ProStrakan)
John Muncey
Dwayne Lysaght
Gina Gibson
NUMIS Telephone: + 44 20 7260
(Rule 3 Adviser and Joint Corporate Broker 1000
to ProStrakan)
Michael Meade
James Black
BRUNSWICK Telephone: +44 20 7404
(Public Relations Adviser to ProStrakan) 5959
Jon Coles
Justine McIlroy
BofA Merrill Lynch is acting exclusively for KHK and no-one else
in connection with the Acquisition and will not be responsible to
anyone other than KHK for providing the protections afforded to
clients of BofA Merrill Lynch or for providing advice in relation
to the Acquisition or any other matter referred to in this
announcement.
J.P. Morgan Cazenove, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting
exclusively for ProStrakan and no one else in connection with the
Acquisition and will not be responsible to anyone other than
ProStrakan for providing the protections afforded to clients of
J.P. Morgan Cazenove or for providing advice in connection with the
Acquisition or any matter referred to in this announcement.
Numis Securities Limited, which is authorised and regulated in
the United Kingdom by the Financial Services Authority, is acting
exclusively for ProStrakan and no-one else in connection with the
Acquisition and will not be responsible to anyone other than
ProStrakan for providing the protections afforded to clients of
Numis Securities Limited or for providing advice in connection with
the Acquisition or any other matter referred to in this
announcement.
This announcement is not intended to, and does not, constitute
or form part of an offer to sell, or otherwise dispose of, or
constitute an invitation or the solicitation of an offer to
purchase, subscribe for or otherwise acquire any securities or the
solicitation of any vote or approval in any jurisdiction, pursuant
to the Acquisition or otherwise nor shall there be any sale,
issuance or transfer of securities of ProStrakan in any
jurisdiction in contravention of applicable law. The Acquisition
will be made solely by means of the Scheme Document, which will
contain the full terms and conditions of the Acquisition (including
details of how to vote in respect of the Scheme). Any vote in
respect of the Scheme or other response to the Acquisition should
be made only on the basis of the information contained in the
Scheme Document. ProStrakan Shareholders are advised to read the
formal documentation in relation to the Acquisition carefully, once
it has been dispatched.
Please be aware that addresses, electronic addresses and certain
other information provided by ProStrakan Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from ProStrakan may be provided to KHK during the
offer period as required under Section 4 of Appendix 4 of the
Code.
This announcement has been prepared for the purpose of complying
with English and Scots law, the Listing Rules, the rules of the
London Stock Exchange and the 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 the United Kingdom. The release, publication
or distribution of this announcement in certain jurisdictions may
be restricted by law. Persons who are not resident in the United
Kingdom or who are subject to other jurisdictions should inform
themselves of, and observe, any applicable requirements. Any
failure to comply with the applicable restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law, the companies and
persons involved in the Acquisition disclaim any responsibility or
liability for the violation of such restrictions by any person.
Shareholders in the United States should note that the Scheme
relates to the shares of a company incorporated in Scotland and
will be governed by Scots law. Neither the proxy solicitation nor
the tender offer rules under the US Securities Exchange Act of
1934, as amended, will apply to the Scheme. Moreover, the Scheme
will be subject to the disclosure requirements and practices and
procedures applicable to schemes of arrangement under Scots Law,
which differ from the disclosure and procedural requirements of the
US proxy solicitation rules and tender offer rules. Financial
information included in this announcement and the Scheme
documentation has been or will have been prepared in accordance
with IFRS and may not be comparable to financial information of US
companies or companies whose financial statements are prepared in
accordance with US GAAP.
The Acquisition will not be made, directly or indirectly, in,
into or from any jurisdiction where to do so would violate the laws
in that jurisdiction (a "Restricted Jurisdiction"), and the
Acquisition will not be capable of acceptance from or within a
Restricted Jurisdiction. Accordingly, copies of this announcement
and all documents relating to the Acquisition are not being, and
must not be, directly or indirectly, mailed or otherwise forwarded
(including, without limitation, by telex, facsimile transmission,
telephone, internet or other forms of electronic communication),
distributed or sent in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction, and
persons receiving this announcement and all documents relating to
the Acquisition (including custodians, nominees and trustees) must
not mail or otherwise distribute or send them in, into or from such
jurisdictions as doing so may invalidate any purported acceptance
of the Acquisition. The availability of the Acquisition to
ProStrakan Shareholders who are not resident in the United Kingdom
may be affected by the laws of the relevant jurisdictions in which
they are resident. Persons who are not resident in the United
Kingdom should inform themselves of, and observe, any applicable
requirements. Further details in relation to overseas shareholders
will be contained in the Scheme Document.
ProStrakan will prepare the Scheme Document to be distributed to
ProStrakan Shareholders. ProStrakan and KHK urge ProStrakan
Shareholders to read the Scheme Document when it becomes available
because it will contain important information relating to the
Acquisition.
No listing authority or equivalent has reviewed, approved or
disapproved of this announcement or any of the proposals described
herein.
Forward Looking Statements
This announcement contains statements about KHK and ProStrakan
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. Without limitation, any
statements preceded or followed by or that include the words
"targets", "plans" "believes", "expects", "aims"," intends",
"will", "may", "anticipates", "estimates", "projects" or, words or
terms of similar substance or the negative thereof, are forward
looking statements. Forward looking statements include statements
relating to the following: statements relating to the expected
benefits of the acquisition to KHK, background and reasons for the
offer, expectations of the impact of the acquisition on revenue and
earnings of KHK, information on the prospects of KHK or ProStrakan
future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, and future prospects.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any forward
looking statements, including risks relating to the successful
integration of ProStrakan with KHK; higher than anticipated costs
relating to the integration of ProStrakan or investment required in
ProStrakan to realise expected benefits and facts relating to
ProStrakan that may impact the timing or amount of benefit realised
from the acquisition that are unknown to KHK. Due to such
uncertainties and risks, readers are cautioned not to place undue
reliance on such forward looking statements, which speak only as of
the date hereof. KHK and ProStrakan disclaim any obligation to
update any forward looking or other statements contained herein,
except as required by applicable law.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Code, if any person is,
or becomes, "interested" (directly or indirectly) in 1 per cent. or
more of any class of "relevant securities" of ProStrakan, all
"dealings" in any "relevant securities" of ProStrakan (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 date on which the Scheme becomes effective or
lapses 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 ProStrakan, 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 Code, all "dealings" in
"relevant securities" of ProStrakan by KHK or ProStrakan, or by any
of their respective "associates", must 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 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, please contact an independent financial adviser authorised under
the Financial Services and Markets Act 2000, consult the Panel's
website at www.thetakeoverpanel.org.uk or contact the Panel on
telephone number +44 (0) 20 7638 0129; fax +44 (0) 20 7236
7013.
Rule 2.10 disclosure
In accordance with Rule 2.10 of the Code, the current issued
share capital of ProStrakan comprises 202,311,080 ordinary shares
of GBP0.05 each. The ISIN number for the ordinary shares is
GB00B09STF21.
Publication on websites
In accordance with Rule 19.11 of the Code, a copy of this
announcement will be available on KHK's website
(www.kyowa-kirin.co.jp) and ProStrakan's website
(www.prostrakan.com) by no later than 12 noon on 22 February
2011.
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
21 February 2011
RECOMMENDED CASH ACQUISITION
OF
PROSTRAKAN GROUP PLC
BY
KYOWA HAKKO KIRIN CO., LTD.
1. Introduction
The boards of Kyowa Hakko Kirin Co., Ltd. ("KHK") and ProStrakan
Group plc ("ProStrakan") are pleased to announce that they have
reached agreement on the terms of the recommended cash acquisition
by KHK (or by a wholly-owned subsidiary of KHK) of the entire
issued and to be issued share capital of ProStrakan (the
"Acquisition").
BofA Merrill Lynch is acting as sole financial adviser and
corporate broker to KHK. J.P. Morgan Cazenove is acting as lead
financial adviser and joint corporate broker to ProStrakan. Numis
is acting as Rule 3 adviser and joint corporate broker to
ProStrakan.
2. The Acquisition
Under the terms of the Acquisition, ProStrakan Shareholders will
be entitled to receive:
for each ProStrakan Share 130 pence in cash
The Acquisition values the entire issued and to be issued
ordinary share capital of ProStrakan at approximately GBP292
million (Yen39,420 million).
The Acquisition represents a premium of approximately:
-- 41 per cent. to the closing price of 92.5 pence per
ProStrakan Share on 12 November 2010, being the last business day
immediately prior to the start of ProStrakan's current offer
period; and
-- 100 per cent. to 64.9 pence, being the volume weighted
average closing price per ProStrakan Share over the 6 months prior
to 12 November 2010, being the last business day immediately prior
to the start of ProStrakan's current offer period.
It is intended that the Acquisition will be implemented by way
of a Court sanctioned scheme of arrangement under sections 895 to
899 of the Companies Act, further details of which are contained in
section 10 below.
It is expected that the Scheme Document will be posted in March
2011, that the Meetings will be held in April 2011 and that the
Scheme will become effective by early June 2011.
The Acquisition will be subject to the conditions and further
terms set out in Appendix I to this announcement and to be set out
in the Scheme Document.
3. Background to and reasons for the Acquisition
KHK owns and develops a large and attractive portfolio of
pipeline products in various therapeutic areas of unmet medical
needs, such as oncology. One of KHK's key strategic objectives is
to maximise returns from its late stage pipeline products through
the establishment of a direct sales and marketing presence in the
US and Europe, two of the world's largest prescription
pharmaceutical markets.
KHK's flagship late stage pipeline product is a humanised
defucosylated monoclonal antibody, which was discovered in-house
and is effective for patients with certain hematologic cancers. In
Japan, the antibody has completed necessary clinical trials and is
due to be filed this spring with an anticipated launch in Japan in
2012. In the US, phase I/II clinical trials have been completed and
the next steps are to be discussed.
The Acquisition will provide KHK with a US platform, where KHK
currently has no sales and marketing presence, and will
significantly enhance its European offering, where KHK currently
has a modest sales and marketing footprint. KHK believes that the
acquisition of ProStrakan's scalable sales and marketing platform
in oncology related areas will help to fulfil its strategic
objective of realising the full benefits from the expected launch
of its therapeutic antibody and other forthcoming pipeline
products. In addition, KHK believes that ProStrakan's solid track
record of successful new drug approvals and regulatory expertise in
the US and Europe will enhance KHK's existing clinical development
activities.
The Acquisition will provide KHK with additional rights to
medicines whose regional rights are already partially held by KHK,
including the long-acting anti-emetic transdermal patch (US brand
name: Sancuso) for which KHK has rights in Taiwan, Hong Kong,
Singapore and Malaysia, and the transmucosal tablet for the
management of breakthrough cancer pain (US and European brand name:
Abstral) for which KHK is currently conducting phase III clinical
trials in Japan. This will enable KHK to leverage ProStrakan's
clinical and marketing expertise in these medicines.
Finally, KHK believes that the Acquisition will reinforce KHK's
expertise in utilising cutting-edge biotechnologies, based mainly
on antibody engineering technology, to create new pharmaceuticals
in the core therapeutic areas of oncology, nephrology and
immunology/allergy.
KHK expects that the impact of the Acquisition on KHK's cash EPS
(earnings per share before amortisation of goodwill) to be neutral
in 2011 and accretive in 2012, the first full year following the
Acquisition.
4. Recommendation
The ProStrakan Directors, who have been so advised by J.P.
Morgan Cazenove and Numis, consider the terms of the Acquisition to
be fair and reasonable. In providing their advice to the ProStrakan
Directors, J.P. Morgan Cazenove and Numis have taken into account
the commercial assessments of the ProStrakan Directors. For the
purposes of Rule 3 of the Code, J.P. Morgan Cazenove is deemed not
to be sufficiently independent of KHK and, accordingly, Numis is
providing the independent financial advice to the ProStrakan
Directors on the Acquisition for such purposes.
The ProStrakan Directors consider the terms of the Acquisition
to be in the best interests of ProStrakan Shareholders as a whole.
Accordingly, the ProStrakan Directors intend unanimously to
recommend that ProStrakan Shareholders vote in favour of the Scheme
and the ProStrakan Resolutions as the ProStrakan Directors have
irrevocably undertaken to do in respect of their entire holdings
of, in aggregate, 279,880 ProStrakan Shares, representing as at the
Announcement Date, approximately 0.14 per cent. of the existing
issued share capital of ProStrakan.
5. Background to and reasons for the recommendation
ProStrakan is a fast-growing, international speciality
pharmaceutical company. This has been achieved through the
acquisition and/or development of high value medicines that treat
unmet therapeutic needs. ProStrakan's initial expansion across
Europe came through a combination of organic growth and targeted
acquisitions. Following expansion into the US in 2008 with the
launch of Sancuso, ProStrakan now has an established infrastructure
and sales presence across both Europe and the US, supported by a
portfolio of proprietary products. The ProStrakan Directors believe
that ProStrakan is in a strong position to continue its growth
trajectory, particularly following the launch of Abstral across
Europe and the approvals of both Abstral and its partnered product,
Fortesta, in the US.
The ProStrakan Directors believe that the Acquisition, at a
significant premium to ProStrakan's current and recent share price,
fully recognises and values the growth potential of the business
through the ongoing pursuit of its current strategy. The ProStrakan
Directors also recognise that the businesses of ProStrakan and KHK
clearly complement one another, in terms of products, geography and
infrastructure, and that this could allow ProStrakan to grow at a
faster pace and to offer to patients and clinicians across Europe
and the US, in time, a broader range of medicines. Consequently,
the ProStrakan Directors believe that the Acquisition is in the
best interests of ProStrakan Shareholders as a whole and, as a
result, have unanimously recommended that the ProStrakan
Shareholders vote in favour of the Scheme and the ProStrakan
Resolutions.
The ProStrakan Directors also welcome the comments from KHK
regarding the value that it places on the skills and experience of
the existing management and employees of ProStrakan and its
intentions regarding the use of ProStrakan's infrastructure.
6. Irrevocable undertakings
KHK has received irrevocable undertakings from each of the
ProStrakan Directors to vote or procure the vote in favour of the
Scheme in respect of their own holdings, representing approximately
0.14 per cent. of the existing issued share capital of
ProStrakan.
KHK has also received irrevocable undertakings from certain
institutional shareholders, Warburg Pincus, Aberforth, LMS Capital
and Schroders, to vote or procure the vote in favour of the Scheme
in respect of holdings or shares over which they have discretionary
voting control (as applicable), representing approximately 47.57
per cent. of the existing issued share capital of ProStrakan.
KHK has therefore received total irrevocable undertakings in
respect of ProStrakan Shares representing approximately 47.71 per
cent. of the existing issued share capital of ProStrakan.
Further details of these irrevocable undertakings are set out in
Appendix III to this announcement.
7. Information on KHK
KHK, based in Tokyo, Japan was incorporated on 1 July 1949 under
the name of Kyowa Hakko Kogyo Co., Ltd. Following its merger with
Kirin Pharma Co., Ltd. in October 2008, KHK established itself as
an R&D-based global specialty pharmaceutical company. KHK is
dedicated to the creation of new value in the life sciences,
especially in its core business segments of Pharmaceuticals and
Bio-Chemicals, and strives to contribute to the health and
well-being of people around the world.
For the financial year ended 31 December 2010 KHK reported net
sales of Yen413,738 million (2009*: Yen407,017 million) and net
income of Yen22,197 million (2009(*) : Yen10,040 million) and had
total assets of Yen695,862 million. KHK is listed on the Tokyo
Stock Exchange and as at 18 February 2011 had a market
capitalisation of approximately Yen497,505 million. KHK's financial
results are reported under Financial Instruments and Exchange Law
of Japan and in conformity with generally accepted accounting
principles and practices prevailing in Japan which differ from
financial reporting standards adopted by the European Union
(IFRS).
8. Information on ProStrakan
Based in Galashiels, UK, ProStrakan is a fast-growing specialty
pharmaceutical company engaged in the development and
commercialisation of prescription medicines for the treatment of
unmet therapeutic needs in major markets. The company's development
capabilities are centred in Galashiels and Bedminster, New Jersey,
US. Sales and marketing of ProStrakan's portfolio of products are
handled by commercial subsidiaries in the UK, US, France, Germany,
Spain, Italy and other EU countries.
For the year ended 31 December 2009, ProStrakan reported
revenues from continuing operations of GBP79.0 million (2008:
GBP56.1 million) and net loss of GBP15.8 million (2008: loss of
GBP25.1 million) and had total assets as at that date of GBP78.1
million.
9. Current trading and prospects of the ProStrakan Group
On 10 January 2011, ProStrakan released its pre-close trading
update for the 12 months ended 31 December 2010. Since 31 December
2010, ProStrakan's trading has proceeded in line with ProStrakan
management's expectations.
10. Structure of the Acquisition
It is intended that the Acquisition will be effected by way of a
Court sanctioned scheme of arrangement under sections 895 to 899 of
the Companies Act. The Scheme is an arrangement between ProStrakan
and the Scheme Shareholders and is subject to the approval of the
Court.
The purpose of the Scheme is to provide for KHK (or a
wholly-owned subsidiary of KHK) to become the owner of the entire
issued and to be issued ordinary share capital of ProStrakan. This
is to be achieved by the cancellation of the Scheme Shares held by
ProStrakan Shareholders and the application of the reserve arising
from such cancellation in paying up in full new ProStrakan Shares
and issuing them to KHK (or a wholly-owned subsidiary of KHK), in
consideration for which Scheme Shareholders will receive cash on
the basis set out in section 2 of this announcement.
The Scheme requires the approval of Scheme Shareholders by the
passing of a resolution at the Court Meeting, expected to be held
in April 2011. The resolution must be approved by a majority in
number of the Scheme Shareholders present and voting, either in
person or by proxy, representing not less than 75 per cent. in
value of the ProStrakan Shares held by such Scheme Shareholders.
Implementation of the Scheme will also require the passing of the
ProStrakan Resolutions (requiring the approval of ProStrakan
Shareholders representing at least 75 per cent. of the votes cast
at the ProStrakan General Meeting, which will be held immediately
after the Court Meeting). In respect of the ProStrakan Resolutions,
the ProStrakan Shareholders will be entitled to cast one vote for
each ProStrakan Share held.
Following the Meetings, the Scheme and the related reduction of
ProStrakan's share capital must be sanctioned and confirmed
respectively by the Court and will only become effective upon
delivery to the Registrar of Companies in Scotland of certified
copies of the Scheme Court Order (sanctioning the Scheme) and of
the Reduction Court Order with the requisite statement of capital
attached thereto (confirming the reduction of share capital of
ProStrakan forming part of the Scheme) and, if so ordered by the
Court, the registration of the Reduction Court Order and statement
of capital by the Registrar of Companies in Scotland. Upon the
Scheme becoming effective, it will be binding on all ProStrakan
Shareholders, irrespective of whether or not they attended or voted
at the Court Meeting or the ProStrakan General Meeting (and if they
attended and voted, whether or not they voted in favour).
Further details of the Scheme will be contained in the Scheme
Document which is expected to be posted to ProStrakan Shareholders
in March 2011. It is anticipated that the Scheme will become
effective by early June 2011, subject to the satisfaction of
regulatory and all other relevant conditions. The Scheme is subject
to certain conditions and certain further terms referred to in
Appendix I of this announcement and to be set out in the Scheme
Document. Further details on the timetable for the implementation
of the Scheme will be set out in the Scheme Document.
KHK reserves the right, subject to the prior consent of the
Panel, to elect to implement the acquisition of the ProStrakan
Shares by way of a takeover offer (as such term is defined in
section 974 of the Companies Act). In such event, such takeover
offer will be implemented on the same terms (subject to appropriate
amendments as described in Part 2 of Appendix I), so far as
applicable, as those which would apply to the Scheme. Furthermore,
if sufficient acceptances of such offer are received and/or
sufficient ProStrakan Shares are otherwise acquired, it is the
intention of KHK to apply the provisions of section 979 of the
Companies Act to acquire compulsorily any outstanding ProStrakan
Shares to which such offer relates.
11. Management and employees
KHK attaches great importance to the skills and experience of
the existing management and employees of ProStrakan. KHK intends
and has given assurances to the ProStrakan Directors that, upon the
Acquisition becoming effective, the existing contractual and
statutory employment rights and pension rights of all employees of
ProStrakan will be fully safeguarded.
KHK's plans do not involve any material changes to the terms of
employment of ProStrakan employees. KHK intends to use ProStrakan's
infrastructure to establish a direct sales and marketing presence
in the US and Europe. While these plans represent KHK's current
intentions, KHK reserves its rights to reorganise the enlarged
group as its strategy evolves.
12. ProStrakan Share Plans and ProStrakan Warrants
The Acquisition will extend to any ProStrakan Shares
unconditionally allotted or issued before the Scheme Record Time
(or until such earlier date as, subject to the Code, KHK may
decide), including those allotted or issued as a result of the
exercise of options or the vesting of awards under the ProStrakan
Share Plans or the exercise of the warrants under the ProStrakan
Warrants.
Appropriate proposals will be made, on or shortly after the date
of the Scheme Document, to the participants in the ProStrakan Share
Plans (including certain compensation proposals for participants
with unvested options and awards granted under ProStrakan's
Executive Share Option Plan, Performance Share Plan and Sharesave
Plans) and the holders of the ProStrakan Warrants.
13. Amendments to Articles of Association
It is proposed to amend the articles of association of
ProStrakan at the ProStrakan General Meeting to provide that, if
the Scheme becomes effective, any ProStrakan Shares issued on or
after the Scheme Effective Date will automatically be transferred
to KHK in exchange for the acquisition price of 130 pence per
ProStrakan Share in cash on the same basis as under the Scheme.
Consequently, participants in the ProStrakan Share Plans or holders
of ProStrakan Warrants who exercise any options or warrants after
the Scheme becomes effective will receive the same cash
consideration as the holders of Scheme Shares who receive the
acquisition price of 130 pence per ProStrakan Share under the
Scheme.
14. Financing
The cash consideration payable by KHK under the terms of the
Acquisition will be funded using KHK's existing cash resources.
BofA Merrill Lynch, financial adviser and corporate broker to
KHK, is satisfied that sufficient resources are available to KHK to
satisfy the full cash consideration payable under the terms of the
Acquisition.
Paladin Labs Inc. has agreed that the debt facility that it
provides (through one of its wholly-owned subsidiaries) to
ProStrakan can be repaid in full immediately following the
Acquisition.
15. Delisting and re-registration
It is intended that dealings in ProStrakan Shares will be
suspended at 5.00 p.m. (London time) on the business day prior to
the Scheme Effective Date. It is further intended that upon or
shortly after the Scheme Effective Date, the London Stock Exchange
will be requested to cancel trading in ProStrakan Shares on the
London Stock Exchange's market for listed securities and the UK
Listing Authority will be requested to cancel the listing of the
ProStrakan Shares from the Official List.
On the Scheme Effective Date, share certificates in respect of
the ProStrakan Shares will cease to be valid and should be
destroyed. In addition, entitlements to ProStrakan Shares held
within the CREST system will be cancelled on the Scheme Effective
Date.
As soon as possible after the Scheme Effective Date, it is
intended that ProStrakan will be re-registered as a private limited
company.
16. Implementation Agreement
ProStrakan and KHK have entered into an Implementation Agreement
which contains, amongst other things, certain obligations and
commitments in relation to implementation of the Acquisition. A
brief summary of the provisions relating to the inducement fee
arrangement, non-solicitation undertaking and right to match, as
contained in the Implementation Agreement, is set out in Appendix
IV to this announcement. Further information regarding this
agreement will be set out in the Scheme Document. The arrangements
relating to the inducement fee have been approved by the Panel.
17. Disclosure of interests in ProStrakan
Except as disclosed below, as at 17 February 2011, the last
practicable date before this announcement, and save for the
irrevocable undertakings referred to in paragraph 6 above, neither
KHK nor any KHK Directors nor, so far as KHK is aware, any party
acting in concert with KHK, has any interest in, or right to
subscribe for, any ProStrakan Shares or any ProStrakan securities,
nor does any such person have any short position (whether
conditional or absolute and whether in the money or otherwise)
including short positions under derivatives or arrangements in
relation to ProStrakan securities. For these purposes,
"arrangement" includes any indemnity or option arrangement or any
agreement or understanding, formal or informal, of whatever nature,
relating to ProStrakan securities which may be an inducement to
deal or refrain from dealing in such securities. In the interests
of secrecy prior to this announcement, KHK has not made any
enquiries in this respect of the matters referred to in this
paragraph of certain parties who may be deemed by the Panel to be
acting in concert with them for the purposes of the Scheme.
Enquiries of such parties will be made as soon as practicable
following the date of this announcement and any material disclosure
in respect of such parties will be included in the Scheme
Document.
Party Interest in ProStrakan securities
BofA Merrill Lynch Long 1,505,681
Short 1,500,000
Net 5,681
18. General
The Acquisition will be made on the terms and subject to the
conditions and further terms set out herein and in Appendix I to
this announcement and to be set out in the Scheme Document. The
Scheme Document will include full details of the Scheme, together
with notices of the Meetings. The Scheme Document will be
dispatched to ProStrakan Shareholders in due course. The
Acquisition will be subject to the applicable requirements of the
Code, the Panel, the London Stock Exchange and the Financial
Services Authority.
Appendix I to this announcement contains the conditions and
further terms relating to the Acquisition. Appendix II to this
announcement contains the bases and sources of certain information
contained in this announcement. Appendix III to this announcement
contains details of the irrevocable undertakings that have been
provided to KHK. Appendix IV to this announcement contains a
description of the principal terms of the Implementation Agreement.
Appendix V contains the definitions of certain terms used in this
announcement.
Enquiries:
KYOWA HAKKO KIRIN CO., LTD. Tetsuro Telephone: +81 3 3282
Kuga, General Manager, Corporate 0009
Communications Yasuhiro Yamamoto,
Corporate Communications
BOFA MERRILL LYNCH Telephone: +81 3 6225
(Sole Financial Adviser and Corporate 7000
Broker to KHK) Telephone: +44 20 7996
Tokyo 1000
Akihiko Manaka
Isana Endo
London
Rupert Hill
Glenn Rewick
PROSTRAKAN GROUP PLC Peter Allen, Telephone: +44 189 666
Chairman and Acting Chief Executive 4000
Allan Watson, Chief Financial Officer
Callum Spreng, Corporate
Communications
J.P. Morgan Cazenove (Lead Financial Telephone: +44 20 7742
Adviser and Joint Corporate Broker to 4000
ProStrakan) John Muncey Dwayne Lysaght
Gina Gibson
NUMIS (Rule 3 Adviser and Joint Telephone: +44 20 7260
Corporate Broker to ProStrakan) Michael 1000
Meade James Black
BRUNSWICK (Public Relations Adviser to Telephone: +44 20 7404
ProStrakan) Jon Coles Justine McIlroy 5959
* As stated in KHK's financial statements for the financial year
ending 31 December 2010, as a result of the change in KHK's fiscal
year end, the figures used for the 1 January 2009 to 31 December
2009 results (for comparison with the 2010 results) are the sum of
i) the figures of the three month period from 1 January 2009 to 31
March 2009, obtained by subtracting figures from the nine month
period (1 April 2009 to 31 December 2009) from the figures for the
twelve month period to 31 March 2009, and ii) the figures from the
first quarter of the fiscal year ending 31 December 2009.
Further information
This announcement is not intended to, and does not, constitute
or form part of an offer to sell, or otherwise dispose of, or
constitute an invitation or the solicitation of an offer to
purchase, subscribe for or otherwise acquire any securities or the
solicitation of any vote or approval in any jurisdiction, pursuant
to the Acquisition or otherwise nor shall there be any sale,
issuance or transfer of securities of ProStrakan in any
jurisdiction in contravention of applicable law. The Acquisition
will be made solely by means of the Scheme Document, which will
contain the full terms and conditions of the Acquisition (including
details of how to vote in respect of the Scheme). Any vote in
respect of the Scheme or other response to the Acquisition should
be made only on the basis of the information contained in the
Scheme Document. ProStrakan Shareholders are advised to read the
formal documentation in relation to the Acquisition carefully, once
it has been dispatched.
Please be aware that addresses, electronic addresses and certain
other information provided by ProStrakan Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from ProStrakan may be provided to KHK during the
offer period as required under Section 4 of Appendix 4 of the
Code.
This announcement has been prepared for the purpose of complying
with English and Scots law, the Listing Rules, the rules of the
London Stock Exchange and the 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 the United Kingdom. The release, publication
or distribution of this announcement in certain jurisdictions may
be restricted by law. Persons who are not resident in the United
Kingdom or who are subject to other jurisdictions should inform
themselves of, and observe, any applicable requirements. Any
failure to comply with the applicable restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law, the companies and
persons involved in the Acquisition disclaim any responsibility or
liability for the violation of such restrictions by any person.
Shareholders in the United States should note that the Scheme
relates to the shares of a company incorporated in Scotland and
will be governed by Scots law. Neither the proxy solicitation nor
the tender offer rules under the US Securities Exchange Act of
1934, as amended, will apply to the Scheme. Moreover, the Scheme
will be subject to the disclosure requirements and practices and
procedures applicable to schemes of arrangement under Scots Law,
which differ from the disclosure and procedural requirements of the
US proxy solicitation rules and tender offer rules. Financial
information included in this announcement and the Scheme
documentation has been or will have been prepared in accordance
with IFRS and may not be comparable to financial information of US
companies or companies whose financial statements are prepared in
accordance with US GAAP.
The Acquisition will not be made, directly or indirectly, in,
into or from any jurisdiction where to do so would violate the laws
in that jurisdiction (a "Restricted Jurisdiction"), and the
Acquisition will not be capable of acceptance from or within a
Restricted Jurisdiction. Accordingly, copies of this announcement
and all documents relating to the Acquisition are not being, and
must not be, directly or indirectly, mailed or otherwise forwarded,
(including without limitation by telex, facsimile transmission,
telephone, internet or other forms of electronic communication)
distributed or sent in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction, and
persons receiving this announcement and all documents relating to
the Acquisition (including custodians, nominees and trustees) must
not mail or otherwise distribute or send them in, into or from such
jurisdictions as doing so may invalidate any purported acceptance
of the Acquisition.
The availability of the Acquisition to ProStrakan Shareholders
who are not resident in the United Kingdom may be affected by the
laws of the relevant jurisdictions in which they are resident.
Persons who are not resident in the United Kingdom should inform
themselves of, and observe, any applicable requirements. Further
details in relation to overseas shareholder will be contained in
the Scheme Document.
BofA Merrill Lynch is acting exclusively for KHK and no-one else
in connection with the Acquisition and will not be responsible to
anyone other than KHK for providing the protections afforded to
clients of BofA Merrill Lynch or for providing advice in relation
to the Acquisition or any other matter referred to in this
announcement.
J.P. Morgan Cazenove, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting
exclusively for ProStrakan and no one else in connection with the
Acquisition and will not be responsible to anyone other than
ProStrakan for providing the protections afforded to clients of
J.P. Morgan Cazenove or for providing advice in connection with the
Acquisition or any matter referred to in this announcement.
Numis Securities Limited, which is authorised and regulated in
the United Kingdom by the Financial Service Authority, is acting
exclusively for ProStrakan and no-one else in connection with the
Acquisition and will not be responsible to anyone other than
ProStrakan for providing the protections afforded to clients of
Numis Securities Limited or for providing advice in connection with
the Acquisition or any other matter referred to in this
announcement.
ProStrakan will prepare the Scheme Document to be distributed to
ProStrakan Shareholders. ProStrakan and KHK urge ProStrakan
Shareholders to read the Scheme Document when it becomes available
because it will contain important information relating to the
Acquisition.
No listing authority or equivalent has reviewed, approved or
disapproved of this announcement or any of the proposals described
herein.
Forward Looking Statements
This announcement contains statements about KHK and ProStrakan
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. Without limitation, any
statements preceded or followed by or that include the words
"targets", "plans", "believes", "expects", "aims", "intends",
"will", "may", "anticipates", "estimates", "projects" or, words or
terms of similar substance or the negative thereof, are forward
looking statements. Forward looking statements include statements
relating to the following: statements relating to the expected
benefits of the acquisition to KHK, background and reasons for the
offer, expectations of the impact of the acquisition on revenue and
earnings of KHK, information on the prospects of KHK or ProStrakan
future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, and future prospects.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any forward
looking statements, including risks relating to the successful
integration of ProStrakan with KHK; higher than anticipated costs
relating to the integration of ProStrakan or investment required in
ProStrakan to realise expected benefits and facts relating to
ProStrakan that may impact the timing or amount of benefit realised
from the acquisition that are unknown to KHK. Due to such
uncertainties and risks, readers are cautioned not to place undue
reliance on such forward looking statements, which speak only as of
the date hereof. KHK and ProStrakan disclaim any obligation to
update any forward looking or other statements contained herein,
except as required by applicable law.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Code, if any person is,
or becomes, "interested" (directly or indirectly) in 1 per cent. or
more of any class of "relevant securities" of ProStrakan, all
"dealings" in any "relevant securities" of ProStrakan (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 date on which the Scheme becomes effective or
lapses 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 ProStrakan, 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 Code, all "dealings" in
"relevant securities" of ProStrakan by KHK or ProStrakan, or by any
of their respective "associates", must 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 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, please contact an independent financial adviser authorised under
the Financial Services and Markets Act 2000, consult the Panel's
website at www.thetakeoverpanel.org.uk or contact the Panel on
telephone number +44 (0) 20 7638 0129; fax +44 (0) 20 7236
7013.
Rule 2.10 disclosure
In accordance with Rule 2.10 of the Code, the current issued
share capital of ProStrakan comprises 202,311,080 ordinary shares
of GBP0.05 each. The ISIN number for the ordinary shares is
GB00B09STF21.
Publication on websites
In accordance with Rule 19.11 of the Code, a copy of this
announcement will be available on KHK's website
(www.kyowa-kirin.co.jp) and ProStrakan's website
(www.prostrakan.com) by no later than 12 noon on 22 February
2011.
APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE SCHEME AND THE
ACQUISITION
Part 1
CONDITIONS OF THE ACQUISITION
1. The Acquisition will be conditional upon the Scheme becoming
unconditional and becoming effective subject to the Code, by no
later than 1 July 2011 or such later date (if any) as KHK and
ProStrakan may, with the consent of the Panel, agree and (if
required) the Court may approve.
2. The Scheme will be conditional upon:
(a) approval by a majority in number representing not less than
75 per cent. in value of the Scheme Shareholders (or the relevant
class or classes thereof, if applicable) present and voting, either
in person or by proxy, at the Court Meeting and at any separate
class meeting which may be required by the Court or at any
adjournment of any such meeting;
(b) all resolutions necessary to approve and implement the
Scheme being duly passed by the requisite majority or majorities at
the ProStrakan General Meeting or at any adjournment of the
ProStrakan General Meeting; and
(c) the sanction of the Scheme with or without modification (but
subject to any such modification being acceptable to ProStrakan and
KHK) by the Court, the confirmation of the Reduction of Capital by
the Court, the delivery of certified copies of the Scheme Court
Order and of the Reduction Court Order (with the requisite
statement of capital attached thereto) to the Registrar of
Companies in Scotland and, if so ordered by the Court in order to
take effect, the registration of the Reduction Court Order (and
statement of capital) by the Registrar of Companies in
Scotland.
3. In addition, KHK and ProStrakan have agreed that the
Acquisition will be conditional upon the following Conditions and,
accordingly, the necessary actions to make the Scheme effective
will not be taken unless the following Conditions (as amended if
appropriate) have been satisfied or, where relevant, waived:
(a) no government or governmental, quasi-governmental,
supranational, statutory, administrative or regulatory body or
association, institution or agency (including any trade agency) or
any court or other body (including any professional or
environmental body) or person in any jurisdiction (each a "Relevant
Authority") having decided to take, instituted or threatened any
action, proceeding, suit, investigation, enquiry or reference or
enacted, made or proposed and there not continuing to be
outstanding any statute, regulation, order or decision that would
or might be reasonably expected to:
(i) make the Acquisition or its implementation or the
acquisition or the proposed acquisition of any shares in, or
control of, ProStrakan by KHK or any member of the Wider KHK Group
void, unenforceable or illegal or directly or indirectly prohibit
or otherwise materially restrict, delay or interfere with the
implementation of, or impose material additional conditions or
obligations with respect to, or otherwise challenge, the
Acquisition or its implementation or the acquisition or the
proposed acquisition of any shares in, or control of, ProStrakan by
KHK or any member of the Wider KHK Group;
(ii) require, prevent or materially delay the divestiture (or
alter the terms of any proposed divestiture) by any member of the
Wider KHK Group or the Wider ProStrakan Group of all or any
substantial part of their respective businesses, assets or
properties or impose any material limitation on their ability to
conduct all or any part of their respective businesses and to own
any of their respective assets or properties;
(iii) impose any material limitation on, or result in any
material delay in, the ability of any member of the Wider KHK Group
to acquire or hold or to exercise effectively, directly or
indirectly, all or any rights of ownership of shares or other
securities (or the equivalent) in, or to exercise management
control over, any member of the Wider ProStrakan Group or on the
ability of any member of the Wider ProStrakan Group to hold or
exercise effectively, directly or indirectly, all or any rights of
ownership of shares or other securities (or the equivalent) in, or
to exercise management control over, any other member of the Wider
ProStrakan Group;
(iv) except pursuant to sections 974 to 991 of the Companies
Act, require any member of the Wider KHK Group or of the Wider
ProStrakan Group to acquire or offer to acquire any shares or other
securities (or the equivalent) in any member of the Wider
ProStrakan Group or any member of the Wider KHK Group;
(v) impose any material limitation on the ability of any member
of the Wider KHK Group or the Wider ProStrakan Group to integrate
or co-ordinate its business, or any part of it, with the businesses
or any part of the businesses of any other member of the Wider KHK
Group and/or the Wider ProStrakan Group; or
(vi) otherwise materially and adversely affect the business,
assets, financial or trading position or profits or prospects of
any member of the Wider KHK Group or of the Wider ProStrakan
Group,
and all applicable waiting and other time periods during which
any such Relevant Authority could decide to take, institute or
threaten any such action, proceeding, suit, investigation, enquiry
or reference having expired, lapsed or been terminated;
(b) all necessary filings having been made and all appropriate
waiting periods (including any extensions thereof) under any
applicable legislation or regulation of any jurisdiction having
expired, lapsed or been terminated in each case in respect of the
Acquisition or its implementation or the acquisition or the
proposed acquisition of any shares in, or control of, ProStrakan by
KHK or any member of the Wider KHK Group and all authorisations,
orders, grants, recognitions, confirmations, licences, consents,
clearances, permissions and approvals ("authorisations") necessary
or appropriate in any jurisdiction for or in respect of the
Acquisition or its implementation or the acquisition or the
proposed acquisition of any shares in, or control of, ProStrakan by
KHK being obtained in terms and in a form reasonably satisfactory
to KHK or any member of the Wider KHK Group from appropriate
Relevant Authorities or from any persons or bodies with whom any
member of the Wider KHK Group or the Wider ProStrakan Group has
entered into contractual arrangements (in each case where the
absence of such authorisation would have a material adverse effect
on the Wider ProStrakan Group taken as a whole) and such
authorisations together with all authorisations necessary or
appropriate for any member of the Wider ProStrakan Group to carry
on its business (where such business is material in the context of
the Wider ProStrakan Group taken as a whole) remaining in full
force and effect and no intimation of any intention to revoke,
suspend, restrict or modify or not to renew any of the same having
been made and all necessary statutory or regulatory obligations in
any jurisdiction having been materially complied with;
(c) save as fairly disclosed in the Annual Report and Accounts,
in ProStrakan's unaudited interim results for the six months ended
30 June 2010 or as publicly announced to a Regulatory Information
Service by ProStrakan prior to the Announcement Date or as fairly
disclosed to KHK in writing before the Announcement Date, there
being no provision of any agreement, arrangement, licence or other
instrument to which any member of the Wider ProStrakan Group is a
party or by or to which any such member or any of its assets is or
may be bound, entitled or subject which, as a result of the
Acquisition or its implementation or the acquisition or proposed
acquisition by KHK or any member of the Wider KHK Group of any
shares in, or change in the control or management of, ProStrakan or
otherwise, would or might (to an extent which is materially adverse
in the context of the Wider ProStrakan Group taken as a whole)
reasonably be expected to result in:
(i) any material amount of monies borrowed by or any other
material indebtedness (actual or contingent) of any such member of
the Wider ProStrakan Group becoming repayable or capable of being
declared repayable immediately or earlier than the stated repayment
date or the ability of such member to borrow monies or incur any
material indebtedness being withdrawn or inhibited;
(ii) the creation or enforcement of any mortgage, charge or
other security interest over the whole or any substantial part of
the business, property or assets of any such member of the Wider
ProStrakan Group or any such security interest (whenever arising or
having arisen) becoming enforceable;
(iii) any material assets or interest of any such member of the
Wider ProStrakan Group being or falling to be disposed of or
charged or any right arising under which any such asset or interest
could be required to be disposed of or charged, other than in the
ordinary course of trading;
(iv) the rights, liabilities, obligations, interests or business
of any such member of the Wider ProStrakan Group in or with any
other person, firm or company (or any agreements or arrangements
relating to such interest or business) being terminated or
materially and adversely affected;
(v) any such member of the Wider ProStrakan Group ceasing to be
able to carry on business under any name under which it presently
does so, where such a result would be material in the context of
the Wider ProStrakan Group taken as a whole;
(vi) the value of any such member of the Wider ProStrakan Group
or its financial or trading position or prospects being materially
prejudiced or materially and adversely affected;
(vii) any such agreement, arrangement, licence or other
instrument being terminated or materially and adversely modified or
any onerous obligation arising or any material adverse action being
taken or arising thereunder; or
(viii) the creation of any material liabilities (actual or
contingent) by any such member of the Wider ProStrakan Group other
than in the ordinary course of business;
and no event having occurred which, under any provision of any
agreement, arrangement, licence or other instrument to which any
member of the Wider ProStrakan Group is a party or by or to which
any such member or any of its assets may be bound or be subject,
would be reasonably likely to result in any events or circumstances
as are referred to in subparagraphs (i) to (viii) of this paragraph
(c) in any case where such result would be material in the context
of the Wider ProStrakan Group taken as a whole;
(d) except as disclosed in the Annual Report and Accounts or as
publicly announced to a Regulatory Information Service by or on
behalf of ProStrakan or as otherwise fairly disclosed in writing to
KHK before the Announcement Date, no member of the Wider ProStrakan
Group having since 31 December 2009:
(i) issued or agreed to issue or authorised the issue of
additional shares of any class, or securities convertible into, or
rights, warrants or options to subscribe for or acquire, any such
shares or convertible securities or transferred or sold any shares
out of treasury save as between ProStrakan and wholly-owned
subsidiaries of ProStrakan prior to the Announcement Date or upon
the exercise of rights to subscribe for ProStrakan Shares pursuant
to options granted under any ProStrakan Share Plans prior to the
Announcement Date;
(ii) recommended, declared, paid or made any bonus, dividend or
other distribution, whether payable in cash or otherwise, other
than a distribution by any wholly-owned subsidiary of
ProStrakan;
(iii) implemented or authorised any merger or demerger or
acquired or disposed of or transferred, mortgaged or charged, or
created any other security interest over, any asset or any right,
title or interest in any asset;
(iv) implemented or authorised any reconstruction, amalgamation,
scheme or other similar transaction or arrangement (other than in
the ordinary course of business);
(v) purchased, redeemed or repaid any of its own shares or other
securities or reduced or made or authorised any other change in its
share capital;
(vi) made or authorised any change in its loan capital or issued
or authorised the issue of any debentures or (other than in the
ordinary course of business and save as between ProStrakan and
wholly-owned subsidiaries of ProStrakan) incurred or increased any
indebtedness or contingent liability;
(vii) entered into, varied or terminated, or authorised the
entry into, variation or termination of, any contract, commitment
or arrangement (whether in respect of capital expenditure or
otherwise) which is outside the ordinary course of business or
which is of a long term, onerous or unusual nature or magnitude or
which involves or could involve an obligation of a nature or
magnitude which is material;
(viii) entered into any contract, commitment or arrangement
which would be materially restrictive on the business of any member
of the Wider ProStrakan Group or the Wider KHK Group (other than to
a nature and extent which is normal in the context of the business
concerned);
(ix) been unable or deemed unable, or admitted in writing that
it is unable, to pay its debts as they fall due or having stopped
or suspended (or threatened to stop or suspend) payment of its
debts generally or ceased or threatened to cease carrying on all or
a substantial part of its business;
(x) commenced negotiations with any of its creditors or taken
any step with a view to rescheduling or restructuring any of its
indebtedness or entered into a composition, compromise, assignment
or arrangement with any of its creditors whether by way of a
voluntary arrangement, scheme of arrangement, deed of compromise or
otherwise;
(xi) taken any corporate action or had any legal proceedings
started or threatened against it or any documents filed or faxed in
court for its winding-up (voluntary or otherwise), dissolution or
reorganisation (or for any analogous proceedings or steps in any
jurisdiction) or for the appointment of a liquidator, provisional
liquidator, receiver, administrator, administrative receiver,
trustee or similar officer (or for the appointment of any analogous
person in any jurisdiction) of all or any of its assets and
revenues or had notice given of the intention to appoint any of the
foregoing to it;
(xii) waived, compromised, settled, abandoned or admitted any
dispute, claim or counter-claim whether made or potential and
whether by or against any member of the Wider ProStrakan Group
which together or separately is material;
(xiii) made any alteration to its articles of association;
(xiv) entered into or varied the terms of, or terminated or
given notice of termination of, any service agreement or
arrangement with any director or senior executive of any member of
the Wider ProStrakan Group;
(xv) agreed to provide, or agreed to materially modify the terms
of, any share option scheme, incentive scheme or other benefit
relating to the employment or termination of employment of any
person employed by any member of the Wider ProStrakan Group;
(xvi) entered into any contract, commitment or arrangement or
passed any resolution or made any offer (which remains open for
acceptance) with respect to, or proposed or announced any intention
to effect or propose, any of the transactions, matters or events
referred to in this condition; or
(xvii) made or agreed or consented to any material change
to:
(i) the terms of any pension scheme arrangement(s) established
by any member of the Wider ProStrakan Group for its directors,
employees or their dependents, or available to such directors,
employees or their dependents;
(ii) the contributions payable to any such arrangement(s) or to
the benefits which accrue or to the pensions which are payable
thereunder;
(iii) the basis on which qualification for, or accrual or
entitlement to, such benefits or pensions are calculated or
determined; or
(iv) the basis upon which the liabilities (including pensions)
of such pension arrangement(s) are funded, valued or made
(including, without limitation, any changes which relate to or
result from any purchase of a bulk annuity or longevity or
financial hedging instrument in respect of some or all of those
liabilities),
and for the purpose of this condition "material" shall mean
material in the context of the Wider ProStrakan Group taken as a
whole;
(e) since 31 December 2009 and except as disclosed in the Annual
Report and Accounts or as publicly announced to a Regulatory
Information Service by or on behalf of ProStrakan before the
Announcement Date or as fairly disclosed to KHK in writing before
the Announcement Date:
(i) no adverse change having occurred in the business, assets,
financial or trading position or profits or prospects of any member
of the Wider ProStrakan Group which is material in the context of
the Wider ProStrakan Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or
other legal proceedings in any jurisdiction having been threatened,
announced, instituted or remaining outstanding by, against or in
respect of any member of the Wider ProStrakan Group or to which any
member of the Wider ProStrakan Group is a party (whether as
claimant or defendant or otherwise) and no investigation by any
Relevant Authority or other investigative body against or in
respect of any member of the Wider ProStrakan Group having been
threatened, announced, instituted or remaining outstanding by,
against or in respect of any member of the Wider ProStrakan Group
which would or might reasonably be expected materially and
adversely to affect the Wider ProStrakan Group taken as a whole;
and
(iii) no contingent or other liability having arisen which would
or might reasonably be expected materially and adversely to affect
any member of the Wider ProStrakan Group taken as a whole;
(f) KHK not having discovered:
(i) that any financial, business or other information disclosed
at any time by any member of the Wider ProStrakan Group is
misleading, contains a misrepresentation of fact or omits to state
a fact necessary to make the information contained therein not
misleading which in any case is material and adverse to the
financial or trading position of the Wider ProStrakan Group taken
as a whole;
(ii) that any member of the Wider ProStrakan Group is subject to
any liability, contingent or otherwise, which is not disclosed in
the Annual Report and Accounts, or otherwise fairly disclosed to
KHK in writing before the Announcement Date and which is material
in the context of the Wider ProStrakan Group taken as a whole;
(iii) any information which affects the import of any
information disclosed at any time by or on behalf of any member of
the Wider ProStrakan Group and which is material in the context of
the Wider ProStrakan Group taken as a whole;
(iv) that any past or present member of the Wider ProStrakan
Group has failed to comply with any applicable legislation or
regulations of any jurisdiction or any notice or requirement of any
Relevant Authority with regard to the storage, disposal, discharge,
spillage, release, leak or emission of any waste or hazardous or
harmful substance or any substance likely to impair the environment
or harm human or animal health or otherwise relating to
environmental matters or that there has otherwise been any such
storage, disposal, discharge, spillage, release, leak or emission
(whether or not the same constituted non-compliance by any person
with any such legislation or regulation, and whenever the same may
have taken place), any of which non--compliance would be likely to
give rise to any liability (whether actual or contingent) or cost
on the part of any member of the Wider ProStrakan Group and which
is material in the context of the Wider ProStrakan Group taken as a
whole; or
(v) there is or is likely to be any obligation or liability
(whether actual or contingent) to make good, repair, re-instate or
clean up any property now or previously owned, occupied, operated
or made use of or controlled by any past or present member of the
Wider ProStrakan Group under any environmental legislation,
regulation, notice, circular or order of any Relevant Authority in
any jurisdiction and which is material in the context of the Wider
ProStrakan Group taken as a whole:
(g) no circumstance having arisen or event having occurred in
relation to any material Intellectual Property Rights owned, used
or licensed by the Wider ProStrakan Group, including:
(i) any member of the Wider ProStrakan Group losing its title to
any Intellectual Property Rights or any Intellectual Property
Rights owned by the Wider ProStrakan Group being revoked, cancelled
or declared invalid;
(ii) any agreement regarding the use of any Intellectual
Property Rights licensed to or by any member of the Wider
ProStrakan Group being terminated or materially varied; or
(iii) any claim being filed alleging that any member of the
Wider ProStrakan Group infringed the Intellectual Property Rights
of a third party or any member of the Wider ProStrakan Group being
found to have infringed the Intellectual Property Rights of a third
party, which, in any case, results or could result in the
financial, trading position or prospects of the Wider ProStrakan
Group being materially prejudiced or adversely affected.
Conditions 3(a) to (g) inclusive must be fulfilled, be
determined by KHK to be or remain satisfied or (if capable of
waiver) be waived by KHK by 11.59 p.m. on the date immediately
preceding the Scheme Court Hearing, failing which the Scheme shall
lapse.
To the extent permitted by law and subject to the requirements
of the Panel, KHK reserves the right to waive all or any of
Conditions 3(a) to (g) inclusive, in whole or in part. KHK shall be
under no obligation to waive or treat as fulfilled any of
Conditions 3(a) to (g) inclusive by a date earlier than the date
specified above in Condition 1 for the fulfilment thereof
notwithstanding that the other Conditions of the Acquisition may at
such earlier date have been waived or fulfilled and that there are
at such earlier date no circumstances indicating that any of such
Conditions may not be capable of fulfilment.
If KHK is required by the Panel to make an offer or offers for
any ProStrakan Shares under Rule 9 of the Code, KHK may make such
alterations to the above conditions as are necessary to comply with
that Rule.
The Scheme will lapse if, before the Court Meeting or the
ProStrakan General Meeting (whichever is the later), the
Acquisition or any matter arising from or relating to the
Acquisition is referred to the Competition Commission or the
European Commission either initiates proceedings under Article
6(1)(c) of the Regulation or, following a referral by the European
Commission to a competent authority in the United Kingdom under
Article 9(1) of the Regulation, the Acquisition or any matter
arising from or relating to the Acquisition is referred to the
Competition Commission.
Each of the Conditions shall be regarded as a separate Condition
and shall not be limited by reference to any other Condition.
Part 2
CERTAIN FURTHER TERMS OF THE ACQUISITION
1. KHK reserves the right to elect (with the consent of the
Panel and in accordance with the Implementation Agreement) to
implement the Acquisition by way of a takeover offer (as defined in
Part 28 of the Companies Act) as it may determine in its absolute
discretion. In such event, such offer will be implemented on the
same terms, so far as applicable, as those which would apply to the
Scheme, subject to appropriate amendments to reflect the change in
method of effecting the Acquisition, which may include changing the
consideration structure under the terms of the Acquisition and
(without limitation and subject to the consent of the Panel) an
acceptance condition set at 90 per cent. (or such lesser
percentage, being more than 50 per cent., as KHK may decide): (i)
in nominal value of the shares to which such offer relates; (ii) of
the voting rights attached to those shares; and (iii) of the voting
rights normally exercisable at a general meeting of ProStrakan,
including, for this purpose, any such voting rights attaching to
ProStrakan Shares that are unconditionally allotted or issued
before the takeover offer becomes or is declared unconditional as
to acceptances, whether pursuant to the exercise of any outstanding
subscription or conversion rights or otherwise.
2. The ProStrakan Shares will be acquired by KHK free from all
liens, charges, encumbrances, rights of pre-emption and any other
third party rights of any nature whatsoever and together with all
rights attaching thereto including the right to receive in full all
dividends and other distributions declared, paid or made on or
after the date of this announcement.
3. The Acquisition will be governed by Scots law and be subject
to the jurisdiction of the Scottish courts and to the conditions
set out in this document and in the formal Scheme Document. The
Acquisition will comply with the applicable rules and regulations
of the Financial Services Authority and the London Stock Exchange
and the Code.
APPENDIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION
(i) References to a percentage of ProStrakan Shares are based on
202,311,080 issued shares.
(ii) The value of the entire issued and to be issued ordinary
share capital of ProStrakan is based on 224,332,026 fully diluted
ProStrakan Shares.
(iii) The closing share price of 92.5 pence on 12 November 2010
is the mid-market price as sourced from Bloomberg. The average
volume-weighted closing price of 64.9p over the 6 months prior to
12 November 2010 is calculated based on the mid-market prices and
daily trading volumes as sourced from Bloomberg.
(iv) Unless otherwise stated, the financial information relating
to ProStrakan is extracted from the audited consolidated financial
statements of ProStrakan for the financial year to 31 December
2009, prepared in accordance with IFRS and from the unaudited
consolidated financial statements of ProStrakan (from its interim
report) for the six months ended 30 June 2010, prepared in
accordance with IFRS.
(v) The market capitalisation of KHK is based on the mid-market
closing price on 18 February 2011 of Yen863 and 576,483,555 issued
shares, as sourced from Bloomberg.
(vi) Unless otherwise stated, the financial information relating
to KHK is extracted from the audited consolidated financial
statements of KHK (for the financial year to 31 December 2010),
prepared in accordance with Financial Instruments and Exchange Law
of Japan.
(vii) All Japanese yen figures have been converted to pounds
sterling at the rate of GBP1 = Yen135.17 being the exchange rate at
5:00 p.m. in London on 18 February 2011, as sourced from
Bloomberg.
(viii) The International Securities Identification Number for
ProStrakan Shares is GB00B09STF21.
APPENDIX III
DETAILS OF IRREVOCABLE UNDERTAKINGS
Directors
The ProStrakan Directors have given irrevocable undertakings to
vote or procure the vote in favour of the Acquisition as
follows:
Number of
ProStrakan % of issued
Name Shares share capital
P Allen 50,000 0.02%
A Watson 47,426 0.02%
M Asbury 99,654 0.05%
P Cawdron 20,000 0.01%
F Fildes 58,000 0.03%
S Turton 4,800 0.00%
Total 279,880 0.14%
KHK has received irrevocable undertakings from the ProStrakan
Directors in respect of their entire holdings in ProStrakan Shares,
representing approximately 0.14 per cent. of the existing issued
share capital of ProStrakan:
l to vote or procure the vote in favour of the Scheme and the
ProStrakan Resolutions; and
l if the Acquisition is structured as a takeover offer, to
accept or procure the acceptance of such offer by KHK.
The irrevocable undertakings given by the ProStrakan Directors
will lapse if:
l the Scheme Document has not been published within 28 days of
the date of this announcement (or within such longer period as KHK,
with the consent of the Panel, determines); or
l the Scheme terminates or lapses in accordance with its terms
or otherwise becomes incapable of ever becoming effective, provided
that KHK has not, within seven days of the Scheme having so
terminated or lapsed, announced in accordance with Rule 2 of the
Code that it intends to implement the Acquisition by way of a
takeover offer; or
l in the event that the Acquisition is implemented by way of a
takeover offer, the offer lapses or is withdrawn.
Certain Institutional Shareholders
The following institutional shareholders have given irrevocable
undertakings to vote or procure the vote in favour of the Scheme as
follows:
Number of
ProStrakan % of issued
Name Shares share capital
Warburg Pincus 49,282,291 24.36%
Aberforth 18,284,435 9.04%
LMS Capital 17,601,737 8.70%
Schroders 11,064,656 5.47%
Total 96,233,119 47.57%
KHK has received an irrevocable undertaking from Warburg Pincus
in respect of 49,282,291 ProStrakan Shares (representing
approximately 24.36 per cent. of the existing issued share capital
of ProStrakan):
l to vote or procure the vote in favour of the Scheme and the
ProStrakan Resolutions; and
l if the Acquisition is structured as a takeover offer, to
accept or procure the acceptance of such offer by KHK.
The irrevocable undertakings given by Warburg Pincus will lapse
if:
l the Scheme Document has not been published within 28 days of
the date of this announcement (or within such longer period to
which the Panel consents, not to be longer than 60 days); or
l the Scheme terminates or lapses in accordance with its terms
or otherwise becomes incapable of ever becoming effective, provided
that KHK has not, within seven days of the Scheme having so
terminated or lapsed, announced in accordance with Rule 2 of the
Code that it intends to implement the Acquisition by way of a
takeover offer;
l in the event that the Acquisition is implemented by way of a
takeover offer, the offer lapses or is withdrawn;
l a third party announces a firm intention to make an offer for
ProStrakan (whether by scheme of arrangement or by way of takeover
offer) at a value equal to or exceeding 140 pence per ProStrakan
Share or a securities exchange offer the value of which on the day
of announcement is equal to or exceeds 140 pence per ProStrakan
Share.
KHK has received an irrevocable undertaking from LMS Capital in
respect of 17,601,737 ProStrakan Shares (representing approximately
8.70 per cent. of the existing issued share capital of
ProStrakan):
l to vote or procure the vote in favour of the Scheme and the
ProStrakan Resolutions; and
l if the Acquisition is structured as a takeover offer, to
accept or procure the acceptance of such offer by KHK.
The irrevocable undertakings given by LMS Capital will lapse
if:
l the Scheme Document has not been published within 28 days of
the date of this announcement (or within such longer period as KHK,
with the Panel's consent, determines); or
l the Scheme terminates or lapses in accordance with its terms
or otherwise becomes incapable of ever becoming effective, provided
that KHK has not, within seven days of the Scheme having so
terminated or lapsed, announced in accordance with Rule 2 of the
Code that it intends to implement the Acquisition by way of a
takeover offer;
l in the event that the Acquisition is implemented by way of a
takeover offer, the offer lapses or is withdrawn; or
l a third party announces a firm intention to make an offer for
ProStrakan (whether by scheme of arrangement or by way of takeover
offer) at a value equal to or exceeding 140 pence per ProStrakan
Share or a securities exchange offer the value of which on the day
of announcement is equal to or exceeds 140 pence per ProStrakan
Share.
KHK has received an irrevocable undertaking from Schroders in
respect of 11,064,656 ProStrakan Shares (representing approximately
5.47 per cent. of the existing issued share capital of
ProStrakan):
l to procure the vote in favour of the Scheme and the ProStrakan
Resolutions; and
l if the Acquisition is structured as a takeover offer, to
procure the acceptance of such offer by KHK.
The irrevocable undertaking given by Schroders will lapse
if:
l the Scheme Document has not been published within 28 days of
the date of this announcement (or within such longer period as KHK,
with the consent of the Panel, determines, not to be longer than
six weeks from the date of the date of this announcement); or
l the Scheme terminates or lapses in accordance with its terms
or otherwise becomes incapable of ever becoming effective, provided
that KHK has not, within seven days of the Scheme having so
terminated or lapsed, announced in accordance with Rule 2 of the
Code that it intends to implement the Acquisition by way of a
takeover offer;
l in the event that the Acquisition is implemented by way of a
takeover offer, the offer lapses or is withdrawn;
l a third party announces a firm intention to make an offer for
ProStrakan (howsoever structured) on terms which represent in
Schroders' opinion substantially no less than 140 pence per
ProStrakan Share as at the date on which such offer is announced
and Schroders has an intention to accept such offer; or
l in certain circumstances where Schroders' clients have
terminated their relationship or changed their investment mandate
in respect of the relevant ProStrakan Shares.
KHK has received an irrevocable undertaking from Aberforth in
respect of 18,284,435 ProStrakan Shares over which it has
discretionary and voting control (representing approximately 9.04
per cent. of the existing issued share capital of ProStrakan):
l to vote in favour of the Scheme and the ProStrakan
Resolutions; and
l if the Acquisition is structured as a takeover offer, to
accept such offer by KHK.
The irrevocable undertaking given by Aberforth will lapse
if:
l an announcement is made by a third party in accordance with
Rule 2.5 of the Code of a higher competing offer in respect of the
acquisition of ProStrakan which represents, in Aberforth's opinion
at any time, a value of not less than 140 pence per ProStrakan
Share, and Aberforth notifies KHK or otherwise makes an
announcement or notification that, as a result of such higher
competing offer, it no longer intends to vote in favour of the
Scheme. In determining the value of any higher competing offer,
Aberforth is entitled to take into account such matters,
circumstances and factors as it considers, in its sole discretion,
appropriate (including, without limitation, any conditions to, or
risks associated with the completion or implementation of, such
offer and where such offer includes any non-cash consideration,
factors other than the then market value, if any, of such
consideration);
l the Scheme is withdrawn or does not become effective; or
l the Scheme Document has not been posted within 28 days of the
date of this announcement.
APPENDIX IV
IMPLEMENTATION AGREEMENT
ProStrakan and KHK have entered into an Implementation Agreement
which contains, amongst other things, certain obligations and
commitments in relation to implementation of the Acquisition. A
brief summary of the provisions relating to the inducement fee
arrangement, non-solicitation undertaking and right to match, as
contained in the Implementation Agreement, is set out below.
Inducement fee
In consideration of KHK making the Acquisition, ProStrakan has
agreed to pay to KHK an inducement fee equal to one per cent. of
the value of the Acquisition (subject to any adjustment for VAT)
if, prior to the date upon which the Acquisition lapses or is
withdrawn:
(a) the ProStrakan Directors (or any committee of the ProStrakan
Directors) do not unanimously and without qualification recommend
the Acquisition, or if they withdraw or adversely modify or qualify
the terms of their unanimous recommendation of the Acquisition;
or
(b) if the Acquisition is proceeding by way of the Scheme, the
Court Meeting and/or the General Meeting is adjourned without the
prior written consent of KHK, unless such adjournment is a
Permitted Adjournment and subsequently the Acquisition does not
become effective (if implemented by way of the Scheme) or does not
become or is not declared wholly unconditional (if implemented by
way of a takeover offer) in either case on or before 1 July 2011;
or
(c) an Alternative Proposal is announced (whether or not on a
pre-conditional basis and whether pursuant to Rule 2.4 or Rule 2.5
of the Code) and that Alternative Proposal or any other Alternative
Proposal (which is announced pursuant to Rule 2.4 or Rule 2.5 prior
to the first Alternative Proposal lapsing or (with the consent of
the Panel) being withdrawn) subsequently becomes effective or is
declared wholly unconditional or is otherwise completed.
Nothing in the Implementation Agreement shall oblige ProStrakan
to pay to KHK any amount which the Panel would not permit it to pay
pursuant to Rule 21.2 of the Code or which would otherwise be
unlawful.
Non-solicitation
ProStrakan has undertaken that it shall not, and shall procure
that each member of the ProStrakan Group and its and their
respective directors, management team and advisers shall not
actively solicit, initiate or otherwise seek to procure or initiate
any approach to, or offer from, any person who is not a concert
party of KHK with a view to a transaction taking place which would
constitute or may lead to an Alternative Proposal or is reasonably
likely to preclude or restrict or delay the Acquisition. KHK has
agreed that these restrictions will not prevent ProStrakan from
continuing discussions with those third parties it is currently in
contact with in relation to a potential offer for the entire issued
share capital of ProStrakan.
ProStrakan has agreed to notify KHK in writing as soon as
practicable if it or any of its directors, employees or advisers
(a) receives an approach in relation to a possible Alternative
Proposal; or (b) receives any request for information under Rule
20.2 of the Code.
Right to match
ProStrakan has agreed that if it makes a notification to KHK of
an Alternative Proposal (as required under the Implementation
Agreement) and such Alternative Proposal is a Superior Proposal (a
"Superior Proposal Notice"), ProStrakan shall not: (a) accept,
recommend, approve or enter into any agreement to implement such
Alternative Proposal; or (b) withhold, withdraw or adversely modify
its recommendation in respect of the Acquisition, in each case,
until the first to occur of the following: (i) KHK having failed
within three Business Days ("Business Day" here meaning any day
other than a Saturday or Sunday or a public holiday on which banks
are generally open for business in London, Edinburgh and Tokyo) of
receipt of the Superior Proposal Notice to announce its firm
intention to increase the terms of the Acquisition to a price per
share equal to or greater than that provided under the Superior
Proposal; or (ii) KHK has confirmed to ProStrakan that it is not
willing to increase the terms of the Acquisition to a price per
share equal to or greater than that provided under the Superior
Proposal.
For these purposes, in the case of a Superior Proposal which
includes any non-cash consideration, the "price" represented by
such non-cash consideration shall, to the extent practicable, be
determined by reference to the middle market closing price of such
consideration as at the last trading day prior to the date of the
notification or, if such non-cash consideration is not in the form
of traded securities, the market value of such consideration as at
the date of the notification.
APPENDIX V
DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise.
"Aberforth" Aberforth Partners LLP;
"Acquisition" the proposed acquisition by KHK (or a wholly
owned subsidiary of KHK) of the entire issued
and to be issued share capital of ProStrakan
(other than ProStrakan Shares already held by
KHK, if any), on the terms and subject to the
conditions set out in this announcement and to
be set out in the Scheme Document (and, where
the context so requires, any subsequent
revision, variation, extension or renewal of
such acquisition);
"Alternative Proposal" for the purposes of the Implementation
Agreement, a proposed offer, scheme of
arrangement, merger, acquisition or other
business combination relating to any direct
or indirect acquisition of thirty per cent.
or more of the ProStrakan Shares or all
or any material part (meaning thirty per
cent. or more in value) of the business
or assets of the ProStrakan Group proposed
by any third party which is not a concert
party (as defined in the Code) of KHK;
"Announcement Date" 21 February 2011;
"Annual Report and the annual consolidated audited report
Accounts" and accounts of ProStrakan for the year
ended 31 December 2009;
"authorisations" all authorisations, orders, grants,
recognitions, confirmations, licences, consents,
clearances, permissions and approvals;
"BofA Merrill Lynch" Merrill Lynch Japan Securities Co., Ltd.,
acting through its affiliate, Merrill Lynch
International, as appropriate;
"business day" a day on which the London Stock Exchange
is open for the transaction of business;
"Code" the City Code on Takeovers and Mergers
of the United Kingdom (as amended);
"Companies Act" the Companies Act 2006 (as amended);
"Conditions" the conditions to the Acquisition which
are set out in Part 1 of Appendix I to
this announcement and to be set out in
the Scheme Document;
"Court" the Court of Session in Edinburgh, Scotland;
"Court Meeting" the meeting of Scheme Shareholders to be
convened pursuant to an order of the Court
pursuant to Part 26 of the Companies Act
for the purpose of considering and, if
thought fit, approving the Scheme (with
or without modification), including any
adjournment thereof;
"Executive Share the ProStrakan Group Executive Share Option
Option Plan" Plan 2005;
"FSA" the United Kingdom Financial Services Authority;
"FSMA" the Financial Services and Markets Act
2000;
"Implementation the implementation agreement between KHK
Agreement" and ProStrakan dated 21 February 2011 in
connection with the implementation of the
Acquisition;
"Intellectual Property (i) copyright, patents, database rights and
Rights" rights in trade marks, designs, know-how and
confidential information (whether registered or
unregistered), (ii) applications for
registration, and rights to apply for
registration, of any of the foregoing rights and
(iii) all other intellectual property rights and
equivalent or similar forms of protection
existing anywhere in the world;
"J.P. Morgan Cazenove" J.P. Morgan plc, which operates its investment
banking business in the United Kingdom
under the name J.P. Morgan Cazenove;
"KHK" Kyowa Hakko Kirin Co., Ltd., a company
established in Japan whose head office
is at 1-6-1 Ohtemachi, Chiyoda-ku, Tokyo
100-8185, Japan;
"KHK Directors" the board of directors of KHK;
"KHK Group" KHK, its subsidiaries and subsidiary
undertakings;
"Listing Rules" the rules and regulations made by the FSA
in its capacity as the UK Listing Authority
under FSMA, and contained in the UK Listing
Authority's publication of the same name;
"LMS Capital" LMS Capital plc;
"London Stock Exchange" London Stock Exchange plc;
"Meetings" the Court Meeting and/or the ProStrakan
General Meeting as the case may be;
"Numis" Numis Securities Limited;
"Official List" the official list of the London Stock Exchange;
"Panel" the Panel on Takeovers and Mergers;
"Performance Share the ProStrakan Group Performance Share
Plan" Plan 2005;
"Permitted Adjournment" for the purposes of the Implementation
Agreement, an adjournment of the Court
Meeting and/or the ProStrakan General Meeting
which is sought by ProStrakan as a result
of (i) a request for such adjournment made
by KHK; (ii) any requirement of the Court
or the Panel; or (iii) events or circumstances
which are beyond the reasonable control
of ProStrakan and which prevent, prohibit
or materially restrict ProStrakan's ability
to convene, hold or transact the relevant
business at the relevant Meeting at the
time and date specified in the Scheme Document;
"ProStrakan" ProStrakan Group plc, a company incorporated
in Scotland (with registered number SC198780)
with its registered office at Galabank
Business Park, Galashiels, TD1 1QH;
"ProStrakan Directors" the directors of ProStrakan;
"ProStrakan General the general meeting of ProStrakan to be
Meeting" convened in connection with the Scheme,
and the Reduction of Capital, including
any adjournment thereof;
"ProStrakan Group" ProStrakan, its subsidiaries and subsidiary
undertakings;
"ProStrakan Resolutions" the special resolutions to approve, amongst
other things, the cancellation of the entire
issued share capital of ProStrakan and
such other matters as may be necessary
to implement the Scheme in the form set
out in the Scheme Document;
"ProStrakan Shareholders" the holders of ProStrakan Shares, from
time to time;
"ProStrakan Shares" ordinary shares of GBP0.05 each in the
capital of ProStrakan;
"ProStrakan Share the ProStrakan Group Executive Share Option
Plans" Plan 2005, the ProStrakan Group Performance
Share Plan 2005, the ProStrakan Group Sharesave
Plan 2005, the ProStrakan Group Sharesave
Plan 2006, the ProStrakan Group Sharesave
Plan 2008, the ProStrakan Group Sharesave
Plan 2009 and the ProStrakan Group Sharesave
Plan 2010, the ProStrakan Group Share Incentive
Plan, the Strakan Group plc Share Option
Scheme, the Strakan International Limited
Share Option Scheme 1996, the Strakan Executive
Management Incentive Scheme, the options
granted to the former ProSkelia B.V. employees
and the individual option agreements with
selected individuals;
"ProStrakan Warrants" the warrants granted in October 2007 over
ProStrakan Shares as part of the strategic
alliance with NovaQuest and the warrants
granted over ProStrakan Shares as part
of a financing arrangement entered into
by ProStrakan in March 2007;
"Reduction Court the order of the Court confirming the Reduction
Order" of Capital under section 648 of the Companies
Act;
"Reduction of Capital" the reduction of ProStrakan's share capital
by the cancellation and extinguishing of
the Scheme Shares provided for by the Scheme
pursuant to section 641 of the Companies
Act;
"Regulation" Article 22(1) of Council Regulation (EC)
No. 139/2004;
"Regulatory Information any of the services set out in Appendix
Service" 3 to the Listing Rules;
"Relevant Authority" government or governmental, quasi-governmental,
supranational, statutory, administrative
or regulatory body or association, institution
or agency (including any trade agency)
or any court or other body (including any
professional or environmental body) or
person in any jurisdiction;
"Scheme" the proposed scheme of arrangement under
Part 26 of the Companies Act between ProStrakan
and Scheme Shareholders, with or subject
to any modification, addition or condition
thereto approved or imposed by the Court
and agreed to by KHK and ProStrakan;
"Scheme Court Hearing" the hearing at which the Scheme Court Order
is sought;
"Scheme Court Order" the order of the Court sanctioning the
Scheme under Part 26 of the Companies Act;
"Scheme Document" the document to be despatched to (amongst
others) ProStrakan Shareholders following
the date of this announcement containing,
amongst other things, the terms and conditions
of the Scheme and the notices of the Meetings;
"Scheme Effective the date on which the Scheme becomes effective;
Date"
"Scheme Record Time" 6.00 p.m. on the business day immediately
preceding the Scheme Effective Date;
"Scheme Shareholders" the holders of Scheme Shares;
"Scheme Shares" all ProStrakan Shares: (i) in issue
at the date of the Scheme Document;
and (ii) (if any) issued after the
date of the Scheme Document and
before the Voting Record Time; and
(iii) (if any) issued at or after
the Voting Record Time but on or
before the Scheme Record Time either
on terms that the original or any
subsequent holders thereof shall be
bound by the Scheme or in respect of
which the holders thereof have
agreed in writing to be bound by the
Scheme, but excluding any ProStrakan
Shares beneficially owned by any
member of the KHK Group and any
ProStrakan Shares held by the
ProStrakan Group's employee benefit
trust;
"Schroders" Schroder Investment Management Limited;
"Sharesave Plans" the ProStrakan Group Sharesave Plan 2005,
the ProStrakan Group Sharesave Plan 2006,
the ProStrakan Group Sharesave Plan 2008,
the ProStrakan Group Sharesave Plan 2009
and the ProStrakan Group Sharesave Plan
2010;
"Substantial Interest" a direct or indirect interest of 20 per
cent. or more of the voting equity capital
of an undertaking;
"Superior Proposal" for the purposes of the Implementation
Agreement, a bona fide Alternative Proposal
which the ProStrakan Directors consider,
acting reasonably and in good faith and
after consultation with their legal and
financial advisers, is able to be announced
pursuant to Rule 2.5 of the Code within
a reasonable period of time and likely
to be completed on its terms, taking into
account all financial, regulatory and other
aspects of such Alternative Proposal and
which, at the time of announcement, would
be, from a financial perspective for ProStrakan
Shareholders, superior to the terms of
the Acquisition;
"United Kingdom" the United Kingdom of Great Britain and
or "UK" Northern Ireland;
"United States" the United States of America, its territories
or "US" and possessions, any state of the United States
of America, the District of Columbia and all
other areas subject to its jurisdiction;
"UK Listing Authority" the Financial Services Authority in its
capacity as the competent authority under
the Financial Services and Markets Act
2000;
"Voting Record Time" the time and date specified in the Scheme
Document by reference to which entitlement
to vote on the Scheme will be determined,
expected to be 6.00 p.m. on the day which
is two days before the date of the Court
Meeting or, if the Court Meeting is adjourned,
6.00 p.m. on the day which is two days
before the date of such adjourned Court
Meeting;
"Warburg Pincus" together, Warburg Pincus & Co., Warburg Pincus
Partners, LLC, Warburg Pincus Private Equity
VIII L.P., Warburg Pincus Netherlands Private
Equity VIII I, CV, WP-WPVIII Investors L.P.,
Warburg Pincus Equity Partners L.P., Warburg
Pincus Netherlands Equity Partners I, C.V.,
Warburg Pincus Netherlands Equity Partners III,
C.V., Warburg Pincus International Partners,
L.P., Warburg Pincus Netherlands International
Partners I, CV and WP-WPIP Investors L.P;
"Wider KHK Group" KHK and its subsidiary undertakings, associated
undertakings and any other undertakings
in which KHK and such undertakings (aggregating
their interests) have a Substantial Interest;
"Wider ProStrakan ProStrakan and its subsidiary undertakings,
Group" associated undertakings and any other
undertakings in which ProStrakan and such
undertakings (aggregating their interests) have
a Substantial Interest;
"subsidiary", "subsidiary have the meanings given by the Companies
undertaking", "undertaking" Act;
and "associated
undertaking"
"Yen" Japanese Yen; and
"GBP" and "pence" pounds and pence sterling, the lawful currency
of the UK.
Words importing the singular shall include the plural and vice
versa, and words importing the masculine gender shall include the
feminine or neutral gender.
All times referred to in this announcement are London times.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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