TIDMFRAN TIDMFLTA
RNS Number : 8505B
Franchise Brands PLC
16 February 2022
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT IS NOT A PROSPECTUS OR PROSPECTUS EQUIVALENT
DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT DECISION IN
RELATION TO THE NEW SHARES EXCEPT ON THE BASIS OF THE INFORMATION
IN THE OFFER DOCUMENT WHICH IS PROPOSED TO BE PUBLISHED IN DUE
COURSE.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 AS IT FORMS PART OF
UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT
2018 AS AMED.
16 February 2022
Franchise Brands plc
Recommended All Share Offer
for
Filta Group Holdings plc ("Filta")
by
Franchise Brands plc ("Franchise Brands")
The directors of Franchise Brands and Filta are pleased to
announce that they have reached agreement on the terms of a
recommended all share offer by Franchise Brands for Filta to be
effected by means of a takeover offer within the meaning of Part 28
of the Companies Act 2006 ("Offer").
The Franchise Brands Board and Filta Board believe that the
Offer has compelling strategic rationale, with the potential to
deliver substantial benefits to customers, employees, franchisees,
shareholders and other stakeholders of both Franchise Brands and
Filta. The Offer is expected to result in enhanced value for Filta
Shareholders and Franchise Brands Shareholders, reflecting a
combination of the recommended Offer Value and the significant
synergy potential of the Offer.
Irrevocable undertakings have been given by certain of the Filta
Directors and their connected parties who control, in aggregate,
62.1 per cent. of the issued ordinary share capital of Filta.
Franchise Brands has also received an irrevocable undertaking to
accept or procure acceptance of the Offer from Gresham House Asset
Management Limited, which controls approximately 19.6 per cent. of
the issued ordinary share capital of Filta.
Overview of the Offer
Under the terms of the Offer holders of Filta Shares will be
entitled to receive:
1.157 New Franchise Brands Shares in exchange for each Filta
Share
Based on a closing price of 147.5 pence per Franchise Brands
Share on 15 February 2022 (being the Latest Practicable Date), the
acquisition of Filta by Franchise Brands ("Offer") will value:
-- each Filta Share at approximately 170.7 pence, a premium of
7.7 per cent. to Filta's closing share price of 158.5 pence on the
Latest Practicable Date and a 23.8 per cent. and 17.1 per cent.
premium to the volume-weighted average price of 137.9 pence and
145.7 pence per Filta Share for the three months and twelve months
ended 15 February 2022 respectively;
-- the entire issued and to be issued share capital of Filta at
approximately GBP49.8million; and
-- the Enlarged Group at a combined market capitalisation of
approximately GBP191.2 million (assuming full acceptance of the
Offer).
In addition, the volume-weighted average price for the 30 day
period ended 15 February 2022 of 157.1 pence per Franchise Brands
Share multiplied by the Offer Value represents a premium of 29.8
per cent. over the volume-weighted average price for the 30 day
period ended 15 February 2022 of 140.0 pence per Filta Share.
The share for share offer enables Filta Shareholders to
participate fully in the potential value creation of the Enlarged
Group and benefit from future shareholder returns, including
participating in the continuation of Franchise Brands' progressive
dividend policy following the Offer. In particular, Filta
Shareholders that have validly accepted the Offer will be entitled
to receive any final dividend that Franchise Brands might recommend
in respect of the year ended 31 December 2021 which, if recommended
and approved, would be expected to be paid in May 2022.
Background to the Offer
Franchise Brands is focused on building market-leading
businesses primarily through a franchise model. It currently has a
combined network of over 425 franchisees across five principal
franchise brands in the UK. Its focus is on established brands that
can benefit from its shared support services, specialist sector
expertise, management experience and group resources.
Franchise Brands is organised into a B2B division comprised of
Metro Rod, Metro Plumb and Willow Pumps, and a B2C division that
incorporates ChipsAway, Ovenclean and Barking Mad. Metro Rod is a
commercial drainage expert, providing one-stop solutions
nationally; Metro Plumb provides specialist plumbing services; and
Willow Pumps is a leading pump design, installation and servicing
business.
In November 2021, Franchise Brands acquired Azura Group, a
leading franchise management software system developer which was an
important step in Franchise Brands' digital journey and gave
Franchise Brands full ownership of its core IT systems.
Franchise Brands has continued to selectively seek
earnings-enhancing acquisitions of complementary B2B and B2C
franchise businesses where Franchise Brands can leverage its
existing divisional structure and high-quality shared support
services. This includes Franchise Brands seeking an additional
franchise business of scale that could create a third division of
the group. In Franchise Brands' half year results announced on 22
July 2021, it stated that all its main businesses were growing and,
with a positive outlook, the Board felt confident that the Group's
organic growth priorities are well supported and on track to
deliver. In this context, the Board stated that it would increase
its focus on growth by acquisition and that it was actively
reviewing acquisition opportunities that would be significantly
earnings enhancing.
The Filta Directors believe that Filta is one of the
market-leaders in the commercial kitchen services sector, servicing
restaurants, supermarkets, stadiums, healthcare, education, hotels
and amusement parks. Trusted by many global brands, Filta
specialises in fryer management and grease and drain management,
servicing businesses that require regular maintenance.
Filta provides cooking oil filtration and fryer management
services to restaurants and other food establishments throughout
North America, the UK and mainland Europe, servicing thousands of
customers every week. This is Filta's core and original service,
FiltaFry, which is operated by over 180 franchise partners across
the UK, the USA and Europe.
The Filta Board believes that there are a number of
opportunities to grow and diversify its business and that, whilst
Filta has a powerful and successful franchise formula in North
America, it has found it more challenging to grow its franchise
network in the UK, a major market. The Offer provides an
opportunity for Filta to become part of a more diversified group,
with greater scale, highly complementary services, and a strong
balance sheet, offering Filta enhanced growth potential.
Key reasons for the Offer
The Franchise Brands Board and the Filta Board believe that
combining the businesses by way of the Offer would deliver
significant benefits to all stakeholders, including:
-- establishing an enlarged Group of greater scale, able to
leverage the combined franchising and management experience and
expertise, shared support services and resources to drive future
growth in revenue and profits;
-- enabling the Enlarged Group to offer one-stop solutions to
its combined commercial customer base. The businesses of Franchise
Brands and Filta in the UK each have a slightly different focus.
Franchise Brands' Metro Rod, Metro Plumb and Willow Pumps
businesses are primarily focused on reactive work serviced from a
national network of 50 depots across the UK. In contrast, the Filta
businesses are focused on planned maintenance and installation
services. By combining these strengths, the Franchise Brands
Directors believe the Enlarged Group would have the ability to
offer a broader range of services to its combined customer base and
provide competitive advantages in its ambition to offer a "Water
In, Waste Out" service to the commercial sector in the UK;
-- the complementary nature of the services provided by the
Enlarged Group, together with the breadth of the customer base of
the combined direct labour businesses in the UK, will also provide
significant opportunities for future growth. When combined with the
Metro Rod national depot network, the Enlarged Group will have a
comprehensive service offering for customers requiring planned
maintenance and reactive services in a wide range of sectors;
-- Filta has a well-established and successful franchise
business in North America. The combination of the strength and
depth of experienced management and Filta's high-quality support
infrastructure and services means the Enlarged Group will be well
placed to expand both organically and by acquisition in this very
large market;
-- the opportunity for Filta to grow its UK franchise business
using Franchise Brands' established franchise recruitment and
support infrastructure;
-- the opportunity for Filta to continue to develop its European
franchise business supported by Franchise Brands' management
experience and expertise, shared support services and established
UK support infrastructure;
-- leveraging the investment Franchise Brands has made in the
digital transformation of its businesses, which has provided it
with scaleable, customisable, proprietary IT systems, for the
benefit of the Enlarged Group;
-- the combination of the experienced management teams of
Franchise Brands and Filta will enhance the growth opportunities of
the Enlarged Group both in the UK and internationally;
-- Jason Sayers and Brian Hogan will join the Franchise Brands
Board as Managing Director-Filta and Chief Financial Officer,
respectively, and will both strengthen the Enlarged Group's board
and help to facilitate the smooth integration of the two
businesses;
-- cost savings through the elimination of duplicated public
quoted company costs and certain UK operational costs and
overheads;
-- enhancing the Enlarged Group's ability to make acquisitions
due to the additional managerial resources, balance sheet strength
and international presence of the Enlarged Group;
-- as an enlarged group with a higher market capitalisation and
potentially increased liquidity in its shares, the opportunity to
attract wider institutional investor interest providing greater
access to capital. The Enlarged Group will be one of the UK's
largest franchise businesses in terms of market capitalisation;
and
-- helping to attract and retain key people due to the increased
size and scale of the Enlarged Group, with increased opportunities
for the employees of both businesses.
The Franchise Brands Board and Filta Board believe that the
terms of the Offer fairly reflect both Franchise Brands' and
Filta's respective standalone businesses and their prospects as
well as an appropriate sharing of the anticipated synergies
resulting from the Offer.
Filta Recommendation and Irrevocable Undertakings
The Filta Directors unanimously consider the terms of the Offer
to be fair and reasonable and the Independent Filta Directors
intend to recommend that Filta Shareholders accept the Offer, as
certain of the Filta Directors who are interested in Filta Shares
have irrevocably undertaken to do (or procure to be done) in
respect of their own holdings (and those of their connected
parties, including the Meredian Settlement trust) of, in aggregate,
18,095,280 Filta Shares, representing, in aggregate, approximately
62.1 per cent. of the share capital of Filta in issue as at the
Latest Practicable Date. These undertakings will remain binding in
the event of a competing offer being made.
In addition, Gresham House Asset Management Limited has
irrevocably undertaken to direct (and to use all reasonable
endeavours to procure that) its nominees, or, where relevant, that
itself accepts the Offer in respect of its own beneficial holdings
totalling 5,715,020 Filta Shares, representing in aggregate
approximately 19.6 per cent. of Filta's issued share capital as at
the Latest Practicable Date. This irrevocable undertaking is
binding save in the event of a higher offer of not less than a 10
per cent. premium to the Offer.
In total, therefore, Filta Shareholders holding, in aggregate,
23,810,300 Filta Shares (representing approximately 81.7 per cent.
of the issued share capital of Filta as at the Latest Practicable
Date) have given irrevocable undertakings to accept the Offer. A
condition of the Offer will be for Franchise Brands to receive
valid acceptances in respect of, and/or having otherwise acquired,
Filta Shares which constitute more than 75 per cent. of the voting
rights relating to the Filta Shares, which would be satisfied by
the receipt of valid acceptances of the Offer in respect of these
irrevocable undertakings.
Cancellation of trading of Filta Shares on AIM
Filta Shares are currently admitted to trading on AIM. Filta
Shareholders should be aware that once Franchise Brands has
received acceptances under the Offer in respect of, and/or
otherwise acquires, 75 per cent. or more of the voting rights
carried by the Filta Shares and upon the Offer becoming or being
declared unconditional, Franchise Brands intends that application
will be made to cancel the admission of the Filta Shares to trading
on AIM. Application will be made to London Stock Exchange for New
Franchise Brands Shares issued pursuant to the Offer to be admitted
to trading on AIM.
It is anticipated that cancellation of admission to trading on
AIM would take effect, as soon as practicable, after 15 March 2022,
being 20 Business Days following the date of this announcement,
assuming the Offer becomes or is declared unconditional in all
respects. A further announcement confirming the cancellation date
will be made upon the Offer becoming or being declared
unconditional. Cancellation of admission to trading on AIM would
significantly reduce the liquidity and marketability of all Filta
Shares not assented to the Offer at that time.
Enlarged Group and Board
Upon the Offer becoming or being declared wholly unconditional,
it is intended that:
-- Jason Sayers and Brian Hogan, currently Chief Executive
Officer and Chief Financial Officer of Filta respectively, will
join the board of directors of Franchise Brands as Managing
Director-Filta and Chief Financial Officer respectively, and
together with the current Franchise Brands management team will
lead the Enlarged Group;
-- Victor Clewes and Jlubomir Urosevic, current executive
directors of Filta, will remain in the Filta business in senior
management roles;
-- all of the Filta non-executive directors will resign from the
Filta Board, such resignation to take effect upon cancellation of
Filta's Shares from trading on AIM; and
-- the existing business activities of Filta will operate as a division of the Enlarged Group.
Franchise Brands recognises the quality of Filta's employees and
management team and their importance to the success of Filta, and
believes that they will be a key factor in maximising the
opportunities available to the Enlarged Group. Management and
employees of both Franchise Brands and Filta will have the
potential to benefit from new opportunities within the Enlarged
Group following the Offer becoming or being declared wholly
unconditional.
Further information on the Proposed Franchise Brands Directors
is set out below in paragraph 19 of this announcement.
Franchise Brands General Meeting and associated irrevocable
undertakings
In order to allot the New Franchise Brands Shares, Franchise
Brands will seek authority from Franchise Brands Shareholders at
the Franchise Brands General Meeting by way of an ordinary
resolution. The completion of the Offer will, accordingly, be
conditional on such authority being approved.
The Franchise Brands Directors consider the Offer to be in the
best interests of Franchise Brands Shareholders as a whole and
intend to recommend unanimously that Franchise Brands Shareholders
vote in favour of the Resolution to be proposed at the Franchise
Brands General Meeting, as those Franchise Brands Directors who are
interested in Franchise Brands Shares intend to do in respect of
their own beneficial holdings (and the beneficial holdings which
are under their control) of 51,822,535 Franchise Brands Shares,
representing, in aggregate, approximately 54.1 per cent. of
Franchise Brands' issued ordinary share capital as at the Latest
Practicable Date.
In addition, Gresham House Asset Management Limited has
irrevocably undertaken to vote in favour of the Resolution in
respect of its own beneficial holdings totalling 5,479,878
Franchise Brands Shares, representing in aggregate approximately
5.7 per cent. of Franchise Brands' issued ordinary share capital as
at the Latest Practicable Date.
In aggregate, irrevocable undertakings to vote in favour of the
Resolution have been received in respect of 57,302,413 Franchise
Brands Shares, representing approximately 59.8 per cent. of
Franchise Brands' issued ordinary share capital as at the Latest
Practicable Date.
Commenting on the Offer, Stephen Hemsley, Executive Chairman of
Franchise Brands, said:
"As we operate in similar markets to Filta, we know the business
well, so we are delighted that Filta will be joining Franchise
Brands. Bringing the businesses together will enable us to offer a
broader range of complementary services to our combined customer
base, providing competitive advantages in our ambition to offer a
"Water In, Waste Out" service to commercial customers and
significant opportunities for future growth.
"With the benefit of greater scale, we will be able to leverage
the combined group's expertise and shared services, including our
scaleable technology, to drive future growth in revenue and
profits, including by growing and developing Filta's UK and
European franchise business. The Enlarged Group will also be well
positioned to expand in North America, given Filta's
well-established and successful franchise business in the
region.
"I am also very pleased that Jason Sayers and Brian Hogan will
join our board as Managing Director-Filta and Chief Financial
Officer, respectively, following our previous announcement that
Chris Dent, our current Chief Financial Officer, will be leaving
the Group in the next few weeks to pursue new challenges. We look
forward to working with the entire Filta team to take advantage of
the significant opportunities ahead of us.
" The Enlarged Group will have a strong balance sheet, with a
high level of liquidity, putting it in a strong position to support
our franchisees, invest in the business and our people, pursue a
progressive dividend policy and take advantage of selective
complementary acquisition opportunities."
Commenting on the Offer, Jason Sayers, Chief Executive Officer
of Filta, said:
"Filta delivered a strong performance in 2021 as the restaurant
and hospitality market recovered from the impact of Covid-19.
Despite some ongoing Covid challenges, new contracts were won, and
we bounced back to deliver a record second half, which is testament
to the resilience of our business model and the exemplary efforts
of the entire team.
"Franchise Brands offers an ideal home for our customers,
business, talented staff and franchisees. Our Board believes there
are greater benefits to be had from the more diversified range of
services the larger group will offer, as well as a broader customer
base and greater shared resources to support future growth. The
share structure of the Offer will also allow Filta's shareholders,
alongside our broader stakeholders, to benefit from the significant
synergy potential the combination represents."
"We look forward to bringing together our market leading
businesses to deliver one-stop solutions to our customers and grow
our franchise business as part of a larger, more diversified and
well capitalised group."
Other key information and conditions to the Offer
Subject to the requirements of the Panel in accordance with the
Code, the Offer will be conditional upon, amongst other
matters:
(i) Franchise Brands receiving valid acceptances in respect of,
and/or having otherwise acquired, Filta Shares which constitute
more than 75 per cent. of the voting rights relating to the Filta
Shares ;
(ii) an ordinary resolution relating to Franchise Brands
Directors' authority to issue shares being proposed at the
Franchise Brands General Meeting and passed (without amendment);
and
(iii) Admission of the New Franchise Brands Shares to trading on
AIM.
The Conditions and other terms of the Offer are set out in
Appendix 1 to this announcement.
General
It is intended that the Offer will be implemented by way of a
takeover offer (as defined in Part 28 of the Companies Act 2006),
further details of which are contained in the full text of this
announcement and which will be set out in the Offer Document.
However, Franchise Brands reserves the right, with the consent of
the Panel and Filta or, in certain circumstances, without the
consent of Filta, to implement the Offer by way of a
court-sanctioned scheme of arrangement between Filta and Filta
Shareholders under Part 26 of the Companies Act 2006
Appendix 1 to this announcement sets out the conditions and
further terms to which the Offer will be subject and to be set out
in the Offer Document. The Offer Document will include full details
of the Offer and the expected timetable, and will specify the
action to be taken by Filta Shareholders to accept the Offer. The
Offer will lapse if it does not become wholly unconditional by
11.59 pm on the Long Stop Date.
The summary above should be read in conjunction with the full
text of this announcement and the Appendices.
Appendix 1 contains the conditions and further terms of the
Offer.
Appendix 2 contains the sources and bases of certain information
used in this summary and this announcement.
Appendix 3 contains details of the irrevocable undertakings
received in relation to the Offer that are referred to in this
announcement.
Appendix 4 contains definitions of certain terms used in this
summary and this announcement.
Enquiries:
Franchise Brands plc
Stephen Hemsley, Executive Chairman
Chris Dent, Chief Financial Officer
Julia Choudhury, Corporate Development Director +44 (0) 1625 813231
Filta Group Holdings plc
Jason Sayers, Chief Executive Officer
Brian Hogan, Chief Financial Officer +1 407 996 5550
Allenby Capital Limited
Financial Adviser, Nominated Adviser and Joint
Broker to Franchise Brands
Jeremy Porter / Liz Kirchner (Corporate Finance)
Amrit Nahal (Sales and Corporate Broking) +44 (0) 20 3328 5656
Dowgate Capital Limited
Financial Adviser and Joint Broker to Franchise
Brands
James Serjeant / Russell Cook / Nicholas Chambers +44 (0) 20 3903 7715
Cenkos Securities plc
Financial Adviser, Rule 3 Adviser, Nominated
Adviser and Broker to Filta
Stephen Keys / Camilla Hume / Callum Davidson +44 (0) 20 7397 8900
MHP Communications +44 (0) 20 3128 8100
PR advisers to Franchise Brands +44 (0) 7884 494112
Katie Hunt / Catherine Chapman +44 (0) 7711 191518
franchisebrands@mhpc.com
Yellow Jersey PR
PR advisers to Filta
Charles Goodwin +44 (0) 7747 788 221
Henry Wilkinson +44 (0) 7951 402336
Gateley plc is acting as legal adviser to Franchise Brands.
Howard Kennedy LLP is acting as legal adviser to Filta.
IMPORTANT NOTICES
Allenby Capital, which is authorised and regulated by the FCA in
the UK, is acting as financial adviser, nominated adviser and joint
broker exclusively for Franchise Brands and no one else in
connection with the Offer and this announcement and will not be
responsible to anyone other than Franchise Brands for providing the
protections afforded to clients of Allenby Capital or for providing
advice in relation to the Offer, the content of this announcement
or any matter referred to herein.
Dowgate, which is authorised and regulated by the FCA in the UK,
is acting as financial adviser and joint broker exclusively for
Franchise Brands and no one else in connection with the Offer and
this announcement and will not be responsible to anyone other than
Franchise Brands for providing the protections afforded to clients
of Dowgate or for providing advice in relation to the Offer, the
content of this announcement or any matter referred to herein.
Cenkos, which is authorised and regulated by the FCA in the UK,
is acting as financial adviser and Rule 3 adviser exclusively for
Filta and no one else in connection with the Offer and the matters
set out in this announcement and will not be responsible to any
person other than Filta for providing the protections afforded to
clients of Cenkos, nor for providing advice in relation to the
Offer , the content of this announcement or any matter referred to
herein.
Further Information
This announcement is for information purposes only and is not
intended to and does not constitute or form part of an offer,
invitation or the solicitation of an offer or invitation to
purchase, or otherwise acquire, subscribe for, sell or otherwise
dispose of any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Offer or otherwise nor
shall there be any sale, issuance or transfer of securities of
Franchise Brands or Filta pursuant to the Offer in any jurisdiction
in contravention of applicable laws. The Offer will be implemented
solely pursuant to the terms of the Offer Document (or, in the
event that the Offer is to be implemented by means of a scheme, the
Scheme Document), which will contain the full terms and conditions
of the Offer, including details of how to accept the Offer. Any
decision in respect of, or other response to, the Offer should be
made solely on the basis of the information contained in the Offer
Document.
Allenby Capital and Cenkos urge Filta Shareholders to read the
Offer Document carefully when it becomes available because it will
contain important information in relation to the Offer, the New
Franchise Brands Shares and the Enlarged Group, and to take
appropriate advice. Any action in relation to the Offer or related
matters should be made only on the basis of the information
contained in the Offer Document.
This announcement does not constitute a prospectus or prospectus
equivalent document.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in one per cent. or more of any class of relevant
securities of an offeree company or of any securities exchange
offeror (being any offeror other than an offeror in respect of
which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following
the commencement of the Offer Period and, if later, following the
announcement in which any securities exchange offeror is first
identified.
An Opening Position Disclosure must contain details of the
person's interests and short positions in, and rights to subscribe
for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s). An Opening Position
Disclosure by a person to whom Rule 8.3(a) applies must be made by
no later than 3.30 pm (London time) on the 10th Business Day
following the commencement of the Offer Period and, if appropriate,
by no later than 3.30 pm (London time) on the 10th Business Day
following the announcement in which any securities exchange offeror
is first identified.
Relevant persons who deal in the relevant securities of the
offeree company or of a securities exchange offeror prior to the
deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure. Under Rule 8.3(b) of the Takeover Code,
any person who is, or becomes, interested in one per cent. or more
of any class of relevant securities of the offeree company or of
any securities exchange offeror must make a Dealing Disclosure if
the person deals in any relevant securities of the offeree company
or of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s), save to the extent that these
details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by
no later than 3.30 pm (London time) on the Business Day following
the date of the relevant dealing. If two or more persons act
together pursuant to an agreement or understanding, whether formal
or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror,
they will be deemed to be a single person for the purpose of Rule
8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk , including
details of the number of relevant securities in issue, when the
Offer Period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44 (0)
20 7638 0129 if you are in any doubt as to whether you are required
to make an Opening Position Disclosure or a Dealing Disclosure.
Information relating to Filta Shareholders
Please be aware that addresses, electronic addresses and certain
other information provided by Filta Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Filta may be provided to Franchise Brands
during the Offer Period as required under Section 4 of Appendix 4
of the Takeover Code to comply with Rule 2.11(c).
Overseas jurisdictions
The attention of Filta Shareholders who are citizens or
residents of jurisdictions outside the UK is drawn to paragraph 2
of Part C of Appendix 1 of this announcement. Further details
(including guidance for US shareholders) will be set out in the
Offer Document.
Cautionary note regarding forward-looking statements
This announcement (including information incorporated by
reference in this announcement), oral statements made regarding the
Offer, and other information published by Filta and Franchise
Brands contain certain forward-looking statements, beliefs or
opinions with respect to the financial condition, results of
operations and business of the Wider Filta Group and the Franchise
Brands Group. These forward-looking statements can be identified by
the fact that they do not relate only to historical or current
facts.
Forward-looking statements may often, but not always, be
identified by the use of forward-looking terms such as "may",
"will", "expects", "believes", "hopes", "anticipates", "aims",
"plans", "estimates", "projects", "targets", "intends",
"forecasts", "outlook", "impact", "potential", "confidence",
"improve", "continue", "optimistic", "deliver", "comfortable",
"trend", "seeks" or variations of such words and phrases or
statements that certain actions, events or results "could",
"should", "would" or "might" be taken, occur or be achieved or the
negative of such terms or other variations on such terms or
comparable terminology.
Such statements are qualified in their entirety by the inherent
risks and uncertainties surrounding future expectations. These
statements are based on assumptions and assessments made by Filta
and/or Franchise Brands, as the case may be, in light of their
experience and their perception of historical trends, current
conditions, future developments and other factors that they believe
appropriate. By their nature, forward-looking statements involve
risk and uncertainty, because they relate to events and depend on
circumstances that will occur in the future and the factors that
could cause actual results and developments to differ materially
from those expressed in or implied by such forward-looking
statements are unknown.
Although it is believed that the expectations reflected in such
forward-looking statements were reasonable at the time the
statements were made, no assurance is given by Filta and/or
Franchise Brands that such expectations or the assumptions and
assessments underlying them will prove to have been correct and the
circumstances may change. You are, therefore, cautioned not to
place undue reliance on these forward-looking statements. Neither
Filta nor Franchise Brands assumes any obligation, and Filta and
Franchise Brands disclaim any intention or obligation, to update or
correct the information contained in this announcement (whether as
a result of new information, future events or otherwise), except as
required by applicable law or regulation.
Save as specifically stated in this announcement, any such
forward-looking statements have not been reviewed by the auditors
of Filta or Franchise Brands or their respective financial
advisers. Such forward-looking statements involve known and unknown
risks and uncertainties that could significantly affect expected
results and are based on certain key assumptions. There are many
factors which could cause actual results to differ materially from
those expressed or implied in forward-looking statements. Among the
factors that could cause actual results to differ materially from
those described in the forward-looking statements is the
satisfaction of any conditions to the Offer, as well as additional
factors such as changes in global, political, economic, business,
competitive, market and regulatory forces (including as a result of
governmental, business or individual responses to the COVID-19
pandemic and any variant thereof), future exchange and interest
rates, changes in tax rates and future business combinations or
dispositions. Such forward looking statements should, therefore, be
construed in the light of such factors. Neither Filta nor Franchise
Brands, nor any of their respective associates or directors,
officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in
any forward-looking statements in this announcement will actually
occur.
No Profit Forecasts or Estimates
No statement in this announcement (including any statement of
estimated synergies) is intended as a profit forecast or estimate
for any period and no statement in this announcement should be
interpreted to mean that earnings or earnings per share or dividend
per share for Franchise Brands, Filta or the Enlarged Group, as
appropriate, for the current or future financial years would
necessarily match or exceed the historical published earnings or
earnings per share or dividend per share for Franchise Brands,
Filta or the Enlarged Group, as appropriate.
Rounding
Certain figures included in this announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures that precede them.
Rule 2.9
In accordance with Rule 2.9 of the Takeover Code, Franchise
Brands confirms that, as at the date of this announcement, it has
95,865,609 ordinary shares of 0.5p each in issue with International
Securities Identification Number (ISIN) GB00BD6P7Y24. Franchise
Brands does not hold any shares in treasury.
In accordance with Rule 2.9 of the Takeover Code, Filta confirms
that, as at the date of this announcement, it has 29,138,164
ordinary shares of 10p each in issue with International Securities
Identification Number (ISIN) GB00BDB7J920. Filta does not hold any
shares in treasury.
Publication on website
Pursuant to Rule 26.1 of the Code, a copy of this announcement
and other documents in connection with the Offer as detailed in
paragraph 16 of this announcement will, subject to certain
restrictions, be available for inspection on Franchise Brands'
website at https://www.franchisebrands.co.uk/investor-information/
and by Filta on its website at
https://filtaplc.com/investor-relations no later than 12 noon
(London time) on the business day following this announcement. The
contents of the websites referred to in this announcement are not
incorporated into, and do not form part of, this announcement.
Requesting hard copy documents
Pursuant to Rule 30.3 of the Code, a person so entitled may
request a copy of this announcement and any information
incorporated into it by reference to another source in hard copy
form by writing to Chris Dent at Franchise Brands plc, Ashwood
Court, Springwood Close, Tytherington Business Park, Macclesfield
SK10 2XF. A person may also request that all future documents,
announcements and information to be sent to that person in relation
to the Offer should be in hard copy form.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT IS NOT A PROSPECTUS OR PROSPECTUS EQUIVALENT
DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT DECISION IN
RELATION TO THE NEW SHARES EXCEPT ON THE BASIS OF THE INFORMATION
IN THE OFFER DOCUMENT WHICH IS PROPOSED TO BE PUBLISHED IN DUE
COURSE.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 AS IT FORMS PART OF
UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT
2018 AS AMED.
16 February 2022
Franchise Brands plc
Recommended All Share Offer
for
Filta Group Holdings plc
by
Franchise Brands plc
1. Introduction
On 16 February 2022, the Filta Directors and the Board of
Franchise Brands plc ("Franchise Brands") announced that they had
reached agreement on the terms of a recommended all-share offer to
be made by Franchise Brands for the entire issued and to be issued
share capital of Filta, to be implemented by means of a Code
takeover offer (the "Offer").
2. The Offer
Under the Offer, Franchise Brands will be offering to acquire,
subject to the Conditions and the further terms set out in Appendix
1 to this announcement, the entire issued and to be issued share
capital of Filta on the following basis:
1.157 New Franchise Brands Shares in exchange for each Filta
Share
The New Franchise Brands Shares will be issued credited as fully
paid and will rank pari passu in all respects with the Franchise
Brands Shares already in issue, including the right to receive and
retain dividends and other distributions declared, made or paid,
including any dividend that might be recommended by Franchise
Brands in respect of the year ended 31 December 2021 and future
periods (if any) , subject to requisite shareholder approval.
Application will be made to the London Stock Exchange for the New
Franchise Brands Shares to be admitted to trading on AIM.
Upon the Offer becoming or being declared unconditional in all
respects and assuming Franchise Brands acquires all the fully
diluted share capital of Filta, Filta Shareholders will own
approximately 26.1 per cent. of the share capital of the Enlarged
Group (based on the existing issued ordinary share capital of
Franchise Brands and the fully diluted share capital of Filta, in
each case as at the Latest Practicable Date).
Based on the Offer Value and the Closing Price per Franchise
Brands Share of 147.5 pence on the Latest Practicable Date, the
Offer will be equivalent in value to 170.7 pence for each Filta
Share and the Offer values the entire issued and to be issued
ordinary share capital of Filta at approximately GBP49.8 million
.
The Offer Value represents a premium of approximately:
-- 7.7 per cent. to the Closing Price of 158.5 pence per Filta
Share on 15 February 2022 (being the latest practicable date prior
to the commencement of the Offer Period);
-- 23.8 per cent. to the volume-weighted average price of 137.9
pence per Filta Share for the three months ended 15 February 2022
(being the latest practicable date prior to the commencement of the
Offer Period); and
-- 17.1 per cent. to the volume-weighted average price of 145.7
pence per Filta Share for the twelve months ended 15 February 2022
(being the latest practicable date prior to the commencement of the
Offer Period).
In addition, the volume-weighted average price for the 30 day
period ended 15 February 2022 of 157.1 pence per Franchise Brands
Share multiplied by the Offer Value represents a premium of 29.8
per cent. over the volume-weighted average price for the 30 day
period ended 15 February 2022 of 140.0 pence per Filta Share.
The Filta Shares will be acquired under the Offer fully paid and
free from all liens, charges, equitable interests, encumbrances,
rights of pre-emption and any other rights and interests of any
nature whatsoever and together with all rights now and hereafter
attaching thereto, including voting rights and the right to receive
and retain in full all dividends and other distributions (if any)
.
Upon the Offer becoming or being declared wholly unconditional,
New Franchise Brands Shares to be issued and allotted to Filta
Shareholders who accept the Offer in accordance with the Offer
Value will be rounded down to the nearest whole number. There will
be no credit for fractional entitlements. Under the terms of the
Offer, Accepting Shareholders will receive 1.157 New Franchise
Brands Shares for every Filta Share held. An Accepting Shareholder
will receive such number of New Franchise Brands Shares as is equal
to such number of Filta Shares they hold multiplied by 1.157 and
rounded down to the nearest whole number. By way of illustration,
if an Accepting Shareholder holds 1,000 Filta Shares, they will
receive 1,157 New Franchise Brands Shares calculated as follows:
1,000 Filta Shares multiplied by 1.157 equates to 1,157 New
Franchise Brands Shares (rounded down to the nearest whole
number).
If, after the Announcement Date and before the Offer becomes or
is declared wholly unconditional, any dividend and/or other
distribution and/or other return of capital is announced, declared,
made or paid or becomes payable in respect of the Filta Shares
(other than dividends and other distributions or returns of capital
that are declared, made or paid by Filta on or after the
Announcement Date, including any dividend that might be declared by
Filta in respect of the year ended 31 December 2021 (if any), which
are payable to Franchise Brands as Filta Shareholders at the time
the payment is made) , Franchise Brands reserves the right to
reduce the Offer Value by an amount up to the amount of such
dividend and/or distribution and/or return of capital so announced,
declared, made, paid or payable. If Franchise Brands exercises this
right or makes such a reduction to the Offer Value in respect of a
dividend and/or other distribution and/or return of capital, Filta
Shareholders will be entitled to receive and retain that dividend
and/or distribution and/or return of capital. Any exercise by
Franchise Brands of its right referred to in this paragraph shall
be subject of an announcement and, for the avoidance of doubt,
shall not constitute a revision or variation to the terms of the
Offer for the purposes of the Code.
The Offer will extend to any Filta Shares not already owned, or
agreed to be acquired, by Franchise Brands and which are
unconditionally allotted or issued and fully paid (or credited as
fully paid) on or before Day 60 or, if earlier the Unconditional
Date including any such shares allotted or issued pursuant to the
exercise of existing options granted under the Filta EMI Plan.
Franchise Brands intends to write to the participants of the Filta
EMI Plan with such appropriate proposals as it is required to make
pursuant to Rule 15 of the Code.
Conditions to the Offer
The Offer will be conditional upon, amongst other matters:
(i) Franchise Brands receiving valid acceptances in respect of,
and/or having otherwise acquired, Filta Shares which constitute
more than 75 per cent. of the voting rights relating to the Filta
Shares ;
(ii) an ordinary resolution relating to Franchise Brands
Directors' authority to issue shares being proposed at the
Franchise Brands General Meeting and passed (without amendment);
and
(iii) Admission of the New Franchise Brands Shares to trading on
AIM.
The Offer will lapse if these conditions are not satisfied or,
if capable of waiver, waived.
The conditions to the Offer are set out in full in Appendix 1 of
this announcement.
3. Background to and reasons for the Offer
Franchise Brands is focused on building market-leading
businesses primarily through a franchise model. It currently has a
combined network of over 425 franchisees across five principal
franchise brands in the UK. Its focus is on established brands that
can benefit from its shared support services, specialist sector
expertise, management experience and group resources.
Franchise Brands has continued to selectively seek
earnings-enhancing acquisitions of complementary B2C franchise
businesses where it can leverage its existing divisional structure
and high-quality shared support services. Having visibility of both
franchisees' and franchisors' longer-term viability following the
COVID-19 crisis is a key factor. Franchise Brands also remains
interested in the acquisition of complementary B2B businesses that
will assist in expanding the range of services offered by its B2B
franchisees. Finally, Franchise Brands stated in its 2020 annual
report that it was searching for additional franchise businesses of
scale that could create a third division of the Group.
In Franchise Brands' half year results announced on 22 July
2021, it was stated that with all its main businesses growing again
and with a positive outlook, Franchise Brands are confident that
the Group's organic growth priorities are well supported and on
track to deliver and Franchise Brands is, therefore, increasing its
focus on growth by acquisition and are actively reviewing
acquisition opportunities that would be significantly
earnings-enhancing.
The Franchise Brands Board and the Filta Board believe that the
merging of the Franchise Brands and Filta businesses, by way of the
Offer, if the Offer becomes or is declared wholly unconditional,
would deliver significant benefits to all stakeholders
including:
-- establishing an enlarged Group of greater scale, able to
leverage the combined franchising and management experience and
expertise, shared support services and resources to drive future
growth in revenue and profits;
-- enabling the Enlarged Group to offer one-stop solutions to
its combined commercial customer base. The businesses of Franchise
Brands and Filta in the UK each have a slightly different focus.
Franchise Brands' Metro Rod, Metro Plumb and Willow Pumps
businesses are primarily focused on reactive work serviced from a
national network of 50 depots across the UK. In contrast, the Filta
businesses are focused on planned maintenance and installation
services. By combining these strengths, the Franchise Brands
Directors believe the Enlarged Group would have the ability to
offer a broader range of services to its combined customer base and
provide competitive advantages in its ambition to offer a "Water
In, Waste Out" service to the commercial sector in the UK;
-- the complementary nature of the services provided by the
Enlarged Group, together with the breadth of the customer base of
the combined direct labour businesses in the UK, will also provide
significant opportunities for future growth. When combined with the
Metro Rod national depot network, the Enlarged Group will have a
comprehensive service offering for customers requiring planned
maintenance and reactive services in a wide range of sectors;
-- Filta has a well-established and successful franchise
business in North America. The combination of the strength and
depth of experienced management and Filta's high-quality support
infrastructure and services, will leave the Enlarged Group well
placed to expand both organically and by acquisition in this very
large market;
-- the opportunity for Filta to grow its UK franchise business
using Franchise Brands' established franchise recruitment and
support infrastructure;
-- the opportunity for Filta to continue to develop its European
franchise business supported by Franchise Brands' management
experience and expertise, shared support services and established
UK support infrastructure;
-- leveraging the investment Franchise Brands has made in the
digital transformation of its businesses, which has provided it
with scaleable, customisable, proprietary IT systems, for the
benefit of the Enlarged Group;
-- the combination of the experienced management teams of
Franchise Brands and Filta will enhance the growth opportunities of
the Enlarged Group both in the UK and internationally;
-- Jason Sayers and Brian Hogan will join the Franchise Brands
board as Managing Director-Filta and Chief Financial Officer,
respectively, and will both strengthen the Enlarged Group's board
and help facilitate the smooth integration of the two
businesses;
-- cost savings through the elimination of duplicated public
quoted company costs and certain UK operational costs and
overheads;
-- enhancing the Enlarged Group's ability to make acquisitions
due to the additional managerial resources, balance sheet strength
and international presence of the Enlarged Group;
-- as an enlarged group with a higher market capitalisation and
potentially increased liquidity in its shares, the opportunity to
attract wider institutional investor interest providing greater
access to capital; and
-- helping to attract and retain key people due to the increased
size and scale of the Enlarged Group with increased opportunities
for the employees of both businesses.
The Franchise Brands Board and Filta Board believe that the
strategic rationale for the Offer as set out above is compelling,
and the financial rationale for combining the businesses of
Franchise Brands and Filta is sound, with the potential to deliver
substantial benefits to customers, employees, franchisees,
shareholders and other stakeholders of Franchise Brands and Filta.
The Offer is expected to result in enhanced value for Filta
Shareholders and Franchise Brands Shareholders, reflecting a
combination of the recommended Offer Value and the significant
synergy potential of the Offer.
The share for share offer enables Filta Shareholders to
participate fully in the potential value creation of the Offer and
benefit from future shareholder returns, including participating in
the continuation of Franchise Brands' progressive dividend policy
following the Offer. In particular, Filta Shareholders that validly
accept the Offer will be entitled to receive any final dividend
that Franchise Brands might recommend, subject to shareholder
approval, for the year ended 31 December 2021 in respect of the New
Franchise Brands Shares they receive as a result of the Offer and
Filta Shareholders are referred to paragraph 7 below and the
paragraph entitled Current Trading in this regard.
The Franchise Brands Board and Filta Board believe that the
terms of the Offer fairly reflect both Franchise Brands and Filta's
respective standalone businesses and their prospects as well as an
appropriate sharing of the anticipated synergies resulting from the
Offer. In addition, Filta will have ongoing representation on the
board of the Enlarged Group, with Jason Sayers and Brian Hogan
joining the Franchise Brands Board as Managing Director-Filta and
Chief Financial Officer respectively.
4. Management, employees and locations
Upon the Offer becoming or being declared wholly unconditional,
the Franchise Brands Board intends that the existing business
activities of Filta will operate as a standalone division of the
Enlarged Group.
Franchise Brands recognises the quality of Filta's employees and
management team and their importance to the success of Filta and
believes that they will be a key factor in maximising the
opportunities that the Enlarged Group will present. Management and
employees of both Franchise Brands and Filta will have the
potential to benefit from new opportunities within the Enlarged
Group following the Offer becoming or being declared wholly
unconditional.
On the Offer becoming or being declared wholly unconditional,
Jason Sayers will join the Franchise Brands Board as Managing
Director-Filta. As announced on 7 December 2021, Franchise Brands'
current Chief Financial Officer, Chris Dent, will be leaving
Franchise Brands shortly after the announcement of its final
results for the year ended 31 December 2021, in order to take up a
new role. Franchise Brands is therefore pleased that Brian Hogan
will also join the Franchise Brands Board as Chief Financial
Officer. These appointments will both strengthen the Enlarged
Group's board and help facilitate the smooth integration of the two
businesses. On the Offer becoming or being declared wholly
unconditional, it is intended that all of the Filta non-executive
directors will resign from the Filta Board. Victor Clewes and
Jlubomir Urosevic, current executive directors of Filta, will
remain in the Filta business in senior management roles. No
incentivisation arrangements for Filta's senior managers and
employees have been discussed or agreed, and Franchise Brands
expects to commence a review of the Filta and Franchise Brands
compensation arrangements shortly after the Offer becoming or being
declared wholly unconditional.
Franchise Brands intends to safeguard the existing statutory and
contractual employment rights of Filta Group's management and
employees and has no plans to make any material changes to the
terms and conditions of employment.
The Franchise Brands Board believes that some cost savings will
be available from an operational and administrative review of the
Enlarged Group, which is likely to be required following the Offer
to reduce costs arising from duplicated head office functions. It
is anticipated that such review may lead to a small reduction in
headcount of head office functions given the overlap in expertise
between the Franchise Brands Group and the Filta Group, however,
Franchise Brands will seek to redeploy such employees elsewhere
within the Enlarged Group. Whilst any review is subject to detailed
planning, Franchise Brands intends to engage with appropriate
stakeholders, including employee representative bodies, to assess
the overall impact of the finalisation of any such plans.
Otherwise, Franchise Brands does not expect a material reduction in
headcount or to make any material change to the balance of skills
and functions of employees and management of Filta Group and
Franchise Brands Group.
Filta operates two defined contribution pension schemes. There
is no intention to make any changes to the current levels of
pension contributions for existing members of, or admission of new
members to, Filta's de ned contribution pension schemes. Over time,
Franchise Brands will seek to harmonise employee benefits across
the Enlarged Group.
Franchise Brands has no intention to redeploy any material xed
assets of Filta or change Filta or Franchise Brands' locations of
business or employment, including the locations of their respective
headquarters for at least the next 12 months, as a consequence of
the Offer. Franchise Brands has no intention to change, relocate or
curtail Filta's existing new product research and development
function. Franchise Brands has no intention of changing Filta's
operational brand given its position in the market.
5. Background to and reasons for Filta's Board recommending the Offer
Since its admission to trading on AIM in November 2016, Filta
has made significant operational progress, growing its franchise
network and direct sales business across North America and mainland
Europe. Filta now provides commercial kitchen services to thousands
of customers, specialising in fryer, grease and drain management.
Filta's revenues have almost tripled since its IPO from GBP7.9
million in 2015 to GBP23.6 million (unaudited) in 2021, through a
combination of organic growth and the acquisitions of Grease
Management Limited in August 2017 and WatBio Limited in December
2018.
The Company's share price performed well during the two years
post flotation, with the share price reaching a high of 269p in
September 2018. This followed strong growth in adjusted EBITDA of
67 per cent. to GBP2.2m in 2017. Subsequent strong trading from new
franchisees and an increased contribution from Grease Management
Limited and the sale of the Company's refrigeration business at the
end of 2017, the combination of which led to higher overall gross
margins and improved profitability.
The emergence of COVID in the first quarter of 2020 impacted the
Company's share price more severely than the wider AIM market as a
result of the Company's exposure to the food retailing and
hospitality industries. It fell to its lowest level of 48p in April
2020 as the Company announced material uncertainties facing its
business.
Notwithstanding these trading difficulties, Filta's business
demonstrated resilience throughout the pandemic and the Filta
Board, more confident in Filta's trading outlook, reinstated market
guidance for 2022. The Filta Board considers that renewed investor
confidence in the Company's outlook supported a reasonable share
price recovery, although it believes that recent market turbulence
and negative investor sentiment surrounding concerns over the
Omicron variant, supply chain issues, interest rate rises and rapid
inflation rate increases curtailed the share price recovery, as it
has certain other sectors of the UK market.
Filta announced in November 2021 that it expected to finish the
year slightly ahead of analysts' forecasts of revenue and adjusted
EBITDA and, as a result of a strong performance in the third and
fourth quarters of 2021, Filta was able to further update the
market earlier this month with a confirmation that revenues are now
running at higher levels than before the coronavirus pandemic and
that, for the year just ended, they would be GBP23.6m (2020:
GBP16.4m).
Notwithstanding the resilience demonstrated by Filta, the COVID
pandemic has had a significant impact on its business over the last
two years. Filta's financial performance is clearly heavily reliant
on the state of the restaurant, food retailing and hospitality
industries, which account for the greatest proportion of customers.
Filta's acquisition of Watbio in late 2018 had been a very
significant step in terms of positioning Filta as one of the
leading providers of its commercial kitchen services in the UK and,
with the franchised activities in North America already one of the
market leaders, the Filta Board believed that this provided a
strong base for growth over the coming years.
The Board of Filta remains confident in the standalone prospects
of Filta and is pleased with the progress made over the last few
years in pursuing its strategic priorities. Despite the challenging
market conditions resulting from the pandemic, a record setting
third and fourth quarter in the financial year ended 31 December
2021 saw Filta generate revenues of GBP23.6 million (unaudited).
Sales in North America grew 82 per cent. year-on-year to a record
GBP14.2 million. Although the return to normality was slower in
Filta's UK operations, second half revenues increased by 37 per
cent. over the first half of the year. Pleasingly, this positive
momentum across the Filta business has continued in 2022 with
January revenue up 62 per cent. over the same period in the prior
year.
However, the pandemic, the effects of which were unavoidable by
Filta, highlighted the risks of being entirely dependent on a
relatively narrow service offering (albeit to one significant
sector of the world economy) as Filta's business endured a three
month period of almost complete shutdown followed by continuing
adverse effects which are still being felt, to some extent, more
than 18 months later. It has only been through taking fast actions,
particularly in managing Filta's cash, being supportive to its
franchisees and customers and using the "downtime" to improve
products and services, that Filta has been able to navigate its way
to a currently robust financial and encouraging trading position,
albeit that the growth and development was stalled for almost two
years.
Filta has sought to mitigate such risks by broadening its
customer base, by continually improving key products, such as the
Cyclone GRU, and by adding new products, such as a vent-cleaning
system, but Filta's future still remains very dependent on the same
single business sector as previously.
Whilst Filta has a powerful and successful franchise formula in
North America, it has found it more challenging to grow its
franchise network in the UK, a major market. Accordingly, growing
the footprint to encompass activities beyond those provided to
commercial kitchens and food-driven activities, generally, will be
taking Filta into unknown territories as regards the knowledge of
the industries and, in the UK, is likely to require capital
investment to support more Company-owned businesses, if the group
remains independent.
The Filta Board believes that, as the economy rebounds after the
Covid-impacted last two years, there will be a number of
opportunities to grow but it is also acutely aware that another
similar event, either worldwide or in Filta's two major operating
territories, would re-create the financial pressures that Filta has
spent the last two years managing. It considers, that, as a small
company, albeit with a strong balance sheet, Filta would need to be
very cautious in venturing into new areas of business, in taking on
debt to help with expansion and in stretching the management team
as it integrates newly acquired or develops new business areas.
The Filta Board has, since IPO, continually monitored the market
for attractive opportunities with a view to achieving increased
scale, diversifying its services and enhancing value for Filta's
Shareholders.
The Filta Board believes the Offer provides the opportunity to
combine two highly complementary businesses into a single group
with a comprehensive suite of commercial waste management services
from which to create a one stop solution to the combined commercial
customer base.
The merger with Franchise Brands, which has established itself
in franchising across a range of activities and business sectors,
provides the diversification which Filta is seeking and to mitigate
the risk of being single sector dependent. Moreover, Franchise
Brands, through its Metro Rod (a commercial drainage expert) and
Willow Pumps (a leading provider of pump design, installation and
servicing) businesses, offers services which are complementary to
Filta's commercial kitchen services and, therefore, provide
opportunities for the extension of its offering to Franchise
Brands' customers. Additionally, with its greater franchise
infrastructure in the UK, Franchise Brands can help to grow that
area of Filta's UK business, which has been relatively static under
Filta's ownership.
The Filta Board believes that the merging of the Franchise
Brands and Filta businesses, by way of the Offer, if the Offer
becomes or is declared wholly unconditional, would deliver several
benefits to Filta shareholders including, inter alia the
following:
-- Offer structure - The Offer gives Filta shareholders
flexibility. Filta shareholders are being offered shares in
Franchise Brands enabling them to continue to benefit from being
shareholders in the Enlarged Group as it pursues its growth
opportunities over the coming years or, should they so wish, to
realise their investment by selling their shares in the market.
-- Increased scale - the Filta board believes that the Offer has
compelling strategic and financial rationale. The share for share
offer enables Filta shareholders to participate fully in the
potential value creation of the Enlarged Group, including
participating in the continuation of Franchise Brands' progressive
dividend policy following the Offer. The Offer would lead to an
Enlarged Group with a greater market capitalisation. The increased
scale is also expected to enhance the liquidity of the New
Franchise Brands Shares held by Filta Shareholders compared to that
of the existing Filta Shares. Furthermore, the Filta Board believes
that the Enlarged Group would attract a greater range of
institutional investors compared to Filta as a standalone business
and smaller AIM-quoted company.
-- Reduced risk exposure through diversified sectors and
customers - Filta currently has exposure principally to food
retailing and hospitality and, as a result, has limited customer
diversification. Whilst Franchise Brands' services are
complementary to Filta's, its operations are multi-franchise,
providing a greater variety of services including plumbing and
drainage, both B2C and B2B, to a more diversified customer base. As
has been demonstrated by Filta's more severe share price impact
compared to Franchise Brands', following the COVID pandemic, the
Filta Board believes that it is important to reduce sector exposure
risk by enhancing diversification through entry into new markets
and servicing new customers. The Offer would provide immediate and
substantial diversification.
-- Enhanced ability to grow through acquisition - Franchise
Brands has a strong balance sheet and track record of acquiring and
integrating new companies. The Offer would enable Filta to benefit
from an enhanced ability to identify, acquire and integrate new
acquisitions across all its geographic markets. Whilst Filta has
completed two acquisitions since IPO, by comparison, Franchise
Brands has completed four acquisitions since its IPO in 2016.
-- Enhanced management team - the Enlarged Group would benefit
from the extensive experience of the combined management teams,
with Jason Sayers and Brian Hogan joining the board of Franchise
Brands upon completion of the Offer.
-- Enhanced franchising infrastructure - Franchise Brands has
substantially greater franchising resources and infrastructure in
the UK compared to Filta. The Enlarged Group, therefore, would
benefit from a greater franchising network to help accelerate the
growth of FiltaFry and FiltaFOG franchise opportunities.
-- Accelerated geographic expansion - following the integration
of Filta into the Enlarged Group after completion of the Offer, the
Enlarged Group would be better placed to expand its combined
operations throughout the US, a market of significant growth
opportunity, given Filta's established US footprint.
-- Cost savings - it is expected that the Offer would result in
cost savings within the Enlarged Group through the removal of
duplicate public quoted company costs as well as certain
operational efficiencies. It is anticipated that further cost
savings could be realised in the future.
The Filta Board anticipates a number of additional benefits of
integration resulting from the Offer, including:
-- Cross selling of Filta's Cyclone grease recovery to
additional customers through Franchise Brands' Metro Rod and Willow
Pumps businesses;
-- Developing FiltaVent further within Franchise Brands' existing customer base;
-- Upselling Franchise Brands' drainage service into existing Filta customers; and
-- Enhanced national logistical coverage in the UK leading to
greater efficiencies and better staff resource utilisation.
The Filta board believes that as set out above, the strategic
case is compelling and the financial rationale for combining the
businesses of Filta and Franchise Brands is sound, and that the
Enlarged Group will have some exciting growth opportunities
ahead.
The share for share offer enables Filta shareholders to
participate fully in the potential value creation of the Enlarged
Group and benefit from future shareholder returns, including
participating in the continuation of Franchise Brands' progressive
dividend policy following the completion of the Offer, as set out
in paragraph 7 below.
The Filta board believes that the terms of the Offer fairly
reflect both Filta and Franchise Brands' respective standalone
businesses and their combined prospects as well as an appropriate
sharing of the anticipated synergies from the Offer. In addition,
the Filta businesses will have ongoing representation within the
board of the Enlarged Group with Jason Sayers, the Chief Executive
of Filta and Brian Hogan the Chief Financial Officer of Filta,
joining the Franchise Brands Board as Managing Director-Filta and
Group Chief Financial Officer respectively.
6. Recommendation
The Filta Directors, who have been so advised by Cenkos as to
the nancial terms of the Offer, unanimously consider the terms of
the Offer to be fair and reasonable. In providing its advice to the
Filta Directors, Cenkos has taken into account the commercial
assessments of the Filta Directors. Cenkos is providing independent
nancial advice to the Filta Directors for the purpose of Rule 3 of
the Code.
Accordingly, the Independent Filta Directors intend to recommend
that Filta Shareholders accept the Offer, as all the Filta
Directors who are interested in Filta Shares intend and/or have
irrevocably undertaken to do (or procure to be done) in respect of
their own holdings (and those of their family members and trusts)
of, in aggregate, 18,175,215 Filta Shares, representing,
approximately 62.4 per cent. of the share capital of Filta in issue
as at the date of this announcement.
7. Information on Franchise Brands
Franchise Brands is a public limited company incorporated in
England and Wales whose shares are admitted to the AIM market of
the London Stock Exchange.
The Franchise Brands Group is focused on building market-leading
businesses primarily via a franchise model.
The Franchise Brands Group currently has a combined network of
over 425 franchisees across five principal franchise brands in the
UK. Its focus is on established brands that can benefit from its
shared support services, specialist sector expertise, management
experience and group resources.
The Franchise Brands Group is organised into a B2B division
comprised of Metro Rod, Metro Plumb and Willow Pumps, and a B2C
division that incorporates ChipsAway, Ovenclean and Barking Mad.
This divisional organisation of its brands is designed to provide a
greater focus and structure to support the strategic development of
its B2B and B2C brands.
In November 2021, Franchise Brands acquired Azura Group, a
leading franchise management software system developer which
represents an important step in the Franchise Brands Group's
digital journey and gave Franchise Brands full ownership of its
core systems, which are scalable and customisable.
Each of the Franchise Brands Group's brands are leaders in their
respective markets and each brand has a long trading history. The
combined trading history of all the Franchise Brands Group's brands
is over 165 years.
Franchise Brands had, as at the Latest Practicable Date, a
market capitalisation of approximately GBP141 million. In the year
ended 31 December 2020, Franchise Brands generated turnover of
GBP49.3 million (2019: 44.0 million) and achieved a gross profit of
GBP20.9 million (2019: GBP16.4 million), giving an adjusted EBITDA
of GBP6.6 million (2019: GBP5.2 million) and adjusted profit before
tax of GBP4.8 million (2019: GBP4.1 million), and had net assets on
its balance sheet as at 31 December 2020 of GBP43.8 million (2019:
GBP27.9 million).
In the unaudited interim results for the Franchise Brands Group
for the six months to 30 June 2021, revenue was GBP28.6 million (H1
2020: GBP24.2 million) and it achieved a gross profit of GBP11.7
million (H1 2020: GBP9.6 million), giving an adjusted EBITDA of
GBP4.2 million (H1 2020: GBP2.8 million) and adjusted profit before
tax of GBP3.2 million (2020: GBP1.9 million).
Current trading
On 11 January 2022, Franchise Brands announced a trading update
for the financial year ended 31 December 2021. Metro Rod system
sales grew by 24 per cent. to a record GBP50.4m (2020: GBP40.6m).
Willow Pumps' service division has continued to grow and
contributed to the overall business growing sales for the year by
11 per cent. to GBP13.8m (unaudited) (2020: GBP12.4m). However, the
supply and install division of Willow Pumps has been slower to
recover. The Group's B2C division continues to perform robustly
with 57 new recruits year-to-date (2020: 58), strong cash
generation and continued tight cost control.
The strong cash generative nature of Franchise Brands' business
allowed the early full repayment of its term loan. At the year end,
Franchise Brands had cash of GBP9.0 million and an additional
GBP5.0 million of unutilised debt facilities. The strength of the
deleveraged balance sheet and high level of liquidity puts
Franchise Brands in a strong position to support its franchisees,
invest in the business and people, support a progressive dividend
policy, and take advantage of earnings-enhancing acquisition
opportunities.
Franchise Brands expects to announce its annual results for the
year ended 31 December 2021 on 3 March 2022.
Dividend policy
As reported in Franchise Brands' annual report and accounts for
the financial year ended 31 December 2020, the Franchise Brands
Board has adopted a dividend policy to provide sustainable
dividends to shareholders, consistent with the Group's earnings
growth and debt gearing levels, to attract long-term investors and
to enable shareholders to enjoy returns on their investment in
tandem with the Group's growth. The payment and amount of any
dividends or distributions to shareholders is at the discretion of
the Board and, in the case of any final dividends, will be subject
to shareholder approval.
Franchise Brands' recent dividend payment record (figures stated
as pence per share)
Year ending 31 2017 2018 2019 2020 2021
December
-------------------- ------ ----- ----- ----- -----
Interim (p) 0.17 0.21 0.30 0.30 0.60
Final (p) 0.33 0.46 0.65 0.80 TBC
Total 0.50 0.67 0.95 1.10 TBC
per cent. increase 194.1 34.0 41.8 15.8 n.a.
The increased diversification of the Enlarged Group, enhanced
financial profile and earnings accretion are expected to support
the generation of attractive and sustainable returns for
shareholders in the Enlarged Group, including through
dividends.
Once the Offer becomes or is declared unconditional, Filta
Shareholders that are issued Franchise Brands Shares pursuant to
the Offer will receive any dividend that might be declared by
Franchise Brands in respect of the year ended 31 December 2021 (if
any).
8. Information on Filta
The Filta Directors believe that Filta is one of the
market-leaders in the commercial kitchen services sector, servicing
restaurants, supermarkets, stadiums, healthcare, education, hotels
and amusement parks. Trusted by many global brands, the Filta Group
specialises in fryer management and grease and drain management,
servicing businesses that require regular maintenance.
Filta provides cooking oil filtration and fryer management
services to restaurants and other food establishments throughout
North America, the UK and mainland Europe, servicing thousands of
customers every week. This is Filta's core and original service,
FiltaFry, which is operated by 180 Franchise Partners across the
UK, the USA and Europe.
Over the years, other products and services have been developed
to be provided to the same customer base, taking advantage of
Filta's market knowledge and working relationships to provide:
- fryer management and cooking oil services;
- fats, oils and grease management;
- wastewater pumping and treatment;
- commercial refrigeration seal replacement service; and
- automated extraction duct cleaning.
In the year ended 31 December 2020, the Filta Group generated
revenue of approximately GBP 16.4 million, a loss before tax of
approximately GBP0.9 million and had net assets on its balance
sheet as at 31 December 2020 of approximately GBP7.7 million. In
the unaudited interim results for the Filta Group for the six
months to 30 June 2021, revenue was GBP9.7 million (H1 2020: GBP8.3
million) and it achieved a gross profit of GBP3.9 million (H1 2020:
GBP3.4 million), giving an adjusted EBITDA of GBP1.3 million (H1
2020: GBP0.2 million). The reported unaudited profit before tax of
GBP0.2 million (2020: loss of GBP0.8 million) was after incurring
GBP1.0 million of non-cash or non-recurring charges (H1 2020:
GBP0.9 million). Filta had net assets on its unaudited balance
sheet as at 30 June 2021 of approximately GBP7.6 million.
Current trading
On 7 February 2022, Filta announced a trading update confirming,
inter alia, that revenues recovered strongly through 2021 and are
now running at higher levels than they were before the impact of
the pandemic. The record-setting third and fourth quarters helped
the Group to finish the year with revenues of GBP23.6m (2020:
GBP16.4m) (unaudited). This performance was led by a strong and
early recovery in North America, where sales grew 82per cent.
year-on-year to a record of GBP14.2m (2020: GBP7.8m). Although the
return to normality was slower in the UK operations, second half
revenues increased by 37per cent. over the first half, resulting in
full year UK revenues of GBP8.9m, up 10per cent. on 2020.
Filta announced that its Group's cash position has continued to
improve with net cash (including lease liabilities) of GBP0.7m as
of 31 December 2021 (31 December 2020: net debt GBP1.6m).
9. Filta Incentive Schemes
The Offer will extend to any Filta Shares which are
unconditionally allotted, issued or transferred to satisfy the
vesting or exercise of awards under the Incentive Schemes prior to
the Unconditional Date.
Participants in the Filta EMI Plan, which is the only Incentive
Scheme pursuant to which any Filta Shares will be unconditionally
allotted, issued or transferred to satisfy the vesting or exercise
of awards, will be contacted separately regarding the effect of the
Offer on their rights under the Filta EMI Plan and appropriate
proposals will be made to such participants in due course.
Participants in the SARs Plan (which is a cash based scheme) are
not entitled to be allotted any Filta Shares unconditionally, or
otherwise, to satisfy the vesting or exercise of their awards, and
will be contacted separately regarding the effect of the Offer on
any rights they may have under the SARs Plan and appropriate
proposals will be made to such participants in due course. Options
held under Filta's SARs Plan will lapse on the Offer becoming or
being declared unconditional in all respects.
10. Irrevocable undertakings and lock-in agreements
Irrevocable undertakings
Franchise Brands has received irrevocable undertakings from
certain of the Filta Directors and their connected parties
(including the Meredian Settlement Trust) who are interested in
Filta Shares to accept or procure acceptance of the Offer in
respect of a total of 18,095,280 Filta Shares, representing, in
aggregate, approximately 62.1 per cent. of the share capital of
Filta in issue as at the date of this announcement. Under the terms
of the irrevocable undertakings these Filta Directors have also
agreed to enter into irrevocable undertakings on analogous terms
should Franchise Brands implement the Offer by way of a Scheme.
These undertakings will remain binding in the event of a competing
offer being made.
In addition, Franchise Brands has received an irrevocable
undertaking to accept or procure acceptance of the Offer (or, if
the Offer is implemented by way of a Scheme to vote, or procure the
vote, in favour of the Scheme at the Court meeting and the
resolutions at the general meeting) from Gresham House Asset
Management Limited , in respect of 5,715,020 Filta Shares,
representing approximately 19.6 per cent. of the issued ordinary
share capital of Filta as at the date of this announcement. This
undertaking will remain binding in the event of a competing offer
being made unless the value of such competing offer is an
improvement of more than 10 per cent. of the value of the
consideration under the Offer and is not matched or bettered by
Franchise Brands (where such competing offer has been announced as
a firm intention to make an offer in accordance with Rule 2.7 of
the Code) or if the Offer Document is not published within 28 days
of the date of this announcement or the Offer lapses or is
otherwise withdrawn.
Therefore, in aggregate, Franchise Brands has received
irrevocable undertakings to accept or procure acceptance of the
Offer in respect of a total of 23,810,300 Filta Shares,
representing, in aggregate, approximately 81.7 per cent. of the
share capital of Filta in issue as at the date of this
announcement. A condition of the Offer will be for Franchise Brands
to receive valid acceptances in respect of, and/or having otherwise
acquired, Filta Shares which constitute more than 75 per cent. of
the voting rights relating to the Filta Shares, which would be
satisfied by the receipt of valid acceptances of the Offer in
respect of these irrevocable undertakings.
Further details of these irrevocable undertakings are set out in
Appendix 3 to this announcement.
Lock-in agreements
Certain of the Filta Directors and the Meredian Settlement
Trust, who are interested in 18,095,280 Filta Shares have entered
into lock-in agreements with Franchise Brands, Allenby Capital and
Dowgate in respect of a total of 20,936,238 New Franchise Brands
Shares, representing, in aggregate, approximately 16.1 per cent. of
the Enlarged Share Capital, to be issued to them should the Offer
become or is declared wholly unconditional Pursuant to these
agreements they have agreed that they will not, and will use all
their reasonable endeavours to procure that each of their connected
persons will not, directly or indirectly effect or agree to effect
a disposal of any legal or beneficial interest in any such New
Franchise Brands Shares during the period from Admission until the
first anniversary of Admission and thereafter for a further 12
months, to only dispose of such shares in an orderly manner as
Allenby Capital and Dowgate shall reasonably determine.
11. Franchise Brands General Meeting
In order to allot the New Franchise Brands Shares, Franchise
Brands will seek authority from Franchise Brands Shareholders at
the Franchise Brands General Meeting. The Offer will accordingly be
conditional, inter alia, on such authority being approved.
The Franchise Brands Directors consider the Offer to be in the
best interests of Franchise Brands Shareholders as a whole and
recommend unanimously that Franchise Brands Shareholders vote in
favour of the Resolution to be proposed at the Franchise Brands
General Meeting, as those Franchise Brands Directors who are
interested in Franchise Brands Shares have irrevocably undertaken
to direct (and to use all reasonable endeavours to procure that)
their nominees, or, where relevant, to themselves to do in respect
of their own beneficial holdings (and the beneficial holdings which
are under their control) of 51,822,535 Franchise Brands Shares
representing, in aggregate, approximately 54.1 per cent. of
Franchise Brands' issued ordinary share capital as at the Latest
Practicable Date.
12. Issue and Admission of New Franchise Brands Shares
The New Franchise Brands Shares will be issued in registered
form and will be capable of being held in certificated and
uncertificated form.
Following the Offer becoming or being declared wholly
unconditional, the New Franchise Brands Shares will be issued as
fully paid and will rank equally in all respects with the Franchise
Brands Shares in issue at the time the New Franchise Brands Shares
are issued pursuant to the Offer, including in relation to the
right to receive notice of, and to attend and vote at, general
meetings of Franchise Brands, and the right to receive and retain
any dividends and/or other distributions declared, made or paid, or
any other return of capital (whether by reduction of share capital
or share premium account or otherwise) made, by Franchise Brands in
respect of the Franchise Brands Shares with a record date falling
after the Offer becoming or being declared wholly unconditional and
to participate in the assets of Franchise Brands upon a winding-up
of Franchise Brands.
Irrespective of the date on which the Offer becomes or is
declared wholly unconditional falls, Filta Shareholders will not be
entitled to receive any dividend declared, made or paid by
Franchise Brands for the benefit of the Franchise Brands
Shareholders by reference to a record date falling on or before the
date on which the Offer becomes or is declared wholly
unconditional.
Application will be made to the London Stock Exchange for the
New Franchise Brands Shares to be admitted to trading on AIM. It is
expected that Admission will become effective and that dealings for
normal settlement in respect of the New Franchise Brands Shares
issued to Accepting Shareholders who submit valid acceptances on or
before the date the Offer becomes or is declared wholly
unconditional, will commence on AIM within 14 days of such a date.
It is expected that Admission will become effective and that
dealings for normal settlement in respect of the New Franchise
Brands Shares issued to Accepting Shareholders who submit valid
acceptances after the date the Offer becomes or is declared wholly
unconditional will commence on AIM within 14 days of submitting
such acceptance.
No application has been made or is currently intended to be made
by Franchise Brands for the New Franchise Brands Shares to be
admitted to listing or trading on any other exchange.
13. Compulsory acquisition, cancellation of admission to trading
of Filta Shares on AIM and re-registration
If Franchise Brands receives acceptances under the Offer in
respect of, and/or otherwise acquires, both 90 per cent. or more in
value of the Filta Shares to which the Offer relates (as de ned in
the Companies Act) and 90 per cent. or more of the voting rights
carried by those shares, and assuming that all of the other
conditions of the Offer have been satis ed or waived (if capable of
being waived), Franchise Brands intends to exercise its rights in
accordance with sections 974 to 991 of the Companies Act to acquire
compulsorily the remaining Filta Shares on the same terms as the
Offer.
Following the Offer becoming or being declared unconditional, if
Franchise Brands receives acceptances under the Offer in respect
of, and/or otherwise acquires 75 per cent. or more of the voting
rights carried by the Filta Shares, Franchise Brands intends to
procure that Filta will cancel the admission of the Filta Shares to
trading on AIM and to re-register Filta as a private limited
company under the relevant provisions of the Companies Act. It is
anticipated that cancellation of admission to trading on AIM would
take effect, as soon as practicable, after 15 March 2022, being 20
Business Days following the Announcement Date, assuming the Offer
is declared or becomes wholly unconditional. A further announcement
confirming the cancellation date will be made upon the Offer
becoming or being declared unconditional.
Cancellation of admission to trading on AIM of the Filta Shares
and the re-registration of Filta as a private limited company would
signi cantly reduce the liquidity and marketability of any Filta
Shares in respect of which the Offer has not been accepted at that
time, and Filta's reporting and disclosure requirements will be
signi cantly reduced. Any remaining Filta Shareholders would become
minority shareholders in a majority controlled private limited
company and may, therefore, be unable to sell their Filta Shares.
There can be no certainty that Filta would pay any dividends or
other distributions or that such minority Filta Shareholders would
again be offered an opportunity to sell their Filta Shares on terms
which are equivalent to, or no less advantageous than, those under
the Offer.
14. Offer-related arrangements
Franchise Brands and Filta have entered into a mutual
non-disclosure agreement dated 11 January 2022 pursuant to which
each of Franchise Brands and Filta has undertaken, among other
things, to: (a) keep certain information relating to the Offer and
the other party confidential and not to disclose it to third
parties (other than to permitted parties) unless required by law or
regulation; and (b) use the confidential information for the sole
purpose of evaluating, negotiating, advising on or implementing the
Offer.
15. Disclosure of Interests
As at the close of business on 15 February 2022 , being the
Latest Practicable Date, neither Franchise Brands, nor any of the
Franchise Brands Directors, nor, so far as Franchise Brands is
aware, any person acting in concert (within the meaning of the
Takeover Code) with Franchise Brands has:
-- any interest in, or right to subscribe for, any Filta Shares
nor does any such person have any short position in Filta Shares
(whether conditional or absolute and whether in the money or
otherwise), including any short position under a derivative, any
agreement to sell, any delivery obligation or right to require
another person to purchase or take delivery of Filta Shares; or
-- borrowed or lent any Filta Shares or entered into any
financial collateral arrangements relating to Filta Shares; or
-- any dealing arrangement, including any indemnity or option
arrangement and any agreement or understanding, formal or informal,
of whatever nature relating to Filta Shares which may be an
inducement to deal or refrain from dealing.
16. Documents available for inspection
Copies of the following documents will, by no later than 12 noon
on 17 February 2022, be published on Franchise Brands' website at
https://www.franchisebrands.co.uk/investor-information/ and on
Filta's website at https://filtaplc.com/investor-relations :
a) this announcement;
b) the irrevocable undertakings referred to in paragraph 10
above and listed in Appendix 3 to this announcement;
c) the Lock-in agreements referred to in paragraph 10 above; and
d) the Non-Disclosure Agreement referred to in paragraph 14 above.
17. Franchise Brands General Meeting and associated irrevocable
undertakings
In order to allot the New Franchise Brands Shares, Franchise
Brands will seek authority from Franchise Brands Shareholders at
the Franchise Brands General Meeting by way of an ordinary
resolution. The completion of the Offer will, accordingly, be
conditional on such authority being approved.
The Franchise Brands Directors consider the Offer to be in the
best interests of Franchise Brands Shareholders as a whole and
intend to recommend unanimously that Franchise Brands Shareholders
vote in favour of the Resolution to be proposed at the Franchise
Brands General Meeting, as those Franchise Brands Directors who are
interested in Franchise Brands Shares intend to do in respect of
their own beneficial holdings (and the beneficial holdings which
are under their control) of 51,822,535 Franchise Brands Shares,
representing, in aggregate, approximately 54.1 per cent. of
Franchise Brands' issued ordinary share capital as at the Latest
Practicable Date.
18. Further information / Terms and conditions
It is intended that the Offer will be implemented by way of a
takeover offer (as defined in Part 28 of the Companies Act 2006),
further details of which are contained in the full text of this
announcement and which will be set out in the Offer Document.
However, Franchise Brands reserves the right, with the consent of
the Panel and Filta or, in certain circumstances, without the
consent of Filta, to implement the Offer by way of a
court-sanctioned scheme of arrangement between Filta and Filta
Shareholders under Part 26 of the Companies Act 2006
Appendix 1 to this announcement sets out the conditions and
further terms to which the Offer will be subject and to be set out
in the Offer Document. The Offer Document will include full details
of the Offer and the expected timetable, and will specify the
action to be taken by Filta Shareholders. The Offer will lapse if
it does not become wholly unconditional by 11.59 pm on the Long
Stop Date.
19. Further information on the Proposed Franchise Brands
Directors
The employment terms of Jason Sayers as described below will
remain after the Offer becomes or is declared unconditional.
On 26 October 2016, Mr Jason Sayers entered into a service
agreement with The Filta Group, Inc. under which he agreed to serve
as Chief Executive Officer of The Filta Group, Inc. and to act as a
director of and carry out duties on behalf of The Filta Group, Inc.
Jason Sayers currently receives an annual salary of US$20,000 under
this agreement. The agreement is terminable by either party on six
months' prior notice. The agreement imposes certain restrictions on
Jason Sayers as regards the use of confidential information and
intellectual property. In addition, Jason Sayers will be subject to
certain restrictive covenants following the termination of the
agreement.
On 26 October 2016, Filta Inc. entered into a consultancy
agreement with Roxanna Holdings, LLC, pursuant to which Roxanna
Holdings, LLC has agreed to provide the services of Mr Jason Sayers
and Mr. Victor Clewes. The aggregate annual fee payable under this
agreement is currently US$360,000. The agreement imposes certain
restrictions on Roxanna Holdings, LLC as regards the use of
confidential information. Roxanna Holdings, LLC will also be
subject to certain restrictive covenants following the termination
of the agreement. The agreement is terminable by either party
giving to the other 6 months' prior written notice.
It is proposed that Jason Sayers and Franchise Brands will enter
into a letter to set out his additional duties as a member of the
Franchise Brands Board on the Offer becoming or being declared
unconditional.
It is proposed that a service agreement will be entered into
between Franchise Brands and Brian Hogan on or around the Offer
becoming or being declared unconditional whereby Brian Hogan will
be appointed as Chief Financial Officer of Franchise Brands. It is
proposed that the service agreement will include termination
provisions whereby either party can terminate the agreement be
serving at least six months' written notice on the other. It is
proposed that the agreement will contain provisions for early
termination in the event, inter alia, of a breach of a material
term of the agreement by the director and, where such breach is
capable of remedy, the director fails to remedy the breach within
30 days of notice provided by the Board of Franchise Brands or
where the director ceases to be a director of Franchise Brands for
any reason. The basic annual salary payable to Brian Hogan is
proposed to be GBP180,000 per annum to be reviewed annually
(without any obligation to increase the same). It is proposed that
the service agreement will contain restrictive covenants for a
period of 12 months following termination of employment.
The following information is disclosed pursuant to Rule 17 and
Schedule Two paragraph (g) of the AIM Rules for Companies:
Brian Joseph Hogan (57 years of age) is, or has during the last
five years, been a director or partner of the following companies
and partnerships:
Current Directorships or Partnerships Previous Directorships or Partnerships
The Filta Group Inc None
Filta Environmental Canada Limited
(Canada)
Filta Group Holdings Plc
Jason Charles Sayers (51 years of age) is, or has during the
last five years, been a director or partner of the following
companies and partnerships:
Current Directorships or Partnerships Previous Directorships or Partnerships
Filta Group Holdings Plc None
The Filta Group Limited
The Filta Group Inc
Filta Group Europe BV
Filta Environmental Canada Ltd
Watbio Holdings Limited
Watbio Limited
Environmental Biotech Limited
Watling Hope (Installations)
Limited
M & M Asset Maintenance Limited
Grease Management Limited
Jason Sayers was a director of Xenerga, Inc. ("Xenerga"), a US
biodiesel company established in 2007. In 2009 the company became
insolvent and went into liquidation. The outstanding amount owed to
creditors from Xenerga was approximately US$4.8 million. The Filta
Group, Inc. and Jason Sayers were named as a defendant in a lawsuit
filed against Xenerga, a supplier of equipment and services for the
construction of biodiesel plants, by a customer of Xenerga. The
lawsuit was filed in the Circuit Court of Florida, Orange County on
21 April 2009. Filta was not involved in the biodiesel business,
but two of its shareholders and directors, Victor Clewes and Jason
Sayers, were shareholders and officers of Xenerga. The plaintiffs
alleged breach of contract, false representations of a material
fact, and other claims against Xenerga and against Mr. Clewes and
Mr. Sayers personally. On 27 December 2011, the parties entered a
settlement in which the plaintiffs filed a voluntary dismissal of
their suit against Filta, Mr. Clewes and Mr. Sayers. The defendants
agreed to pay approximately US$0.1 million to the plaintiffs and
were released from any further claims by the plaintiffs.
IMPORTANT NOTICES
Allenby Capital, which is authorised and regulated by the FCA in
the UK, is acting as financial adviser, nominated adviser and joint
broker exclusively for Franchise Brands and no one else in
connection with the Offer and this announcement and will not be
responsible to anyone other than Franchise Brands for providing the
protections afforded to clients of Allenby Capital or for providing
advice in relation to the Offer the content of this announcement or
any matter referred to herein.
Dowgate, which is authorised and regulated by the FCA in the UK,
is acting as joint broker exclusively for Franchise Brands and no
one else in connection with the Offer and this announcement and
will not be responsible to anyone other than Franchise Brands for
providing the protections afforded to clients of Dowgate or for
providing advice in relation to the Offer the content of this
announcement or any matter referred to herein.
Cenkos, which is authorised and regulated by the FCA in the UK,
is acting as financial adviser and Rule 3 adviser exclusively for
Filta and no one else in connection with the Offer and the matters
set out in this announcement and will not be responsible to any
person other than Filta for providing the protections afforded to
clients of Cenkos, nor for providing advice in relation to the
Offer , the content of this announcement or any matter referred to
herein.
Further Information
This announcement is for information purposes only and is not
intended to and does not constitute or form part of an offer,
invitation or the solicitation of an offer or invitation to
purchase, or otherwise acquire, subscribe for, sell or otherwise
dispose of any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Offer or otherwise nor
shall there be any sale, issuance or transfer of securities of
Franchise Brands or Filta pursuant to the Offer in any jurisdiction
in contravention of applicable laws. The Offer will be implemented
solely pursuant to the terms of the Offer Document (or, in the
event that the Offer is to be implemented by means of a scheme, the
Scheme Document), which will contain the full terms and conditions
of the Offer, including details of how to accept the Offer. Any
decision in respect of, or other response to, the Offer should be
made on the basis of the information contained in the Offer
Document.
Allenby Capital and Cenkos urge Filta Shareholders to read the
Offer Document carefully when it becomes available because it will
contain important information in relation to the Offer, the New
Franchise Brands Shares and the Enlarged Group, and to take
appropriate advice. Any action in relation to the Offer or related
matters should be made only on the basis of the information
contained in the Offer Document.
This announcement does not constitute a prospectus or prospectus
equivalent document.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in one per cent. or more of any class of relevant
securities of an offeree company or of any securities exchange
offeror (being any offeror other than an offeror in respect of
which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following
the commencement of the Offer Period and, if later, following the
announcement in which any securities exchange offeror is first
identified.
An Opening Position Disclosure must contain details of the
person's interests and short positions in, and rights to subscribe
for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s). An Opening Position
Disclosure by a person to whom Rule 8.3(a) applies must be made by
no later than 3.30 pm (London time) on the 10th Business Day
following the commencement of the Offer Period and, if appropriate,
by no later than 3.30 pm (London time) on the 10th Business Day
following the announcement in which any securities exchange offeror
is first identified.
Relevant persons who deal in the relevant securities of the
offeree company or of a securities exchange offeror prior to the
deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure. Under Rule 8.3(b) of the Takeover Code,
any person who is, or becomes, interested in one per cent. or more
of any class of relevant securities of the offeree company or of
any securities exchange offeror must make a Dealing Disclosure if
the person deals in any relevant securities of the offeree company
or of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s), save to the extent that these
details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by
no later than 3.30 pm (London time) on the Business Day following
the date of the relevant dealing. If two or more persons act
together pursuant to an agreement or understanding, whether formal
or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror,
they will be deemed to be a single person for the purpose of Rule
8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk , including
details of the number of relevant securities in issue, when the
Offer Period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44 (0)
20 7638 0129 if you are in any doubt as to whether you are required
to make an Opening Position Disclosure or a Dealing Disclosure.
Information relating to Filta Shareholders
Please be aware that addresses, electronic addresses and certain
other information provided by Filta Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Filta may be provided to Franchise Brands
during the Offer Period as required under Section 4 of Appendix 4
of the Takeover Code to comply with Rule 2.11(c).
Overseas jurisdictions
The attention of Filta Shareholders who are citizens or
residents of jurisdictions outside the UK is drawn to paragraph 2
of Part C of Appendix 1 of this announcement. Further details
(including guidance for US shareholders) will be set out in the
Offer Document.
Cautionary note regarding forward-looking statements
This announcement (including information incorporated by
reference in this announcement), oral statements made regarding the
Offer, and other information published by Filta and Franchise
Brands contain certain forward-looking statements, beliefs or
opinions with respect to the financial condition, results of
operations and business of the Wider Filta Group and the Franchise
Brands Group. These forward-looking statements can be identified by
the fact that they do not relate only to historical or current
facts.
Forward-looking statements may often, but not always, be
identified by the use of forward-looking terms such as "may",
"will", "expects", "believes", "hopes", "anticipates", "aims",
"plans", "estimates", "projects", "targets", "intends",
"forecasts", "outlook", "impact", "potential", "confidence",
"improve", "continue", "optimistic", "deliver", "comfortable",
"trend", "seeks" or variations of such words and phrases or
statements that certain actions, events or results "could",
"should", "would" or "might" be taken, occur or be achieved or the
negative of such terms or other variations on such terms or
comparable terminology.
Such statements are qualified in their entirety by the inherent
risks and uncertainties surrounding future expectations. These
statements are based on assumptions and assessments made by Filta
and/or Franchise Brands, as the case may be, in light of their
experience and their perception of historical trends, current
conditions, future developments and other factors that they believe
appropriate. By their nature, forward-looking statements involve
risk and uncertainty, because they relate to events and depend on
circumstances that will occur in the future and the factors that
could cause actual results and developments to differ materially
from those expressed in or implied by such forward-looking
statements are unknown.
Although it is believed that the expectations reflected in such
forward-looking statements were reasonable at the time the
statements were made, no assurance is given by Filta and/or
Franchise Brands that such expectations or the assumptions and
assessments underlying them will prove to have been correct and the
circumstances may change. You are, therefore, cautioned not to
place undue reliance on these forward-looking statements. Neither
Filta nor Franchise Brands assumes any obligation, and Filta and
Franchise Brands disclaim any intention or obligation, to update or
correct the information contained in this announcement (whether as
a result of new information, future events or otherwise), except as
required by applicable law or regulation.
Save as specifically stated in this announcement, any such
forward-looking statements have not been reviewed by the auditors
of Filta or Franchise Brands or their respective financial
advisers. Such forward-looking statements involve known and unknown
risks and uncertainties that could significantly affect expected
results and are based on certain key assumptions. There are many
factors which could cause actual results to differ materially from
those expressed or implied in forward-looking statements. Among the
factors that could cause actual results to differ materially from
those described in the forward-looking statements is the
satisfaction of any conditions to the Offer, as well as additional
factors such as changes in global, political, economic, business,
competitive, market and regulatory forces (including as a result of
governmental, business or individual responses to the COVID-19
pandemic and any variant thereof), future exchange and interest
rates, changes in tax rates and future business combinations or
dispositions. Such forward looking statements should, therefore, be
construed in the light of such factors. Neither Filta nor Franchise
Brands, nor any of their respective associates or directors,
officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in
any forward-looking statements in this announcement will actually
occur.
No Profit Forecasts or Estimates
No statement in this announcement (including any statement of
estimated synergies) is intended as a profit forecast or estimate
for any period and no statement in this announcement should be
interpreted to mean that earnings or earnings per share or dividend
per share for Franchise Brands, Filta or the Enlarged Group, as
appropriate, for the current or future financial years would
necessarily match or exceed the historical published earnings or
earnings per share or dividend per share for Franchise Brands,
Filta or the Enlarged Group, as appropriate.
Rounding
Certain figures included in this announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures that precede them.
Rule 2.9
In accordance with Rule 2.9 of the Takeover Code, Franchise
Brands confirms that, as at the date of this announcement, it has
95,865,609 ordinary shares of 0.5p each in issue with International
Securities Identification Number (ISIN) GB00BD6P7Y24. Franchise
Brands does not hold any shares in treasury.
In accordance with Rule 2.9 of the Takeover Code, Filta confirms
that, as at the date of this announcement, it has 29,138,164
ordinary shares of 10p each in issue with International Securities
Identification Number (ISIN) GB00BDB7J920. Filta does not hold any
shares in treasury.
Publication on website
Pursuant to Rule 26.1 of the Code, a copy of this announcement
and other documents in connection with the Offer will, subject to
certain restrictions, be available for inspection on Franchise
Brands' website at
https://www.franchisebrands.co.uk/investor-information/ and by
Filta on its website at https://filtaplc.com/investor-relations no
later than 12 noon (London time) on the business day following this
announcement. The contents of the websites referred to in this
announcement are not incorporated into, and do not form part of,
this announcement.
Requesting hard copy documents
Pursuant to Rule 30.3 of the Code, a person so entitled may
request a copy of this announcement and any information
incorporated into it by reference to another source in hard copy
form by writing to Chris Dent at Franchise Brands plc, Ashwood
Court, Springwood Close, Tytherington Business Park, Macclesfield
SK10 2XF. A person may also request that all future documents,
announcements and information to be sent to that person in relation
to the Offer should be in hard copy form.
APPIX 1
CONDITIONS TO AND FURTHER TERMS OF THE OFFER
PART A - CONDITIONS TO THE OFFER
Acceptance condition
1. The Offer will be conditional upon valid acceptances of the
Offer having been received (and not validly withdrawn in accordance
with the rules and requirements of the Code and the terms of the
Offer) by no later than 1.00 pm on the Unconditional Date (or such
other times and/or dates as Franchise Brands may specify, subject
to the rules of the Code and where applicable with the consent of
the Panel) in respect of such number of Filta Shares which, when
aggregated with the Filta Shares held by Franchise Brands at the
date of the Offer and any Filta Shares acquired or agreed to be
acquired by Franchise Brands on or after such date, carry more than
75 per cent. (or, subject to the Code, such lower percentage as
Franchise Brands may decide) of the voting rights then exercisable
at a general meeting of Filta, provided that (a) the Condition in
this paragraph will not be satisfied unless Franchise Brands has
acquired or agreed to acquire (whether pursuant to the Offer or
otherwise) Filta Shares carrying, in aggregate, over 50 per cent.
of the voting rights then normally exercisable at general meetings
of Filta, including for this purpose (to the extent, if any,
required by the Code) any such voting rights attaching to any Filta
Shares which may be unconditionally allotted or issued before the
Offer becomes or is declared unconditional as to acceptances
whether pursuant to the exercise of any outstanding subscription or
conversion rights or otherwise and (b) unless the Panel consents
otherwise this Condition (the "Acceptance Condition") shall only be
capable of being satis ed when all other Conditions set out in
paragraph 2 below have been satis ed or waived;
For the purposes of the Acceptance Condition:
(a) Filta Shares which have been unconditionally allotted but
not issued before the Offer becomes or is declared unconditional,
whether pursuant to the exercise of any outstanding subscription,
option or conversion rights or otherwise, shall be deemed to carry
the voting rights they will carry upon issue;
(b) valid acceptances shall be deemed to have been received in
respect of Filta Shares which are treated for the purposes of Part
28 of the Companies Act as having been acquired or contracted to be
acquired by Franchise Brands, whether by virtue of acceptance of
the Offer or otherwise; and
(c) all percentages of voting rights and share capital are to be
calculated by reference to the percentage held and in issue
excluding any and all shares held in treasury by Filta from time to
time.
Other conditions
2. Subject to the provisions of Part B of this Appendix 1 and
the requirements of the Panel in accordance with the Code, the
Offer will also be conditional upon the satisfaction or, where
relevant, waiver of the following Conditions and, accordingly, the
Offer will not become or be declared unconditional unless the
following Conditions (as amended if appropriate) have been satis ed
or, where relevant, waived:
Franchise Brands Shareholder approval
2.1 an ordinary resolution relating to Franchise Brands
Directors' authority to issue shares being proposed at the
Franchise Brands General Meeting and passed (without
amendment);
Admission of the New Franchise Brands Shares
2.2 the New Franchise Brands Shares being admitted to trading on
the AIM market;
Noti cations, waiting periods and authorisations
2.3 all necessary noti cations, lings and applications having
been made in connection with the Offer, all regulatory and
statutory obligations in any relevant jurisdiction reasonably
deemed necessary by Franchise Brands having been complied with in
connection with the Offer, all necessary waiting and other time
periods (including any extensions of such waiting and other time
periods) under any applicable legislation or regulations of any
relevant jurisdiction reasonably deemed necessary by Franchise
Brands having expired, lapsed or been terminated in each case in
respect of the Offer and all necessary Authorisations having been
obtained in terms and in a form reasonably satisfactory to
Franchise Brands from appropriate third parties in connection with
the Offer or the proposed acquisition of any shares or other
securities in, or control or management of, Filta or any other
member of the Wider Filta Group by any member of the Franchise
Brands Group or the carrying on by any member of the Wider Filta
Group of its business and there being no notice or intimation of an
intention to revoke, suspend, restrict, modify or not to renew such
Authorisations, in each case in any way that would be materially
adverse to the Wider Filta Group;
Other third party clearances
2.4 no central bank, government or governmental,
quasi-governmental, supranational, statutory, regulatory,
environmental, administrative, scal or investigative body, court,
trade agency, association, institution, employee representative
body or any other equivalent or analogous body or person in any
jurisdiction (each a "Third Party") having given notice of a
decision to take, institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference (and in each
case, not having withdrawn the same), or having enacted, made or
proposed to enact or make any statute, regulation, decision, order
or change to published practice (and in each case, not having
withdrawn the same) and there not continuing to be outstanding any
statute, regulation, decision or order, or having taken any other
steps which would, in each case, reasonably be expected to:
(a) require, prevent or materially delay the divestiture, or
materially alter the terms envisaged for any proposed divestiture
by any member of the Franchise Brands Group or by any member of the
Wider Filta Group of all or any part of their respective
businesses, assets or properties or impose any material limitation
on the ability of any of them to conduct their respective
businesses (or any of them) or to own any of their respective
assets or properties or any part thereof, which, in any such case,
is material in the context of the Franchise Brands Group or the
Wider Filta Group, in either case taken as a whole;
(b) require, prevent or materially delay or materially alter the
terms envisaged for, any divestiture by any member of the Franchise
Brands Group of any shares, other securities or other interests in
Filta or any member of the Wider Filta Group;
(c) except pursuant to Chapter 3 of Part 28 of the Companies Act
in the context of the Offer, require any member of the Franchise
Brands Group or of the Wider Filta Group to acquire, or to offer to
acquire, any shares or other securities (or the equivalent) or
interest in any member of the Wider Filta Group;
(d) except as Disclosed, require any member of the Wider Filta
Group to repay any indebtedness of any member of the Wider Filta
Group (other than in implementation of the Offer as agreed between
Franchise Brands and Filta);
(e) impose any limitation on, or result in any delay in, the
ability of any member of the Franchise Brands Group directly or
indirectly to acquire or to hold or to exercise effectively,
directly or indirectly, all or any rights of ownership in respect
of shares or loans or securities convertible into shares or any
other securities (or the equivalent) in any member of the Wider
Filta Group or the Franchise Brands Group or to exercise management
control over any such member;
(f) otherwise adversely affect the business, assets,
liabilities, trading position, value, pro ts, operational
performance, or prospects of any member of the Franchise Brands
Group or of any member of the Wider Filta Group in a manner which
is material in the context of the Franchise Brands Group or the
Wider Filta Group in either case taken as a whole ;
(g) make the Offer or implementation of the Offer by Franchise
Brands or any member of the Franchise Brands Group of any shares or
other securities in, or control of, Filta void, voidable, illegal,
and/or unenforceable under the laws of any jurisdiction, or
otherwise, directly or indirectly, restrain, restrict, prohibit,
prevent, delay or otherwise interfere with the same, or impose
additional conditions or obligations with respect thereto, or
otherwise challenge or interfere or require material amendment to
the terms of the Offer or the proposed acquisition of any shares or
other securities in, or control or management of, Filta by any of
the Franchise Brands Group;
(h) impose any limitation on, or result in any delay in, the
ability of any member of the Franchise Brands Group or the Wider
Filta Group to conduct, integrate or co-ordinate its business, or
any part of it, with the businesses of any other members of the
Franchise Brands Group and/or the Wider Filta Group in each case in
a manner which is adverse to and material in the context of the
Franchise Brands Group or the Wider Filta Group in each case taken
as a whole;
(i) require any member of the Wider Filta Group or the Franchise
Brands Group to relinquish, terminate or amend in any way any
material contract to which any member of the Wider Filta Group or
the Franchise Brands Group, as applicable, is a party, in each case
in a manner which is material in the context of the Franchise
Brands Group or the Wider Filta Group in each case taken as a whole
; or
(j) result in any member of the Wider Filta Group ceasing to be
able to carry on business under any name under which it presently
does so to an extent which is material in the context of the Wider
Filta Group taken as a whole, and all applicable waiting and other
time periods (including extensions thereof) during which any such
Third Party could institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference or take any
other step under the laws of any jurisdiction in respect of the
Offer or proposed Offer of any Filta Shares or other securities in,
or control or management of, Filta, Franchise Brands or otherwise
having expired, lapsed or been terminated;
2.5 all Authorisations necessary or appropriate for any member
of the Wider Filta Group to carry on its business remaining in full
force and effect at the time at which the Offer becomes Effective
or otherwise wholly unconditional (where the absence of such would
be material and adverse in the context of the Wider Filta Group)
and no intimation of any intention to revoke, suspend, materially
restrict or materially modify or not to renew any of the same
having been made;
2.6 no temporary restraining order, preliminary or permanent
injunction, preliminary or permanent enjoinment, or other order
issued and being in effect by a court or other Third Party which
has the effect of making the Offer or any proposed acquisition of
any shares or other securities in, or control or management of, any
member of the Wider Filta Group by any member of the Franchise
Brands Group, or the implementation of either of them, void,
voidable, illegal and/ or unenforceable under the laws of any
relevant jurisdiction, or otherwise directly or indirectly
prohibiting, preventing, restraining, restricting, delaying or
otherwise interfering with the completion or the approval of the
Offer or any matter arising from the proposed acquisition of any
shares or other securities in, or in control of, any member of the
Wider Filta Group by any member of the Franchise Brands Group;
Frustrating action
2.7 except with the consent or the agreement of Franchise
Brands, no resolution of Filta Shareholders in relation to any
offer or disposal of assets or shares (or the equivalent thereof)
in any undertaking or undertakings (or in relation to any merger,
demerger, consolidation, reconstruction, amalgamation or scheme)
being passed at a meeting of Filta Shareholders other than in
relation to the Offer and, other than with the consent or the
agreement of Franchise Brands, no member of the Wider Filta Group
having taken (or agreed or proposed to take) any action that
requires, or would require, the consent of the Panel or the
approval of Filta Shareholders in accordance with, or as
contemplated by, Rule 21.1 of the Code;
Certain matters arising as a result of any arrangement or
agreement
2.8 except as Disclosed, there being no provision of any
arrangement, agreement, lease, licence, franchise, permit or other
instrument to which any member of the Wider Filta 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, or any event or circumstance which, as
a consequence of the Offer or any proposed offer by any member of
the Franchise Brands Group of any shares or other securities (or
the equivalent) in Filta or because of a change in the control or
management of any member of the Wider Filta Group or otherwise,
would or might reasonably be expected to result in (in each case to
an extent or in a manner which is material and adverse in the
context of the Wider Filta Group or the Franchise Brands Group, in
either case taken as a whole, or in the context of the Offer):
(a) any moneys borrowed by or any other indebtedness or
liabilities (actual or contingent) of, or any grant available to
member of the Wider Filta Group, being or becoming repayable or
capable of being declared repayable immediately or earlier than
their or its stated maturity date or repayment date or the ability
of any such member to borrow moneys or incur any indebtedness being
withdrawn or inhibited or being capable of becoming or being
withdrawn or inhibited;
(b) any such agreement, arrangement, licence, permit or
instrument or the rights, liabilities, obligations or interests of
any member of the Wider Filta Group thereunder being, or becoming
capable of being, terminated or adversely modi ed or adversely
affected or any onerous obligation or liability arising or any
adverse action being taken or arising thereunder;
(c) any asset owned or used by, or interests in, any member of
the Wider Filta Group being disposed of or charged or ceasing to be
available to any member of the Wider Filta Group or any right
arising under which any such asset or interest could be required to
be disposed of or charged or cease to be available to any member of
the Wider Filta Group otherwise than in the ordinary and normal
course of business;
(d) the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business,
property, assets or interest of any member of the Wider Filta Group
or any such mortgage, charge or other security (whenever created,
arising or having arisen) becoming enforceable;
(e) the rights, liabilities, obligations, interests or business
of any member of the Wider Filta Group under any such arrangement,
agreement, licence, permit, lease or instrument or the interests or
business of any member of the Wider Filta Group in or with any
other person or body or rm or company (or any arrangement relating
to any such interests or business) being or becoming capable of
being terminated, or adversely modi ed or affected or any onerous
obligation or liability arising or any adverse action being taken
thereunder;
(f) the value of any member of the Wider Filta Group or its
business, assets, value, nancial or trading position, pro ts,
operational performance or prospects being prejudiced or adversely
affected;
(g) any member of the Wider Filta Group ceasing to be able to
carry on business under any name under which it presently does
so;
(h) the creation or acceleration of any liability, actual or
contingent, by any member of the Wider Filta Group (including any
tax liability or any obligation to obtain or acquire any Material
Authorisation, notice, waiver, concession, agreement or exemption
from any Third Party or any person which would be material in the
context of the Wider Filta Group);
(i) any liability of any member of the Wider Filta Group to make
any severance, termination, bonus or other payment to any of its
directors or other of cers; or
(j) any requirement on any member of the Wider Filta Group to
acquire, subscribe, pay up or repay any shares or other securities
in another corporate entity (other than in respect of another
member of the Wider Filta Group),
and no event having occurred which, under any provision of any
agreement, arrangement, licence, permit or other instrument to
which any member of the Wider Filta Group is a party or by or to
which any such member or any of its assets may be bound, entitled
or subject, would or is reasonably likely to result in any of the
events or circumstances as are referred to in sub-paragraphs (a) to
(j) of this Condition to an extent which is or which would be
material in the context of the Wider Filta Group;
Certain events occurring since 31 December 2020
2.9 except as Disclosed, no member of the Wider Filta Group
having, since 31 December 2020:
(a) save as between Filta and wholly-owned subsidiaries of Filta
or for Filta Shares issued under or pursuant to the exercise of
options and vesting of awards granted under the Filta EMI Plan,
issued, agreed to issue, authorised or proposed the issue of
additional shares of any class or agreed to transfer or sell or
authorised or proposed the transfer or sale of Filta Shares out of treasury;
(b) save as between Filta and wholly-owned subsidiaries of Filta
or for the grant of options and awards and other rights under the
Filta EMI Plan, issued or agreed to issue, authorised or proposed
the issue of securities convertible into shares of any class or
rights, warrants or options to subscribe for, or acquire, any such
shares or convertible securities;
(c) other than to another member of the Filta Group,
recommended, declared, paid or made or proposed to recommend,
declare, pay or make any bonus, dividend or other distribution
whether payable in cash or otherwise ;
(d) other than pursuant to the Offer or transactions in the
ordinary and normal course of business, merged or demerged with any
body corporate, partnership or business or acquired or disposed of
or transferred, mortgaged or charged or created any security
interest over any assets or any right, title or interest in any
asset (including shares and trade investments) or authorised or
proposed or announced any intention to propose any merger,
demerger, offer or disposal, transfer, mortgage, charge or security
interest, in any such case to an extent which is material in the
context of the Wider Filta Group taken as a whole;
(e) save as between Filta and wholly-owned subsidiaries of
Filta, made or authorised or proposed or announced an intention to
propose any change in its loan capital, in each case to the extent
to which is material in the context of the Wider Filta Group taken
as a whole;
(f) save as between Filta and wholly-owned subsidiaries of
Filta, save for transactions in the ordinary and normal course of
business, issued, authorised or proposed the issue of any
debentures, incurred or increased any indebtedness or become
subject to any guarantee or actual or contingent liability;
(g) disposed of, or transferred, mortgaged or created any
security interest over any material asset or any right, title or
interest in any material asset or authorised, proposed or announced
any intention to do so;
(h) purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities
or reduced or, save in respect to the matters mentioned in
sub-paragraphs (a) or
(b) above, made any other change to any part of its share capital;
(i) implemented, or authorised, proposed or announced its
intention to implement, any joint venture, asset or pro t sharing
arrangement, partnership, composition, assignment, reconstruction,
merger, demerger, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of
business or in respect of the Offer;
(j) sold or transferred or agreed to sell or transfer any Filta
Shares held by Filta as treasury shares except for the issue or
transfer out of treasury of Filta Shares on the exercise of
employee share options;
(k) entered into, varied, authorised or proposed entry into or
variation of the terms of, or made any offer (which remains open
for acceptance) to enter into or vary the terms of any contract,
commitment, arrangement or service agreement with any director or
senior executive of any member of the Wider Filta Group;
(l) entered into or varied or authorised, proposed or announced
its intention to enter into or vary any contract, transaction,
arrangement or commitment (whether in respect of capital
expenditure or otherwise) which is of a long term, onerous or
unusual nature or magnitude or which is or could reasonably be
expected to be materially restrictive on the businesses of any
member of the Wider Filta Group or the Franchise Brands Group;
(m) taken or proposed any steps, corporate action or had any
legal proceedings instituted or threatened against it for its
winding-up (voluntary or otherwise), dissolution or reorganisation
or in relation to payments, a moratorium of any indebtedness, or
for the appointment of a receiver, administrator, manager,
administrative receiver, trustee or similar of cer of all or any
part of its assets or revenues or any analogous or equivalent steps
or proceedings in any jurisdiction or appointed any analogous
person in any jurisdiction or had any such person appointed, and in
each such case, to the extent which is material in the context of
the Wider Filta Group taken as a whole;
(n) been unable, or admitted in writing that it is unable, to
pay its debts or commenced negotiations with one or more of its
creditors with a view to rescheduling or restructuring any of its
indebtedness, 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
;
(o) waived, compromised or settled any claim otherwise than in
the ordinary course of business and, in
any case, which is material in the context of the Wider Filta Group as a whole;
(p) except in relation to changes made or agreed as a result of
being required as a result of changes to legislation, having made
or agreed or consented to any material change to:
(i) the terms of the trust deeds, rules, policy or other
governing documents constituting the pension schemes or other
retirement or death bene t arrangement established by any member of
the Wider Filta Group for its directors, former directors,
employees, former employees or each of their respective
dependents;
(ii) the contributions payable to any such scheme(s) or to the
bene ts which accrue or to the pensions which are payable
thereunder;
(iii) the basis on which quali cation for, or accrual or
entitlement to, such bene ts or pensions are calculated or
determined; or
(iv) the basis upon which the liabilities (including pensions)
of such pension schemes are funded, valued or made;
(q) carried out any act:
(i) which would or could reasonably be expected to lead to the
commencement of the winding up of any pension plan;
(ii) which would or might create a material debt owed by an employer to any pension plan;
(iii) which would or might accelerate any obligation on any
employer to fund or pay additional contributions to any pension
plan;
(iv) which would or might give rise indirectly or directly to a
liability in respect of a pension plan; or
(v) to change the trustee or trustee directors or other duciary
of the relevant pension plans;
(r) save as agreed by the Panel (if required) and by Franchise
Brands , proposed, agreed to provide or modi ed the terms of any
share option scheme or incentive scheme or other bene t
constituting a material change relating to the employment or
termination of employment of a material category of person employed
by the Wider Filta Group or which constitutes a material change to
the terms or conditions of employment of any senior employee of the
Wider Filta Group;
(s) made any material alteration to its constitutional documents
(other than an alteration required in connection with the
Offer);
(t) except in the ordinary and normal course of business,
terminated or varied the terms of any agreement or arrangement
between any member of the Wider Filta Group and any other person in
a manner which would or is reasonably likely to have a material
adverse effect on the nancial position of the Wider Filta Group
taken as a whole; or
(u) otherwise than in the ordinary course of business, entered
into any contract, commitment, arrangement or agreement, or passed
any resolution or made any offer (which remains open for
acceptance) with respect to, or announced any intention to, or to
propose to, effect any of the transactions, matters or events
referred to in this Condition;
No adverse change, litigation, regulatory enquiry or similar
2.10 except as Disclosed, since 31 December 2020
(a) no adverse change and no circumstance having arisen which
would or might reasonably be expected to result in any adverse
change or deterioration in the business, assets, value,
liabilities, nancial or trading position, operational performance
or pro ts or prospects of any member of the Wider Filta Group which
is material in the context of the Wider Filta Group taken as a
whole;
(b) no litigation, arbitration proceedings, prosecution or other
legal proceedings including, without limitation, with regard to
intellectual property rights used or owned by the Wider Filta Group
having been threatened, announced or instituted by or against or
remaining outstanding against any member of the Wider Filta Group
or to which any member of the Wider Filta Group is or may become a
party (whether as a claimant, defendant or otherwise) which is
material in the context of the Wider Filta Group taken as a
whole;
(c) no enquiry, review, investigation or enforcement proceedings
by, or complaint or reference to, any Third Party against or in
respect of any member of the Wider Filta Group having been
instituted, announced, implemented or threatened by or against or
remaining outstanding against or in respect of any member of the
Wider Filta Group, which, in each case might reasonably be expected
to have an adverse effect on such member to an extent which is
material, in the context of the Wider Filta Group taken as a whole
or in the context of the Offer;
(d) no steps having been taken and no omissions having been made
which are likely to result in the withdrawal, cancellation,
termination or modi cation of any licence or permit held by any
member of the Wider Filta Group which is necessary for the proper
carrying on of its business and the withdrawal, cancellation,
termination or modi cation of which would have, or would reasonably
be expected to have a material and adverse effect on the Wider
Filta Group taken as a whole;
(e) no contingent or other liability having arisen, increased or
become apparent to Filta (other than in the ordinary course of
business) which is reasonably likely to affect adversely the
business, assets, nancial or trading position or pro ts or
prospects or operational performance of any member of the Wider
Filta Group; in each case to an extent which is material in the
context of the Wider Filta Group taken as whole or in the context
of the Offer; and
(f) no member of the Wider Filta Group having conducted its
business in breach of any applicable laws and regulations and which
is material in the context of the Wider Filta Group as a whole or
material in the context of the Offer.
No discovery of certain matters regarding information,
liabilities and environmental issues
2.11 except as Disclosed, Franchise Brands not having discovered
(a) that any nancial, business or other information concerning
the Wider Filta Group as contained in the information disclosed at
the time by or on behalf of any member of the Wider Filta Group
publicly and delivered by or on behalf of Filta through a RIS or
other public announcement prior to the date of this announcement is
misleading, contains a material misrepresentation of fact or omits
to state a fact necessary to make that information not
misleading;
(b) that any member of the Wider Filta Group is subject to any
liability (contingent or otherwise) and which is material in the
context of the Wider Filta Group taken as a whole;
(c) any information which affects the import of any information
disclosed at any time prior to this announcement by or on behalf of
any member of the Wider Filta Group and which is material in the
context of the Wider Filta Group taken as a whole;
(d) any past or present member of the Wider Filta Group has not
complied with all applicable legislation, regulations or other
requirements of any jurisdiction or any notice, order or
requirement of any Third Party, , or Authorisations relating to the
use, treatment, handling, storage, transport, carriage, disposal,
discharge, spillage, release, leak or emission of any waste or
hazardous substance or any substance likely to impair the
environment (including property) or harm human or animal health or
otherwise relating to environmental matters or the health and
safety of any person, or that there has otherwise been any such
use, treatment, handling, storage, transport, carriage, disposal,
discharge, spillage, release, leak or emission (whether or not
giving rise to non-compliance with any law or regulation), which
non-compliance would be likely to give rise to any liability
including any penalty for non-compliance (whether actual or
contingent) on the part of any member of the Wider Filta Group, in
each case, to an extent which is material in the context of the
Wider Filta Group taken as whole or in the context of the Offer;
or
(e) there is, or is reasonably likely to be, any obligation or
liability (whether actual or contingent) or requirement to make
good, remediate, repair, reinstate or clean up any property, asset
or any controlled waters currently or previously owned, occupied,
operated or made use of or controlled by any past or present member
of the Wider Filta Group (or on its behalf), or in which any such
member has or previously has had or be deemed to have had an
interest, under any environmental legislation, common law,
regulation, notice, circular, authorisation, consent, permission or
order of any Third Party in any jurisdiction or to contribute to
the cost thereof or associated therewith or indemnify any person in
relation thereto to an extent which is material in the context of
the Wider Filta Group taken as whole or in the context of the
Offer;
Anti-bribery, anti-corruption, proceeds of crime and sanctions
2.12 except as Disclosed, Franchise Brands not having discovered that:
(a) any past or present member, director, of cer or employee,
agent, consultant or designated representative of the Wider Filta
Group or any person that performs or has performed services for or
on behalf of the Wider Filta Group is or has at any time engaged in
any or has paid or agreed to pay any bribe including any
"inducement fee", given or agreed to give any similar gift or bene
t or paid or agreed to pay to a concealed bank account or fund to
or for the account of, any customer, supplier, governmental of cial
or employee, representative of a political party, or other person
for the purpose of obtaining or retaining business or otherwise
engaged in any activity, practice, conduct or any such things (or
omitted to do such things) in contravention of the Bribery Act
2010, as amended, or the US Foreign Corrupt Practices Act 1977, as
amended or any other anti-corruption legislation applicable to the
Wider Filta Group;
(b) any asset of any member of the Wider Filta Group constitutes
criminal property as de ned by section 340(3) of the Proceeds of
Crime Act 2002 (but disregarding paragraph (b) of that de nition)
or proceeds of crime under any other applicable law, rule or
regulation concerning money laundering or proceeds of crime or any
member of the Wider Filta Group is found to have engaged in
activities constituting money laundering under any applicable law,
rule or regulation concerning money laundering;
(c) any past or present member, director, of cer or employee,
agent, consultant or designated representative of the Wider Filta
Group has engaged in any activity or business with, or made any
investments in, or made any payments, funds or assets available to,
or received any funds or assets from: (i) any government, entity or
individual in respect of which US, UK or European Union persons, or
persons operating in those territories, are prohibited from
engaging in activities or doing business, or from receiving or
making available funds or economic resources, by US, UK or European
Union laws or regulations, including the economic sanctions
administered by the United States Of ce of Foreign Assets Control
or HMRC; or (ii) any government, entity or individual named by any
of the economic sanctions of the United Nations, the United States,
the UK or the European Union or any of their respective member
states;
(d) a member of the Wider Filta Group has engaged in any
transaction which would cause the Franchise Brands Group to be in
breach of any law or regulation upon its Offer of Filta, including
the economic sanctions of the United States Of ce of Foreign Assets
Control, or HMRC, or any government, entity or individual targeted
by any of the economic sanctions of the United Nations, the United
States, the UK, the European Union or any of its member states;
or
(e) any past (whilst in the employment of the Wider Filta Group)
or present member, director, officer or employee of the Wider Filta
Group, or any other person for whom any such person may be liable
or responsible:
(i) has engaged in conduct which would violate any relevant
anti-terrorism laws, rules or regulations, including but not
limited to the U.S. Anti-Terrorism Act;
(ii) has engaged in conduct which would violate any relevant
anti-terrorism laws, rules or regulation or any applicable export
controls. Including but not limited to the Export Administration
Regulations administered and enforced by the U.S. Department of
Commerce or the International Traffic in Arms Regulations
administered and enforced by the U.S. Department of State;
(iii) has engaged in conduct which would violate any relevant
laws, rules, or regulations concerning human rights, including but
not limited to any law, rule, or regulation concerning false
imprisonment, torture or other cruel and unusual punishment, or
child labour; or
(iv) is debarred or otherwise rendered ineligible to bid for or
to perform contracts for or with any government, governmental
instrumentality, or international organization or found to have
violated any applicable law, rule or regulation concerning
government contracting or public procurement.
PART B - WAIVER AND INVOCATION OF THE CONDITIONS
Franchise Brands reserves the right to waive, in whole or in
part, all or any of the Conditions, except for the Acceptance
Condition, which cannot be waived. The Offer will be subject to the
satisfaction (or waiver, if permitted) of the Conditions and to the
further terms set out in this announcement .
The Offer shall lapse unless all of the Conditions have been ful
lled or, where permitted, waived or, where appropriate, have been
determined by Franchise Brands to be or remain satis ed, by
midnight on the earlier of the Unconditional Date and the Long Stop
Date (subject to the rules of the Code and where applicable the
consent of the Panel).
Franchise Brands shall be under no obligation to waive (if
capable of waiver), to determine to be or remain satis ed or to
treat as satis ed any of Conditions 1 and 2 by a date earlier than
the latest date speci ed above for the ful lment of the relevant
Condition, notwithstanding that the other Conditions to the Offer
may at such earlier date have been waived or ful lled and that
there are at such earlier date no circumstances indicating that any
such Condition(s) may not be capable of ful lment.
Under Rule 13.4 of the Code, Filta may not invoke, or cause or
permit Franchise Brands to invoke, any condition to the Offer
unless the circumstances which give rise to the right to invoke the
condition are of material significance to the shareholders of Filta
in the context of the Offer.
Under Rule 13.5(a) of the Code, Franchise Brands may not invoke
a Condition to the Offer so as to cause the Offer not to proceed,
to lapse or to be withdrawn without the consent of the Panel. The
Panel will normally only give its consent if the circumstances
which give rise to the right to invoke the Condition are of
material signi cance to Franchise Brands in the context of the
Offer.
The Acceptance Condition (condition 1), Franchise Brands
Shareholder Approval (condition 2.1) and Admission of the New
Franchise Brands Shares (condition 2.2) are not subject to Rule
13.5(a) of the Code. All other Conditions are subject to Rule
13.5(a) of the Code and any Condition that is subject to Rule
13.5(a) may be waived by Franchise Brands.
If Franchise Brands is required by the Panel to make an offer or
offers for Filta Shares under the provisions of Rule 9 of the Code,
Franchise Brands may make such alterations to the Conditions as are
necessary to comply with the provisions of that Rule.
Save as may otherwise be required by the Panel, the Offer will
not proceed, will lapse or will be withdrawn if on the Long Stop
Date:
(a) suf cient acceptances have not been received so as to enable
the Acceptance Condition to be satis ed; or
(b) where suf cient acceptances have been received so as to
enable the Acceptance Condition to be satis ed, but one or more of
the Conditions relating to an of cial authorisation or regulatory
clearance has not been satis ed or waived and the Panel consents to
the Offer not proceeding, lapsing or being withdrawn. As noted
above, such consent will only be given if the Condition relating to
such of cial authorisation or regulatory clearance is of material
signi cance to Franchise Brands in the context of the Offer.
Each of the Conditions shall be regarded as a separate Condition
and shall not be limited by reference to any other Condition.
PART C - FURTHER TERMS OF THE OFFER
1. General
(a) It is intended that the Offer will be implemented by way of
a takeover offer within the meaning of the Companies Act. However,
Franchise Brands reserves the right to elect, with the consent of
the Panel (where necessary), to implement the Offer by way of a
Court sanctioned scheme of arrangement in accordance with Part 26
of the Companies Act (Scheme). If the Offer is implemented by way
of a Scheme, such Scheme will be implemented on the same terms, so
far as applicable, as those that would apply to the Offer subject
to appropriate amendments to re ect the change in method of
effecting the Offer, including (without limitation and subject to
the consent of the Panel) such amendments as may be required by law
or regulation. In particular: the Long Stop Date may cease to apply
(and Franchise Brands may, in accordance with the Code, specify a
new long stop date by which the Scheme must become effective and
speci c dates by which by which the shareholder meetings and Court
hearing to sanction the Scheme must be held); and the Acceptance
Condition would not apply and instead the Scheme would become
effective and binding following:
(i) its approval by a majority in number representing 75 per
cent. or more in value of the relevant Filta Shareholders (or the
relevant class or classes thereof, if applicable) present and
voting, either in person or by proxy, at the applicable court
meeting and at any separate class meeting which may be required by
the Court or at any adjournment of any such meeting;
(ii) all resolutions necessary to approve and implement the
Scheme being duly passed by the requisite majority or majorities at
a Filta general meeting or at any adjournment of that meeting;
and
(iii) the sanction of the Scheme by the Court with or without
modi cation (but subject to any such modi cation being acceptable
to Franchise Brands) and the delivery of a copy of the applicable
Scheme order within two Business Days thereafter to the Registrar
of Companies in England and Wales.
(b) In addition, if the Offer is implemented by way of the
Scheme, the Scheme will be conditional upon the Conditions (other
than the Acceptance Condition) and, accordingly, the necessary
actions to make the Scheme effective will not be taken unless such
Conditions have either been waived (if permitted) or ful lled.
(c) Filta Shares will be acquired by Franchise Brands fully paid
and free from all liens, charges, equitable interests,
encumbrances, rights of pre-emption and any other rights and
interests of any nature whatsoever and together with all rights now
and hereafter attaching thereto, including without limitation
voting rights and the right to receive and retain in full all
dividends and other distributions (if any) declared, made or paid,
or any other return of capital (whether by way of reduction of
share capital or share premium account or otherwise) made or paid,
on or after the Offer becomes or is declared wholly unconditional
.
(d) If any dividend or other distribution or return of value is
proposed, declared, made, paid or becomes payable by Filta in
respect of a Filta Share on or after the Offer becomes or is
declared wholly unconditional , Franchise Brands will have the
right (without prejudice to any right of Franchise Brands to invoke
2.9(c) Condition in Part A of this Appendix 1) to reduce the value
of the consideration payable for each Filta Share by up to the
amount per Filta Share of such dividend, distribution or return of
value except where the Filta Share is or will be acquired pursuant
to the Offer on a basis which entitles Franchise Brands to receive
the dividend, distribution or return of value and to retain it. If
any such dividend, distribution or return of value is paid or made
to Filta Shareholders on or after the Offer becomes or is declared
wholly unconditional and Franchise Brands exercises its rights
described above, any reference in this announcement to the
consideration payable under the Offer shall be deemed to be a
reference to the consideration as so reduced. Any exercise by
Franchise Brands of its rights referred to in this paragraph shall
be the subject of an announcement and, for the avoidance of doubt,
shall not be regarded as constituting any revision or variation of
the terms of the
Offer. In the event that Franchise Brands exercises its right to reduce the value of the consideration payable under the Offer by all or any part of the amount of any dividend or other distribution or return of value that has not been paid to Filta Shareholders, Filta Shareholders will be entitled to receive and retain that dividend or other distribution or return of value.
(e) Any reference in this Appendix 1 to any law or regulation of
any jurisdiction includes: (i) any subordinate legislation or
regulation made under it; (ii) any law or regulation which it has
amended, supplemented or replaced; and (iii) any law or regulation
amending, supplementing or replacing it (whether before or after
the date of this announcement).
(f) The Offer is subject to applicable requirements of the
London Stock Exchange and the Code. In the event of any con ict or
inconsistency between the terms and conditions of the Offer and the
Code, the provisions of the Code shall prevail, and Franchise
Brands reserves the right to (and shall if required by the Panel)
make such alterations, additions or modi cations to the terms and
conditions of the Offer so that any such con ict or inconsistency
is removed.
2. Overseas Shareholders
(a) The making of the Offer in, or to persons resident in, or to
nationals or citizens of, jurisdictions outside the United Kingdom
or to nominees of, or custodians or trustees for, citizens or
nationals of other countries (Overseas Shareholders) may be
prohibited or affected by the laws of the relevant jurisdictions.
Such Overseas Shareholders should inform themselves about and
observe any applicable legal requirements. No person receiving a
copy of this announcement, the Offer Document and/or a Form of
Acceptance in any jurisdiction other than the UK may treat the same
as constituting an invitation or offer to them, nor should they in
any event use such Form of Acceptance if, in the relevant
jurisdiction, such invitation or offer cannot lawfully be made to
them or such Form of Acceptance cannot lawfully be used without
contravention of any relevant or other legal requirements. In such
circumstances, this announcement, the Offer Document and/or Form of
Acceptance are sent for information only. It is the responsibility
of such Overseas Shareholder receiving a copy of this announcement,
the Offer Document and/or Form of Acceptance and wishing to accept
the Offer to satisfy themselves as to the full observance of the
laws and regulatory requirements of the relevant jurisdiction in
connection with the Offer, including obtaining any governmental,
exchange control or other consents which may be required, or
compliance with other necessary formalities needing to be observed
and payment of any issue, transfer or other taxes or duties due in
such jurisdiction. Any such Overseas Shareholder will be
responsible for any such issue, transfer or other taxes or other
payments by whomsoever payable and Franchise Brands and Allenby
Capital (and any person acting on behalf of either of them) shall
be fully indemni ed and held harmless by such Overseas Shareholder
for any such issue, transfer or other taxes or duties as Franchise
Brands or
Allenby Capital (and any person acting on behalf of either of them) may be required to pay.
If you are an Overseas Shareholder and you are in doubt about
your position, you should consult your independent professional
adviser in the relevant jurisdiction.
(b) In particular, the Offer will not be made, directly or
indirectly, in or into, and is not capable of acceptance in or from
a Restricted Jurisdiction. Accordingly, copies of this
announcement, the Offer Document will not be, and must not be,
mailed or otherwise forwarded, distributed or sent in or into or
from a Restricted Jurisdiction.
Persons receiving such documents (including without limitation,
custodians, trustees and nominees) must not mail or otherwise
forward, distribute or send them, directly or indirectly, in, into
or from a Restricted Jurisdiction or use Restricted Jurisdiction
mails or any such means or instrumentality or facility for any
purpose, directly or indirectly, in connection with the Offer.
Doing so may invalidate any purported acceptance of the Offer.
APPIX 2
SOURCES OF INFORMATION AND BASES OF CALCULATION
In this announcement:
1. Unless otherwise stated:
a. financial information relating to the Franchise Brands Group
has been extracted or derived (without any adjustment) from the
audited annual report and accounts of the Franchise Brands Group
for the financial year ended 31 December 2020 and its unaudited
half year results for the six months ended 30 June 2021; and
b. financial information relating to the Filta Group has been
extracted or derived (without any adjustment) from the audited
annual report and accounts of the Filta Group for the financial
year ended 31 December 2020 and its unaudited half year results for
the six months ended 30 June 2021.
2. The value of each Filta Share is calculated:
a. by reference to the price of 147.50 pence per Franchise
Brands Share, being the Closing Price on 15 February 2022, being
the Latest Practicable Date;
b. using the Offer Value of 1.157 New Shares in exchange for each Filta Share; and
c. on the basis of the fully diluted share capital of Filta referred to in paragraph 4 below.
3. As at the close of business on 15 February 2022, being the
Latest Practicable Date, Filta had in issue 29,138,164 Filta Shares
and Franchise Brands had in issue 95,865,609 Franchise Brands
Shares.
4. The fully diluted share capital of Filta (being 29,203,164
Filta Shares) is calculated on the basis of:
a. 29,138,164 issued Filta Shares referred to in paragraph 3 above; and
b. 65,000 Filta Shares required in connection with the exercise
of options over 65,000 Filta Shares for the purposes of the Filta
EMI Plan, being those options that have vested and are exercisable
at prices below the Offer Value.
5. Unless otherwise stated, all prices and closing prices for
Filta Shares and Franchise Brands Shares are closing middle market
quotations derived from the AIM Appendix to the Daily Official List
on that day.
APPIX 3
DETAILS OF IRREVOCABLE UNDERTAKINGS
PART A - Director irrevocable undertakings
The following Filta Directors (and their connected parties and
trusts) have each given an irrevocable undertaking in respect of
their own beneficial holding of Filta Shares to accept the Offer as
set out below:
Name of Filta Director Number of Filta Shares Percentage of Filta
issued share capital
Jason Sayers 3,688,120 12.7
----------------------- ----------------------
Roy Sayers 562,160 1.9
----------------------- ----------------------
The Meredian Settlement
Trust 7,926,560 27.2
----------------------- ----------------------
Victor Clewes 4,558,750 15.7
----------------------- ----------------------
Jlubomir Urosevic 1,359,690 4.7
----------------------- ----------------------
18,095,280 62.1
----------------------- ----------------------
PART B - Non-Director shareholder irrevocable undertaking(s)
Gresham House Asset Management Limited has given an irrevocable
undertaking in respect of their own beneficial holding of Filta
Shares to accept the Offer as set out below:
Name of Filta Shareholder Number of Filta Percentage of
Shares Filta issued
share capital
Gresham House Asset Management
Limited 5,715,020 19.6
---------------- ---------------
Notes:
1. The Filta Shares referred to in the tables set out at Part A
and Part B of this Appendix 3 above are either held by such Filta
Director/Shareholder directly or held through a nominee. In each
case, such Filta Director/Shareholder has undertaken to accept
itself, or to direct (and to use all reasonable endeavours to
procure) that the relevant nominee to accept, the Offer.
2. The percentages in the table above have been rounded to one decimal place.
3. The undertakings detailed in this Appendix 3 cease to be binding only if:
a. Franchise Brands announces that it does not intend to proceed
with the Offer and no new, revised or replacement scheme or offer
is announced in accordance with Rule 2.7 of the Takeover Code at
the same time;
b. the Offer lapses or is withdrawn; or
c. the Offer has not become wholly unconditional by 11:59 pm on the Long-Stop Date.
4. The undertakings detailed in Part A of this Appendix 3 will
remain binding in the event of a competing offer.
5. The undertaking detailed in Part B of this Appendix 3 will
remain binding in the event of a competing offer being made unless
the value of such competing offer is an improvement of more than 10
per cent. of the value of the consideration under the Offer and is
not matched or bettered by Franchise Brands (where such competing
offer has been announced as a firm intention to make an offer in
accordance with Rule 2.7 of the Code) or if the Offer Document is
not published within 28 days of the date of this announcement or
the Offer lapses or is otherwise withdrawn.
APPIX 4
DEFINITIONS
1.1 The following de nitions apply throughout this announcement
(with the exception of Appendix 1) u nless the context requires
otherwise:
Acceleration Statement a statement in which Filta, in accordance
with Rule 31.5 of the Code, brings forward
the latest date by which all of the Conditions
to the Offer must be satis ed or waived
Acceptance Condition the Condition as to acceptances set out
in paragraph 1(a) of Part A of Appendix
1 to this announcement
acting in concert has the meaning ascribed to it in the Code
adjusted EBITDA earnings before interest, tax, depreciation,
amortisation and share-based payment expense
and non-recurring items
Admission the admission of the New Franchise Brands
Shares to trading on AIM;
AIM the market of that name operated by the
London Stock Exchange
AIM Rules the AIM Rules for Companies published by
the London Stock Exchange (as amended from
time to time)
Allenby Capital Allenby Capital Limited, financial adviser,
nominated adviser and joint broker to Franchise
Brands in connection with the Offer
Announcement Date 16 February 2022
associated undertaking has the meaning given in section 344(3)
of the Companies Act
Authorisations regulatory authorisations, orders, recognitions,
grants, consents, clearances, con rmations,
certi cates, licences, permissions or approvals
B2B business to business commerce in which products
or services are sold by one business to
another
B2C business to consumer commerce in which products
or services are sold directly to consumers
B2B Division Franchise Brands' business to business division
comprising Metro Rod, Metro Plumb, and Willow
Pumps
B2C Division Franchise Brands' business to consumer division
comprising ChipsAway, Ovenclean and Barking
Mad
Board as the context requires, the board of directors
of Filta or the board of directors of Franchise
Brands
Business Day any day (other than a Saturday, Sunday or
public holiday) during which banks in London
are open for business
Cenkos Cenkos Securities plc, nancial adviser to
Filta under Rule 3 of the Code
Closing Price unless otherwise stated, the closing middle
market quotation derived from the AIM Appendix
to the Daily Of cial List
Code or Takeover the City Code on Takeovers and Mergers issued
Code from time to time by the Panel
Companies Act the Companies Act 2006, as amended, modi
ed, consolidated, re-enacted or replaced
from time to time
Computershare or Computershare Investor Services plc, Filta's
Receiving Agent registrars and the receiving agents for
the purposes of the Offer
Conditions the conditions to the Offer which are set
out in Part A of Appendix 1 to this announcement
connected persons has the meaning given to it in sections
252 to 255 of the Companies Act
Court the High Court of Justice in England and
Wales
CREST the relevant system (as de ned in the Regulations)
in respect of which Euroclear is the Operator
(as de ned in the Regulations) for the paperless
settlement of trades in securities and the
holding of uncerti cated securities
CREST Manual the CREST Manual published by Euroclear
as amended from time to time
CREST member a person who is, in relation to CREST, a
system member (as de ned in the Regulations)
CREST participant a person who is, in relation to CREST, a
system participant (as de ned in the Regulations)
CREST sponsor a person who is, in relation to CREST, a
sponsoring system- participant (as de ned
in the Regulations)
CREST sponsored a CREST member admitted to CREST as a sponsored
member member
Daily Of cial List the daily of cial list of the London Stock
Exchange
Day 60 the 60th day following the publication of
the Offer Document or such other date as
may otherwise be set as being such day of
the timetable of the Offer in accordance
with the Code
Dealing Disclosure has the meaning given to it in Rule 8 of
the Code
Disclosed the information fairly disclosed by, or
on behalf of Filta:
(i) in its published annual report and accounts
for the nancial year ended 31 December 2019;
(ii) in its published annual report and
accounts for the nancial year ended 31 December
2020;
(iii) in its published interim report for
the six month period ended 30 June 2021;
(iv) in this announcement;
(v) in the documents in the online data
room made available to Franchise Brands
and its advisers in relation to the Offer;
(vi) in any other public announcement made
by Filta in accordance with the Market Abuse
Regulation, the AIM Rules, and/or the Disclosure
Guidance and Transparency Rules before the
Announcement Date; or
(vii) as disclosed in writing before the
Announcement Date by or on behalf of Filta
to Franchise Brands (or its respective of
cers, employees, agents or advisers in their
capacity as such)
Dowgate Dowgate Capital Limited, joint broker to
Franchise Brands in connection with the
Offer
Disclosure Guidance Disclosure Guidance and Transparency Rules
and Transparency sourcebook issued by the FCA
Rules
Effective the Offer having been declared or become
unconditional in all respects in accordance
with the requirements of the Code
Effective Date means:
(i) the Unconditional Date; or
(ii) if Franchise Brands elects to implement
the Offer by way of a Scheme, the date on
which the Scheme becomes effective in accordance
with its terms
Electronic Acceptance the inputting and setting of a TTE instruction
which constitutes or is deemed to constitute
an acceptance of the Offer on the terms
set out in the Offer Document
Enlarged Group the combined businesses of the Wider Filta
Group and the Franchise Brands Group following
the completion of the Offer
Enlarged Share Capital 129,653,669 Franchise Shares, being the
issued share capital of Franchise Brands
upon the Offer becoming wholly unconditional
and the Offer being accepted in respect
of all the issued and to be issued Filta
Shares
ESA Instruction an Escrow Account Adjustment Input ("AESN")
transaction type "ESA" (as de ned in the
CREST Manual)
Escrow Agent the Receiving Agent, Computershare in its
capacity as escrow agent (as described in
the CREST Manual)
Euroclear Euroclear UK & Ireland Limited
FCA the UK Financial Conduct Authority, or its
successor from time to time
Filta Filta Group Holdings plc (incorporated in
England and Wales under registered number
10095071 with its registered of ce at The
Locks, Hilmorton, Rugby, Warwickshire, CV21
4PP , United Kingdom)
Filta Board the board of directors of Filta
Filta Directors the directors of Filta at the date of this
announcement
Filta EMI Plan the 2017 Filta Group Holdings PLC Enterprise
Management Incentive Scheme (adopted by
the Directors of Filta on 20 April 2017)
Filta Group Filta and its subsidiaries and subsidiary
undertakings (as defined in the Companies
Act)
Filta Share(s) the existing unconditionally allotted or
issued and fully paid ordinary shares of
10 (ten) pence each in the capital of Filta
and any further such ordinary shares which
are unconditionally allotted or issued while
the Offer remains open for acceptance or,
subject to the provisions of the Code, by
such earlier date as Franchise Brands may
determine
Filta Shareholders holders of Filta Shares from time to time
Form of Acceptance the form of acceptance and authority relating
to the Offer to be despatched to Filta Shareholders
with shares in certi cated form with the
Offer Document
Franchise Brands Franchise Brands plc (incorporated in England
and Wales under registered number 10281033
with its registered of ce at Franchise Brands
plc, Ashwood Court, Springwood Close, Tytherington
Business Park, Macclesfield SK10 2XF , United
Kingdom)
Franchise Brands the board of directors of Franchise Brands
Board
Franchise Brands the meeting of Franchise Brands Shareholders
General Meeting to be convened for the purposes of considering
and, if thought t, passing the Resolution
and any adjournment thereof
Franchise Brands Franchise Brands and its subsidiaries and
Group subsidiary undertakings (as defined in the
Companies Act)
Franchise Brands existing ordinary shares of 0.5 pence each
Shares of Franchise Brands
Franchise Brands holders of Franchise Brands shares from
Shareholders time to time
H1 the six months to 30 June
Incentive Schemes together, the Filta EMI Plan and the SARs
Plan
Independent Filta Tim Worlledge, Graham Woolfman and Lloyd
Directors Martin
Latest Practicable 15 February 2022, being the latest practicable
Date date prior to the publication of this announcement
London Stock Exchange London Stock Exchange plc
Long Stop Date 11.59p.m. on 30 November 2022 or such other
date (if any) as Franchise Brands may, with
the consent of Filta or with the consent
of the Panel, specify
Market Abuse Regulation the UK version of Regulation (EU) No 596/2014
which forms part of UK domestic law by virtue
of the European Union (Withdrawal) Act 2018
Meredian Settlement the trust established on 11 November 2010
Trust under the name "The Meredian Settlement"
member account ID the identi cation code or number attached
to any member account in CREST
New Franchise Brands up to 33,788,060 new ordinary shares of
Shares 0.5 pence each of Franchise Brands to be
issued in connection with the Offer
Offer the recommended all share offer being made
by Franchise Brands to acquire all of the
issued and to be issued Filta Shares on
the terms and subject to the conditions
to be set out in Offer Document and, in
the case of Filta Shares held in certi cated
form, in the Form of Acceptance, including
where the context so permits or requires,
any subsequent revision, variation, extension
or renewal of such offer
Offer Document the document to be sent or made available
to Filta Shareholders and persons with information
rights containing, among other things, the
full terms and conditions of the Offer
Offer Period the offer period (as de ned by the Code)
relating to Filta, which commenced on the
date of this announcement and will end on
the earlier of the Effective Date or the
date on which the Offer lapses or is withdrawn
Offer Value 1.157 New Franchise Brands Shares in exchange
for each Filta Share
Opening Position has the meaning given to it in Rule 8 of
Disclosure the Code
Overseas Shareholders Filta Shareholders (or nominees, or custodians
or trustees of Filta Shareholders) who are
resident in, or nationals or citizens of,
jurisdictions outside the UK or who are
citizens or residents of countries other
than the UK
Panel the Panel on Takeovers and Mergers
participant ID the identi cation code or membership number
used in CREST to identify a particular CREST
member or other CREST participant
Proposed Franchise Jason Sayers and Brian Hogan
Brands Directors
Regulations the Uncerti cated Securities Regulations
2001 (SI 2001 No. 3755) (as amended)
Regulatory Information a primary information provider which has
Service or RIS been approved by the FCA to disseminate
regulated information
Resolution the ordinary resolution to be proposed by
Franchise Brands at the Franchise Brands
General Meeting
Restricted Jurisdiction any jurisdiction where the relevant action
would constitute a violation of the relevant
laws and regulations of such jurisdiction
or would result in a requirement to comply
with any governmental or other consent or
any registration, ling or other formality
which Franchise Brands or Filta regards
as unduly onerous
Restricted Persons holders of Filta Shares in a Restricted
Jurisdiction
SARs Plan a share acquisition rights scheme, which
is an employee incentive scheme implemented
by Filta for the benefit of employees in
the US which follows the structure of the
Filta EMI Plan to provide holders of SARs
'options' with the same reward value as
if the SARs were options over shares in
Filta options, save that the reward is provided
in cash and does not involve the issue of
Filta shares
Scheme should the Offer be implemented by way of
a scheme of arrangement under Part 26 of
the Companies Act, such scheme of arrangement
between Filta and the Filta Shareholders
to implement the Offer with or subject to
any modi cation, addition or condition approved
or imposed by the Court
Signi cant Interest in relation to an undertaking, a direct
or indirect interest of 20 per cent. or
more of (i) the total voting rights conferred
by the equity share capital (as de ned in
section 548 of the Companies Act) of such
undertaking or (ii) the relevant partnership
interest
TFE instruction a Transfer from Escrow instruction given
by a holder of uncerti cated Filta Shares
through CREST (as described in the CREST
Manual)
TTE instruction a Transfer to Escrow instruction given by
a holder of uncerti cated Filta Shares through
CREST (as described in the CREST Manual)
UK or United Kingdom the United Kingdom of Great Britain and
Northern Ireland
uncerti cated or recorded on the relevant register as being
in uncerti cated held in uncerti cated form in CREST and
form title to which may be transferred by means
of CREST
Unconditional Date Day 60, or such earlier date as Franchise
Brands may specify in any Acceleration Statement
unless, where permitted, it has set aside
that statement
US the United States of America
US Shareholder a Filta Shareholder whose acceptance of
the Offer will be subject to the US Securities
Act
US Securities Act the United States Securities Act of 1933,
as amended, and the rules and regulations
promulgated thereunder
Wider Filta Group Filta and its subsidiaries, subsidiary undertakings,
associated undertakings and any other body
corporate, partnership, joint venture or
person in which Filta and all such undertakings
(aggregating their interests) have a Signi
cant Interest
1.2 In this announcement, unless the contrary is otherwise indicated:
(a) "subsidiary", "subsidiary undertaking" and "undertaking"
have the meanings given by the Companies Act;
(b) all times referred to are London, UK, time unless otherwise stated;
(c) references to the singular include the plural and vice versa
and words importing the masculine gender include the feminine or
neutral;
(d) all references to legislation are to English legislation; and
(e) any reference to a provision of any legislation shall
include any amendment, modi cation, re-enactment or extension.
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END
OUPKZGMZVVGGZZG
(END) Dow Jones Newswires
February 16, 2022 02:00 ET (07:00 GMT)
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