RECOMMENDED CASH OFFER
for
AUGEAN PLC
by
ELEIA LIMITED
(a newly-formed company indirectly owned by a consortium consisting of investment funds managed by (i) Ancala Partners LLP, and (ii) Fiera Infrastructure Inc.)
to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006
Summary
· The boards of Augean plc (“Augean” or the “Company”) and Eleia Limited (“Bidco”), a special purpose vehicle formed by investment funds managed by Ancala Partners LLP (“Ancala”) and investment funds managed by Fiera Infrastructure Inc. (“Fiera Infrastructure”), are pleased to announce that they have agreed the terms of a recommended all cash offer for Augean by Bidco, pursuant to which Bidco will acquire the entire issued and to be issued ordinary share capital of Augean (the “Offer”).
· Under the terms of the Offer, Augean Shareholders will be entitled to receive:
for each Scheme Share: 325 pence in cash
· The Offer values the entire issued and to be issued ordinary share capital of Augean at approximately £341.2 million on a fully diluted basis and represents a premium of approximately:
· 16.1 per cent. to the offer price of 280 pence per Augean Share from MSIP which was announced on 30 July 2021, assuming no payment is made in respect of the contingent value rights offered in connection with the MSIP Offer;
· 8.3 per cent. to the offer price of 280 pence per Augean Share from MSIP which was announced on 30 July 2021, assuming the maximum payment is made in respect of the contingent value rights offered in connection with the MSIP Offer;
· 30.8 per cent. to the Closing Price of 248.5 pence per Augean Share on 26 May 2021 (being the last Business Day before the commencement of the Offer Period); and
· 47.2 per cent. to the two-month volume weighted average price of 220.8 pence per Augean Share for the period ending 26 May 2021 (being the last Business Day before the commencement of the Offer Period).
· The terms of the Offer represent an attractive premium for Augean Shareholders over the terms of the MSIP Offer and accordingly the Augean Directors urge Augean Shareholders to take no action in respect of the MSIP Offer.
· If, on or after the date of this announcement and before the Effective Date, any dividend, distribution and/or other return of capital is declared, made or paid or becomes payable in respect of the Augean Shares, Bidco reserves the right to reduce the cash consideration payable under the terms of the Offer by the amount of any such dividend, distribution and/or return of capital which is paid or becomes payable by the Company to Augean Shareholders, in which case the relevant eligible Augean Shareholders will be entitled to receive and retain such dividend, distribution and/or return of capital declared, made or paid.
· It is intended that the Offer will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. In order to become Effective, the Scheme must be approved by a majority in number of the Scheme Shareholders present and voting (and entitled to vote) at the Court Meeting, either in person or by proxy, representing 75 per cent. in value of the Scheme Shares held by those Scheme Shareholders. Further details of the Scheme and the Court Meeting are contained in the full text of this announcement. In addition, the implementation of the Scheme must also be approved by the requisite majority of Augean Shareholders at the General Meeting. Bidco reserves the right to elect, in accordance with the Co-operation Agreement and with the consent of the Panel, to implement the Offer by way of a Takeover Offer for the whole of the issued and to be issued ordinary share capital of the Company as an alternative to the Scheme.
Ancala, Fiera Infrastructure and Bidco and background to and reasons for the Offer
· Ancala is an independent infrastructure investment manager established in 2010. Ancala's strategy is to deliver stable risk-adjusted returns by investing in essential, mid-market infrastructure businesses in Europe. Ancala has an established team combining operating, financial, execution, management and institutional experience – including Industry Partners and several senior advisers with significant operational and leadership experience in managing major infrastructure assets, as well as waste management businesses. Ancala has identified the waste management sector as one of its key target sectors and has successfully made a number of investments in this sector to date.
· Fiera Infrastructure is a leading global mid-market, infrastructure investment manager headquartered in Toronto, Canada. Fiera Infrastructure's mandate is to take a long-term approach to infrastructure investing across all subsectors of the infrastructure asset class and in selected OECD countries. With local presence in Toronto, London and New York, Fiera Infrastructure has invested in more than 39 infrastructure assets across waste management, utilities, telecommunications, transportation, renewables and public-private partnerships. Fiera Infrastructure is majority owned by Fiera Capital Corporation, a publicly-traded company on the Toronto Stock Exchange. Fiera Capital Corporation is one of Canada's leading investment management firms, providing full-service, multi-product investment advisory and related services. Fiera Infrastructure has an existing investment platform and extensive experience in the UK waste management sector, including an investment in Cory Group, one of the UKs leading waste management, recycling and energy recovery companies.
· Bidco is a newly established investment vehicle jointly owned by investment funds managed by Ancala and investment funds managed by Fiera Infrastructure, and has been formed specifically for the purposes of making the Offer.
· Both members of the Consortium are long term investors in the waste management sector and have spent significant time and resource in conjunction with their industry experts evaluating the hazardous waste management sector and Augean in particular.
· The Consortium believes that Augean represents an attractive opportunity to acquire a highly regarded leader in the hazardous waste management sector. The Consortium recognises the high quality of Augean's strategically located facilities and breadth of customer relationships. With exposure to attractive end markets and further growth opportunities, the Consortium looks forward to working with the Augean management team and supporting the business through its next stage of growth.
· Through their respective experience investing in the UK waste management sector, both members of the Consortium will provide Augean the necessary financial, technical and strategic support to thrive as a private company.
Recommendation and letters of intent
· The Augean Directors, who have been so advised by Rothschild & Co as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. In providing its advice, Rothschild & Co has taken into account the commercial assessments of the Augean Directors. Rothschild & Co is providing independent financial advice to the Augean Directors for the purposes of Rule 3 of the Code.
· Accordingly, the Augean Directors intend to recommend unanimously that Augean Shareholders vote, or procure the voting, in favour of the Scheme at the Court Meeting and vote, or procure the voting, in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Offer is implemented by way of a Takeover Offer, that Augean Shareholders accept or procure acceptance of, that Takeover Offer).
· The Augean Directors believe that the superior offer price of 325 pence in cash per Augean Share is compelling and urge Augean Shareholders to take no action in relation to the MSIP Offer.
· Bidco has received non-binding letters of intent from Artemis Investment Management LLP, Chelverton Asset Management Limited, Close Asset Management Limited and Hargreave Hale Limited to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and to vote (or, where applicable, procure voting) in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Offer is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of 26,644,898 Augean Shares, representing approximately 25.38 per cent. of Augean's issued ordinary share capital on the Latest Practicable Date. In addition, the non-binding letter of intent received from Hargreave Hale Limited provides that it would not consider accepting a further offer unless it were at least 20 pence in cash higher than Bidco's offer price for each Augean Share pursuant to the terms of the Offer.
· In addition, Bidco has received non-binding letters of intent from the Harwood Entities to, in the event that the relevant MSIP Undertakings lapse, provide binding irrevocable undertakings to Bidco in connection with the Offer to vote in favour of the Scheme at the Court Meeting and to vote in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Offer is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of 25,100,000 Augean Shares, representing approximately 23.91 per cent. of Augean's issued ordinary share capital on the Latest Practicable Date, which such irrevocable undertakings will cease to be binding in the event that: (i) Bidco announces, with the consent of the Panel, that it does not intend to make or proceed with the Offer and no new or replacement Scheme or Takeover Offer is announced in accordance with the Code at the same time; (ii) the Offer lapses or is withdrawn; or (iii) the Offer has not become effective or been declared unconditional in all respects by the Long Stop Date.
· Bidco has also received a non-binding letter of intent from Gresham House Strategic PLC to provide a binding irrevocable undertaking to Bidco in connection with the Offer to vote in favour of the Scheme at the Court Meeting and to vote in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Offer is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of 5,870,604 Augean Shares, representing approximately 5.59 per cent. of Augean's issued ordinary share capital on the Latest Practicable Date, which such irrevocable undertaking will cease to be binding, inter alia, in the event that an announcement is made in accordance with Rule 2.7 of the Code of an offer, whether by way of a takeover offer or a scheme of arrangement, or any other transaction which constitutes a takeover offer for the purposes of the Code, for Augean and the consideration payable to Augean Shareholders per Augean Share under such offer represents an amount in cash that is at least 345 pence for each Augean Share.
· Therefore, as at the date of this announcement, Bidco has received non-binding letters of intent to vote, or procure the voting, in favour of the Scheme at the Court Meeting and vote, or procure the voting, in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Offer is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), in the case of the Harwood Entities, in the event that the relevant MSIP Undertakings lapse[1], in respect of a total of 57,615,502 Augean Shares, in aggregate, representing approximately 54.89 per cent. of Augean's issued ordinary share capital on the Latest Practicable Date.
· Full details of the letters of intent are set out in Appendix 3 to this announcement.
Timetable and Conditions
· The Offer is subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions which will be set out in the Scheme Document.
· Further details of the Scheme will be set out in the Scheme Document, which is expected to be dispatched to Augean Shareholders (together with the Forms of Proxy) in the week commencing 6 September 2021 and by no later than 28 days from the date of this announcement (unless Bidco and Augean otherwise agree, and the Panel consents, to a later date). The Court Meeting and the General Meeting are expected to be held in the week commencing 27 September 2021.
· Subject to the satisfaction or waiver (as applicable) of all relevant conditions, including the Conditions and certain terms set out in Appendix 1 to this announcement and to be set out in the Scheme Document, the Scheme is expected to become Effective in October 2021. An expected timetable of principal events will be included in the Scheme Document.
Commenting on the Offer, Jim Meredith, Executive Chairman of Augean, said:
“The Augean Board believes that Ancala and Fiera Instructure are well-respected as long-term investors in the infrastructure sector and will be able to support Augean's strategy of providing the highest level of customer service and safe operations in niche and highly regulated hazardous waste markets. We recognise the increase in the price offered to Augean Shareholders under the Offer when compared with the MSIP Offer and have accordingly recommended the Offer to Augean Shareholders.
As Ancala and Fiera Infrastructure intend to maintain the same strategy and footprint, we also believe that the acquisition is a good outcome for all Augean stakeholders, including our employees, our customers and the wider UK economy.”
Commenting on the Offer, Karen Dolenec, Partner of Ancala, said:
“Augean provides essential and responsible hazardous waste management services to key private and governmental infrastructure operators. Ancala has been impressed by the high quality of the team and operations and is excited to support the Company in expanding its role in this critical part of an effective waste management ecosystem.”
Commenting on the Offer, Alina Osorio, President of Fiera Infrastructure, said:
“Augean is a leading provider of hazardous waste management services in the UK, offering essential and responsible treatment and disposal solutions for hazardous materials. Fiera Infrastructure is excited to work alongside the management team at Augean to support the company in its next stage of growth.”