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St Modwen Properties plc- Offer Update and Publication of Scheme Document

This content has been sourced from: https://www.investegate.co.uk/st.-modwen-props--sm...

RECOMMENDED CASH ACQUISITION
of
ST. MODWEN PROPERTIES PLC
by
BRIGHTON BIDCO LIMITED
(a newly formed company indirectly owned by investment funds advised by Blackstone)
to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006

OFFER UPDATE
AND
PUBLICATION OF THE SCHEME DOCUMENT

On 20 May 2021, Brighton Bidco Limited ("Bidco") and St. Modwen Properties PLC ("St. Modwen") jointly announced (the "Rule 2.7 Announcement") that they had reached agreement on the terms and conditions of a recommended all cash offer by Bidco for the entire issued, and to be issued, ordinary share capital of St. Modwen (the "Acquisition"), to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006 (the "Scheme"). Capitalised terms in this announcement, unless otherwise defined, have the same meanings as set out in the Scheme Document (as defined below). All references to times in this announcement are to London times unless otherwise stated.

Increased Offer

Bidco and St. Modwen are pleased to announce that they have reached agreement on the terms of an increased and final* recommended cash offer (the "Increased Offer") by Bidco for the entire issued, and to be issued, ordinary share capital of St. Modwen.

Under the terms of the Increased Offer, each Scheme Shareholder will be entitled to receive:

for each St. Modwen Share: 560 pence in cash (the "Final Offer Price")

The Final Offer Price represents a premium of approximately:

· 25.1 per cent. to the Closing Price of 448 pence on 6 May 2021 (being the last Business Day before the commencement of the offer period);

· 38.3 per cent. to the volume-weighted average St. Modwen share price of 405 pence over the 90-day period ending on 6 May 2021 (being the last Business Day before the commencement of the offer period);

· 41.8 per cent. to the volume-weighted average St. Modwen share price of 395 pence over the 180-day period ending on 6 May 2021 (being the last Business Day before the commencement of the offer period);

· 21.1 per cent. to St. Modwen's estimated EPRA Net Tangible Assets Per Share of 463 pence as at 31 May 2021, as contained in the Scheme Document.

The Acquisition values St. Modwen's entire issued, and to be issued, ordinary share capital at approximately £1,272 million.

The financial terms of the Increased Offer are final* and will not be increased, except that Bidco reserves the right to increase the amount of the offer price if there is an announcement on or after the date of this announcement of an offer or a possible offer for St. Modwen by a third party offeror or potential offeror. Bidco reserves the right to elect to implement the Acquisition by way of an Offer as an alternative to the Scheme.

If, on or after the date of this announcement and before the Effective Date, any dividend and/or other distribution and/or other return of capital is declared, made or paid or becomes payable in respect of the St. Modwen Shares, Bidco will reduce the consideration payable under the terms of the Acquisition for the St. Modwen Shares by an amount up to the amount of such dividend and/or distribution and/or return of capital, in which case any reference in this announcement to the consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced. Any reduction 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 Scheme or the Acquisition. In such circumstances, St. Modwen Shareholders would be entitled to retain any such dividend, distribution and/or other return of capital declared, made or paid.

The Increased Offer does not change Bidco's intentions as regards the business of St. Modwen (including locations of its operations), the management and employees of St. Modwen and the proposals in respect of the St. Modwen Share Plans, as set out in the Rule 2.7 Announcement and in the Scheme Document.

* Bidco reserves the right to increase the amount of the offer price if there is an announcement on or after the date of this announcement of an offer or a possible offer for St. Modwen by a third party offeror or potential offeror. Bidco also reserves the right to elect to implement the Acquisition by way of an Offer as an alternative to the Scheme.

Recommendation

The St. Modwen Directors, who have been so advised by Lazard, J.P. Morgan Cazenove and Numis as to the financial terms of the Acquisition, consider the terms of the Increased Offer to be fair and reasonable. In providing their financial advice, Lazard, J.P. Morgan Cazenove and Numis have taken into account the commercial assessments of the St. Modwen Directors. Lazard and Numis are each providing independent financial advice to the St. Modwen Directors for the purposes of Rule 3 of the Takeover Code.

The St. Modwen Directors believe that the terms of the Acquisition (including the Scheme) are in the best interests of St. Modwen Shareholders as a whole and unanimously recommend that St. Modwen Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting, as they have irrevocably agreed to do in respect of their own beneficial holdings.

St. Modwen Shareholders should carefully read the Scheme Document in its entirety before making a decision with respect to the Scheme.

Additional irrevocable undertakings

In accordance with Rule 2.10(a) of the Code, Bidco announces that members of the Leavesley family have undertaken to vote in favour of the resolutions relating to the Acquisition at the Meetings (or in the event that the Acquisition is implemented by an Offer, to accept such Offer) in respect of their respective beneficial holdings of St. Modwen Shares, which total 10,792,377 St. Modwen Shares, representing approximately 4.85 per cent. of the issued ordinary share capital of St. Modwen as at the Latest Practicable Date.

In total, therefore, Bidco has received irrevocable undertakings to vote in favour of the resolutions relating to the Acquisition at the Meetings (or in the event that the Acquisition is implemented by an Offer, to accept such Offer) in respect of, in aggregate, 25,478,019 St. Modwen Shares, representing approximately 11.44 per cent. of the issued ordinary share capital of St. Modwen as at the Latest Practicable Date. The undertakings will remain binding in the event that a higher competing offer for St. Modwen is made. Full details of the irrevocable undertakings are set out in Appendix 2 to this announcement and in the Scheme Document.

Financing of the Acquisition

The cash consideration payable to the St. Modwen Shareholders under the terms of the Increased Offer will be financed by equity to be invested by Blackstone Funds. In connection with the financing of Bidco, Blackstone Funds have entered into a revised equity commitment letter (the "Revised Equity Commitment Letter").

Rothschild & Co, in its capacity as financial adviser to Bidco, is satisfied that sufficient resources are available to Bidco to satisfy in full the cash consideration payable to the St. Modwen Shareholders under the terms of the Scheme.

Amended and Restated Cooperation Agreement

In connection with the Increased Offer, Bidco and St. Modwen have entered into a deed of amendment and restatement in relation to the cooperation agreement entered into between Bidco and St. Modwen on 20 May 2021 (the "Amended and Restated Cooperation Agreement").  Under the terms of the Amended and Restated Cooperation Agreement, Bidco may at any time, subject to the consent of the Panel (if required), elect to implement the Acquisition by way of an Offer.  All other terms of the Amended and Restated Cooperation Agreement are on the same terms as the previous agreement.

Publication of the Scheme Document

St. Modwen is pleased to announce that a circular in relation to the Scheme (the "Scheme Document") setting out, among other things, a letter from the Chairman of St. Modwen, the full terms and conditions of the Scheme, a statutory explanatory statement, an expected timetable of principal events, a valuation report in respect of St. Modwen's portfolio of investment properties and assets held for sale as at 31 May 2021,  notices of the Court Meeting and General Meeting and details of the actions to be taken by St. Modwen and Scheme Shareholders has been published today on St. Modwen's website at www.stmodwen.co.uk/investors.

A letter and/or email giving details of the website where the Scheme Document may be accessed (and, depending on the St. Modwen Shareholders' communication preferences, a hard copy of the Scheme Document) is being sent to St. Modwen Shareholders. St. Modwen Shareholders may request a hard copy of the relevant documentation or Forms of Proxy by calling St. Modwen's registrars, Equiniti, between 8:30 a.m. and 5:30 p.m. Monday to Friday (except English and Welsh public holidays) on 0333 207 6530 from within the UK or on +44 333 207 6530 if calling from outside the UK, or by writing to 'Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA', stating the name and address to which the hard copies should be sent.

Action required

As further detailed in the Scheme Document, in order to become effective, the Scheme will require, among other things, that the requisite majority of eligible Scheme Shareholders vote in favour of the Scheme at the Court Meeting and eligible St. Modwen Shareholders vote in favour of the Special Resolution at the General Meeting. The Scheme is also subject to the satisfaction or waiver of the Conditions and further terms that are set out in the Scheme Document.

Notices convening the Court Meeting and the General Meeting at 12:00 p.m. on  21 July 2021 and 12:15 p.m. (or as soon thereafter as the Court Meeting concludes or is adjourned) on 21 July 2021, respectively, to be held at The Queen Elizabeth II Centre, Broad Sanctuary, Westminster, London SW1P 3EE, are set out in the Scheme Document.

COVID-19 restrictions remain in place at the time of publication of this announcement, and the UK Government has urged people to maintain social distancing and reduce time spent in crowded areas. Whilst St. Modwen anticipates that attendance in person will be legally permissible, Scheme Shareholders and St. Modwen Shareholders are strongly encouraged not to attend the Meetings in person, and are instead encouraged to attend the Meetings remotely via the Virtual Meeting Platform.

Any changes to the arrangements for the Court Meeting and the General Meeting will be communicated to Scheme Shareholders and St. Modwen Shareholders before the Meetings, including through our website www.stmodwen.co.uk/investors and by announcement through a Regulatory Information Service.

Scheme Shareholders and St. Modwen Shareholders will be given the opportunity to remotely attend, submit written questions and/or any objections (in the case of the Court Meeting) and vote at the Court Meeting and the General Meeting via the Virtual Meeting Platform, further details of which are set out in the Scheme Document.

Scheme Shareholders and St. Modwen Shareholders are strongly encouraged to submit proxy appointments and instructions for the Court Meeting and the General Meeting as soon as possible, using any of the methods (online, electronically through CREST, by post or by email) set out in the Scheme Document. Scheme Shareholders and St. Modwen Shareholders are also strongly encouraged to appoint "the Chair of the meeting" as their proxy, in particular given the ongoing uncertainties associated with the COVID-19 pandemic.

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of opinion of Scheme Shareholders.  You are therefore strongly urged to complete and return your Forms of Proxy as soon as possible. Whether or not you intend to attend and/or vote at the Meetings (either in person or remotely), you are strongly advised to transmit a proxy appointment and voting instruction (online or through CREST) or sign and return your blue Form of Proxy by post or email for the Court Meeting as soon as possible.

Timetable

The Scheme Document contains an expected timetable of principal events relating to the Scheme, which is also set out in Appendix 1 to this announcement. The Scheme remains conditional on the approval of Scheme Shareholders at the Court Meeting and St. Modwen Shareholders at the General Meeting and on the satisfaction or waiver of the other Conditions set out in the Scheme Document, including the approval of the Court. The Scheme is expected to become effective on 6 August 2021.

Other

Copies of this announcement and the Scheme Document will be available for viewing on St. Modwen's website at www.stmodwen.co.uk/investors and Bidco's website at www.publishdocuments.co.uk by no later than 12.00 p.m. on the Business Day following the date of publication of the Scheme Document (subject to any applicable restrictions relating to persons resident in Restricted Jurisdictions) up to and including the Effective Date or the date the Scheme lapses or is withdrawn, whichever is earlier.

A copy of the Scheme Document will shortly be submitted to the National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

If you have any questions about this announcement, the Scheme Document, the Court Meeting or the General Meeting, or are in any doubt as to how to submit your proxies online or to complete the Forms of Proxy, please call St. Modwen's registrars, Equiniti, between 8:30 a.m. and 5:30 p.m. Monday to Friday (except English and Welsh public holidays) on 0333 207 6530 from within the UK or on +44 333 207 6530 if calling from outside the UK. Calls from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones. Please note that calls may be monitored or recorded and Equiniti cannot provide advice on the merits of the Acquisition or the Scheme or give any financial, legal or tax advice.

The person responsible for arranging release of this announcement on behalf of St. Modwen is Lisa Minns, General Counsel & Company Secretary.

Commenting on this announcement, Danuta Gray, Chair of St Modwen said:

"Given the repositioning of the business in the attractive logistics and housebuilding sectors, the momentum of the business and confidence in the management team, the Board considered Blackstone's approach from a position of strength. The Board adopted a robust position on value, mindful of expected growth both in H1 2021 and over the medium to long term. We are pleased to announce this increased offer, supporting our belief that the acquisition is in the best interests of St. Modwen shareholders by significantly accelerating, and de-risking, the value that could be realised by St. Modwen independently."

James Seppala , Head of Blackstone Real Estate Europe, added:

"We believe this is a business with great potential and we will be providing significant additional capital to accelerate its existing plans and to fully realise the opportunity for the business, its customers and its employees.  Our belief in our ability to grow St Modwen in this way enables us to make this final offer to shareholders at a significant premium to undisturbed market value."