14 December 2007
Not for release, publication or distribution, in whole or in part, in, into or
from any jurisdiction where to do so would constitute a violation of the
relevant laws of such jurisdiction
RECOMMENDED OFFER BY TMN GROUP PLC FOR INTERNET BUSINESS GROUP PLC
The Boards of TMN Group plc ("TMN") one of the UK's premier online direct
marketing groups, and Internet Business Group plc ("IBG"), the online
advertising and media specialist, are pleased to announce that they have
reached agreement on the terms of a recommended proposal for TMN to acquire the
entire issued and to be issued share capital of IBG by way of a share-for-share
exchange.
Key points
* The Acquisition will be effected by means of a scheme of arrangement
between IBG and its shareholders pursuant to section 425 of the Companies
Act 1985. The Scheme requires the approval of IBG Shareholders and the
sanction of the Court.
* Scheme Shareholders will receive 1 new ordinary share in TMN for every
3.765 ordinary shares held in IBG. Based on the Closing Price of 48 pence
per TMN Share and 12.75 pence per IBG Share on 13 December 2007, being the
last business day prior to this announcement, the Acquisition values each
IBG Share at approximately 12.75 pence and the existing issued share
capital of IBG at approximately �9.84 million. This represents a nil
premium to the Closing Price of 12.75 pence per IBG Share.
* A maximum number of approximately 21.0 million New TMN Shares will be
issued pursuant to the Acquisition if all IBG Options are exercised
(including those with an exercise price greater than the consideration per
IBG Share receivable under the Acquisition). Assuming no options in either
IBG or TMN are exercised prior to completion of the Acquisition, a maximum
number of approximately 20.5 million New TMN Shares will be issued, such
that IBG Shareholders will hold New TMN Shares representing approximately
29 per cent. of the enlarged issued share capital of TMN immediately after
completion of the Acquisition.
* The New TMN Shares will be allotted and issued credited as fully paid and
will rank pari passu in all respects with the TMN Shares in issue at the
time the New TMN Shares are allotted and issued, including the right to
receive and retain dividends and other distributions declared, made or paid
after the Effective Date.
* TMN's services include email and website marketing (TMN Media), full
service digital advertising (EDR), online fieldwork solutions (iD Factor)
and research analysis (ICD Research). For the year ended 30 April 2007, TMN
reported revenue of �16.1 million and operating profit of �3.3 million. For
the six months ended 31 October 2007, TMN reported revenue of �9.0 million,
and headline profit before tax of �1.4 million.
.
* IBG's operations are divided primarily into the following three divisions:
AffiliateFuture (a Performance Marketing network), IBG Media (brokering
traffic as well as publishing a variety of websites), and E-commerce
(websites retailing product lines across several sectors within sports and
lifestyle). IBG is today announcing its preliminary results for the
financial year ended 31 October 2007, reporting revenue of �16.4 million,
profit before share based charges, interest, taxation, depreciation,
amortisation IFRS share based charges and movement in investments of �1.6
million, and profit before taxation of �0.92 million.
* The IBG Directors and TMN Directors believe that the Acquisition will
result in an Enlarged Group with significant commercial and financial
advantages for the shareholders of both companies.
* As one of the UK's premier online direct marketing groups, TMN will bring
to the Enlarged Group extensive experience and scale advantages. TMN's
strategy is to increase its UK online direct marketing service range with
view to controlling more of advertisers' online spend in a rapidly
expanding market.
* The IBG Directors believe that their strategy of creating a substantially
larger advertising and media operation can best be achieved at this time by
means of the Acquisition.
* There is little cross-over at present between the TMN and IBG customer
bases, providing potential opportunities to cross-sell products and
services.
* The IBG Directors believe that the Acquisition should allow IBG to
accelerate its existing growth strategy by leveraging TMN's complementary
resources and expertise. Taking all of the above factors into account, the
IBG Directors believe that the Acquisition is in the best interests of IBG
Shareholders and therefore unanimously recommend that they vote in favour
of the resolutions to be proposed at the Court Meeting and the General
Meeting.
* In aggregate, TMN has received irrevocable undertakings to vote in favour
of the Scheme in respect of 37,350,270 IBG Shares in aggregate representing
approximately 48.39 per cent. of IBG's existing issued share capital.
Mark Smith, CEO of TMN, said:
"Bringing the two Groups together, with their obvious synergies and exciting
market potential, represents an opportunity to continue our strategic focus on
building an Enlarged Group providing a broad range of high quality, online
advertising, marketing and research services.
The market in which we operate continues to grow and present new opportunities,
and TMN will continue to evolve to meet the needs of the market. We see
excellent synergies between the businesses and feel that this is a significant
step in achieving our long-term vision."
Maziar Darvish, CEO of IBG, said:
"We believe that as part of a larger integrated group, we will be better
positioned to exploit the significant opportunities within the marketplace.
The structure of the deal and the combination of two such highly complementary
businesses is expected to enhance value for shareholders in the medium to long
term. With these factors in mind, the Directors unanimously recommend that the
shareholders vote in favour of the resolutions to be proposed at the Court
Meeting and the General Meeting."
Investec is acting as sole financial adviser and corporate broker to TMN.
Strand Partners is acting as financial adviser to IBG. St Helen's Capital plc
is acting as corporate broker to IBG.
Enquiries:
TMN GROUP PLC
Mark Smith, CEO 020 7440 9310
Craig Dixon, CFO
INVESTEC
Andrew Craig 020 7597 5172
Erik Anderson
REDLEAF COMMUNICATIONS
Samantha Robbins 020 7822 0200
Anna Dunkin
IBG PLC
Maziar Darvish, CEO 07967 039 693
STRAND PARTNERS
James Harris 020 7409 3494
Braden Saunders
ST HELEN'S CAPITAL
Ruari McGirr 020 7628 5582
TAVISTOCK COMMUNICATIONS
Matt Ridsdale 020 7920 3150
Summary
Terms of the Acquisition
The boards of TMN Group plc and Internet Business Group plc are pleased to
announce that they have reached agreement on the terms of a recommended
proposal for TMN to acquire the entire issued and to be issued share capital of
IBG by way of a share-for-share exchange, to be effected by means of a scheme
of arrangement between IBG and its shareholders pursuant to section 425 of the
Companies Act 1985. The Scheme requires the approval of IBG Shareholders and
the sanction of the Court.
Under the terms of the Acquisition, Scheme Shareholders will receive 1 new
ordinary share in TMN for every 3.765 ordinary shares held in IBG. Based on the
Closing Price of 48 pence per TMN Share and 12.75 pence per IBG Share on 13
December 2007, being the last business day prior to this announcement, the
Acquisition values each IBG Share at approximately 12.75 pence and the existing
issued share capital of IBG at approximately �9.84 million.
A maximum number of approximately 21.0 million New TMN Shares will be issued
pursuant to the Acquisition if all IBG Options are exercised (including those
with an exercise price greater than the consideration per IBG Share receivable
under the Acquisition). Assuming no options in either IBG or TMN are exercised
prior to completion of the Acquisition, a maximum number of approximately 20.5
million New TMN Shares will be issued, such that IBG Shareholders will hold New
TMN Shares representing approximately 29 per cent. of the enlarged issued share
capital of TMN immediately after completion of the Acquisition. The New TMN
Shares will be allotted and issued credited as fully paid and will rank pari
passu in all respects with the TMN Shares in issue at the time the New TMN
Shares are allotted and issued, including the right to receive and retain
dividends and other distributions declared, made or paid after the Effective
Date.
Information on TMN
TMN is one of the UK's largest online direct marketing organisations. TMN was
established in 1999 and was listed on AIM in 2000 under the name themutual.net.
Following TMN's acquisition of EDR and The iD Factor in 2005, themutual.net
changed its name to TMN plc. TMN's services include email and website marketing
(TMN Media), full service digital advertising (EDR), online fieldwork solutions
(iD Factor) and research analysis (ICD Research). For the year ended 30 April
2007, TMN reported revenue of �16.1 million and operating profit of �3.3
million. For the six months ended 31 October 2007, TMN reported revenue of �9.0
million, and headline profit before tax of �1.4 million.
Information on IBG
IBG was incorporated in 1999. Its subsidiary, Mazware Ltd, was incorporated in
1996, offering web design and web hosting services. With its core skills in
technology, design and marketing, IBG has developed into a business focused on
online advertising, online publishing and online retailing. IBG's operations
are divided primarily into the following three divisions: AffiliateFuture (a
Performance Marketing network), IBG Media (brokering traffic as well as
publishing a variety of websites), and E-commerce (websites retailing product
lines across several sectors within sports and lifestyle). IBG is today
announcing its preliminary results for the financial year ended 31 October
2007, reporting revenue of �16.4 million and profit before interest, taxation,
depreciation amortisation, IFRS share based charges and movement in investments
of �1.6 million, and profit before taxation of �0.92 million
Strategic rationale
The IBG Directors and TMN Directors believe that the Acquisition will result in
an Enlarged Group with significant commercial and financial advantages for both
the shareholders of TMN as well as the shareholders of IBG, who will, through
their subsequent shareholdings in the Enlarged Group, partake in the potential
benefits that are expected to result from the Acquisition. As one of the UK's
premier online direct marketing groups, TMN will bring to the Enlarged Group
extensive experience and scale advantages. TMN's strategy is to increase its UK
online direct marketing service range with view to controlling more of
advertisers' online spend in a rapidly expanding market.
The IBG Directors believe that their strategy of creating a substantially
larger advertising and media operation can best be achieved at this time by
means of the Acquisition. This will allow the IBG Directors the opportunity to
focus on growing the business within the TMN Group and without the distraction
to operational matters that the on-going requirements of being a smaller
independently quoted business bring. TMN operates in the complementary areas of
operating media assets, e-mail campaign management, e-mail sales representation
and market research and has demonstrable expertise in both sales and account
management. In addition, TMN owns complementary technology and know-how in the
lead generation market. In addition, there is little cross-over at present
between the TMN and IBG customer bases, providing potential opportunities to
cross-sell products and services. As a result of these factors, the IBG
Directors have concluded that IBG would be better placed to achieve the
opportunities available to it within a larger integrated group. As the
acquisition of IBG by TMN is equity based, resulting in IBG Shareholders being
interested in approximately 29 per cent of the enlarged TMN group following the
Acquisition (on the basis that no options over TMN Shares and IBG Shares as at
13 December 2007 are exercised thereafter), IBG shareholders may have the
opportunity to gain from the potential medium to long term upside offered by
IBG, as part of a larger media and marketing services organisation.
Furthermore, the IBG Directors believe there to be a strong commercial
rationale for the Acquisition, beneficial to all IBG stakeholders, including
IBG Shareholders, employees and customers. The IBG Directors believe that the
Acquisition should allow IBG to accelerate its existing growth strategy by
leveraging TMN's complementary resources and expertise. Taking all of the above
factors into account, the IBG Directors believe that the Acquisition is in the
best interests of IBG Shareholders and therefore unanimously recommend that
they vote in favour of the resolutions to be proposed at the Court Meeting and
the General Meeting.
The Board
The Enlarged Group will continue to be managed and run on a day to day basis by
the current executive management team of TMN. Upon completion of the
Acquisition the board of TMN will comprise:
Peter Harkness Non Executive Chairman
Mark Smith Chief Executive Officer
Craig Dixon Chief Financial Officer
Vincent Smith Non Executive Director
Bruce Fair Non Executive Director
TMN attaches great importance to the skills and experience of the existing
management and employees of IBG and believes that opportunities for the
employees of the Enlarged Group will be enhanced in the event that the
Acquisition is completed.
TMN confirms that it has no plans to alter existing arrangements with employees
or management of the IBG Group. As such, the employees and management of the
IBG Group will continue to be employed on the basis of their current terms. TMN
also has no plans to change the locations of IBG Group's places of business and
it has confirmed that following completion of the Acquisition all existing
employment rights, including pension rights, of employees of IBG will be fully
safeguarded.
Undertakings
TMN has received irrevocable undertakings from certain IBG Directors and
Connected Parties to vote (or procure the vote) in favour of the Scheme in
respect of 28,649,270 IBG Shares, in aggregate representing approximately 37.11
per cent. of IBG's existing issued share capital. TMN has also received
irrevocable undertakings from other IBG Shareholders to vote in favour of the
Scheme in respect of 8,701,000 IBG Shares, in aggregate representing
approximately 11.27 per cent. of IBG's existing issued share capital. Such
undertakings from these other IBG Shareholders will cease to be binding,
broadly speaking, in the event of a higher competing offer being made for IBG.
In aggregate, therefore, TMN has received irrevocable undertakings to vote in
favour of the Scheme in respect of 37,350,270 IBG Shares, in aggregate
representing approximately 48.39 per cent. of IBG's existing issued share
capital. Further details of these irrevocable undertakings received by TMN are
set out in Appendix III to this announcement.
Recommendation
The IBG Directors, who have been so advised by Strand Partners, consider the
terms of the Acquisition to be fair and reasonable. In providing its advice to
the IBG Directors, Strand Partners has taken into account the commercial
assessments of the IBG Directors. Accordingly, the IBG Directors unanimously
recommend IBG Shareholders to vote in favour of the resolutions to be proposed
at the Court Meeting and the General Meeting, as they have irrevocably
undertaken to do in respect of their own entire legal and beneficial holdings
of IBG Shares which, in aggregate, total 25,310,316 IBG Shares, representing
approximately 32.79 per cent. of IBG's existing issued share capital.
This summary should be read in conjunction with, and is subject to, the full
text of the following announcement and the Appendices. The Acquisition will be
subject to the Conditions set out in Appendix I. Appendix II contains the bases
and sources of certain information contained in this announcement. Appendix III
contains details of the irrevocable undertakings. Appendix IV contains the
definitions of certain terms used in this summary.
General
Application will be made to the London Stock Exchange for the New TMN Shares to
be admitted to trading on AIM. It is expected that Admission will become
effective and that trading in the New TMN Shares will commence on AIM on the
Effective Date. It is also proposed that, in addition, to the cancellation of
the listing of IBG Shares, IBG be re-registered as a private limited company
under the relevant provisions of the Act prior to the Effective Date to enable
the New IBG Shares to be issued to TMN following the Capital Reduction without
the need to prepare a valuation report under Section 103 of the Act.
This announcement is not intended to and does not constitute or form any part
of an offer or invitation to sell or subscribe for or purchase any securities
in any jurisdiction pursuant to the Acquisition or otherwise. The Acquisition
will be subject to the Conditions and further terms set out herein and in
Appendix I, and to the full terms and conditions that will be set out in the
Scheme Document. The Acquisition will be governed by English law and will be
subject to the applicable requirements of the City Code, the Panel and the
London Stock Exchange. Any acceptance or other response to the Acquisition
should be made only on the basis of the information in the Scheme Document. IBG
Shareholders are advised to read the formal documentation in relation to the
Acquisition carefully, once it has been dispatched.
It is anticipated that a Scheme Document containing the notice of the two
Shareholders' meetings will be sent to IBG Shareholders on or around 19
December 2007 following a hearing of the application in Court to convene the
Scheme Shareholders' meetings.
TMN reserves the right to implement the offer, with the written consent of IBG,
by way of a Conventional Offer, in which case additional documents will be
despatched to IBG Shareholders. Further details are set out in Appendix I.
Investec, which is authorised and regulated in the United Kingdom by the FSA,
is acting exclusively for TMN and no one else in connection with the
Acquisition and other matters referred to in this announcement and the Scheme
and will not be responsible to anyone other than TMN for providing the
protections afforded to clients of Investec nor for giving advice in relation
to the Acquisition and the Scheme or any other matter or arrangement referred
to in this announcement.
Strand Partners, which is authorised and regulated in the United Kingdom by the
FSA, is acting exclusively for IBG and no one else in connection with the
Acquisition and the Scheme and will not be responsible to anyone other than IBG
for providing the protections afforded to clients of Strand Partners nor for
giving advice in relation to the Acquisition and the Scheme or any other matter
or arrangement referred to in this announcement.
The TMN Directors accept responsibility for the information contained in this
announcement other than the information relating to IBG. To the best of the
knowledge and belief of the directors of TMN (who have taken all reasonable
care to ensure that such is the case), the information contained in this
announcement for which they accept responsibility is in accordance with the
facts and does not omit anything likely to affect the import of such
information.
The IBG Directors accept responsibility for the information contained in this
announcement other than the information relating to TMN. To the best of the
knowledge and belief of the directors of IBG (who have taken all reasonable
care to ensure that such is the case), the information contained in this
announcement for which they accept responsibility is in accordance with the
facts and does not omit anything likely to affect the import of such
information.
The distribution of this announcement in jurisdictions other than the United
Kingdom may be restricted by law and therefore persons into whose possession
this announcement comes should inform themselves about, and observe, such
restrictions. Any failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction.
Any TMN Shares issued pursuant to the Scheme (including the New TMN Shares)
will be issued in reliance upon the exemptions from the registration
requirements of the US Securities Act provided by Section 3(a)(10) of the US
Securities Act and, as a consequence, will not be registered thereunder or
under the securities laws of any state or other jurisdiction of the Unites
States. For the purposes of qualifying for the Section 3(a)(10) exemption from
the registration requirements of the US Securities Act and the securities laws
of certain states of the Unites States, TMN and IBG will advise the Court that
its sanctioning of the Scheme will be relied upon by TMN and IBG as an approval
of the Scheme following a hearing of its fairness to Scheme Shareholders at
which hearing all such Scheme Shareholders are entitled to attend in person or
through counsel to support or oppose the sanctioning of the Scheme and with
respect to which notification has been given to all Scheme Shareholders. TMN
will not register the TMN Shares (including the New TMN Shares) under the US
Securities and Exchange Act of 1934 and thus will not be required following
completion of the Scheme to file any reports with the SEC.
Cautionary note regarding forward looking statements:
This announcement contains certain forward looking statements with respect to
the financial condition, results of operations and business of IBG or the IBG
Group, TMN or the TMN Group or the Enlarged Group and certain plans and
objectives of the boards of directors of IBG and TMN. These forward looking
statements can be identified by the fact that they do not relate to historical
or current facts. Forward looking statements often use words such as
"anticipate", "target", "expect", "estimate", "intend", "plan", "goal",
"believe", "will", "may", "should", "would", "could", "potential" or other
words of similar meaning. These statements are based on assumptions and
assessments made by the boards of directors of IBG and TMN in the light of
their experience and their perception of historical trends, current conditions,
expected future developments and other factors they believe appropriate. By
their nature, forward looking statements involve risk and uncertainty and the
factors described in the context of such forward looking statements in this
announcement could cause actual results and developments to differ materially
from those expressed in or implied by such forward looking statements.
Should one or more of these risks or uncertainties materialise, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this announcement. Although IBG and TMN believe that the
expectations reflected in any such forward-looking statements are reasonable,
IBG and TMN can give no assurance that such expectations will prove to have
been correct. IBG and TMN caution you not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
announcement. IBG and TMN assume no obligation to update or correct the
information contained in this announcement.
Dealing disclosure requirements
Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,
"interested" (directly or indirectly) in one per cent. or more of any class of
"relevant securities" of IBG or TMN, all "dealings" in any "relevant securities
of that company (including by means of an option in respect of, or a derivative
referenced to, any such relevant securities") must be publicly disclosed by no
later than 3.30 p.m. on the business day following the date of the relevant
transaction. This requirement will continue until the Effective Date or until
the date on which the Scheme lapses or is otherwise withdrawn or on which the
"Offer Period" otherwise ends (or, if TMN elects to effect the Acquisition by
way of a Takeover Offer, until the date on which such Takeover Offer becomes,
or is declared, unconditional as to acceptances, lapses or is otherwise
withdrawn or on which the relevant "offer period" otherwise ends). If two or
more persons act together pursuant to an agreement or understanding, whether
formal or informal, to acquire an "interest" in "relevant securities" of IBG or
TMN, they will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all "dealings" in relevant
securities of IBG or TMN by IBG or TMN, or by any of their respective
associates, must be disclosed by no later than 12.00 noon on the business day
following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on
the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a dealing under Rule 8, please contact an independent
financial adviser authorised under FSMA, consult the Panel's website at
www.thetakeoverpanel.org.uk or contact the Panel on telephone number + 44 (0)
20 7638 0129.
14 December 2007
RECOMMENDED OFFER BYTMN GROUP PLC FORINTERNET BUSINESS GROUPPLC
1. Introduction
The boards of TMN Group plc and Internet Business Group plc are pleased to
announce that they have reached agreement on the terms of a recommended
proposal for TMN to acquire the entire issued and to be issued share capital of
IBG by way of a share for share exchange and which is to be effected by means
of a scheme of arrangement (the "Scheme") between IBG and its shareholders
pursuant to section 425 of the Act (involving a reduction of capital pursuant
to section 135 of the Act). The Scheme requires the approval of Scheme
Shareholders and the sanction of the Court.
2. The Acquisition
Under the terms of the Acquisition, Scheme Shareholders will receive 1 new
ordinary share in TMN for every 3.765 ordinary shares held in IBG. Based on the
Closing Price of 48 pence per TMN Share and 12.75 pence per IBG Share on 13
December 2007, being the last business day prior to this announcement, the
Acquisition values each IBG Share at approximately 12.75 pence and the existing
issued share capital of IBG at approximately �9.84 million. This represents a
nil premium to the Closing Price of 12.75 pence per IBG Share.
A maximum number of up to 21.0 million New TMN Shares will be issued pursuant
to the Acquisition if all IBG Options are exercised, including those with an
exercise price greater than the consideration per IBG Share receivable under
the Acquisition. Assuming no options in either IBG or TMN are exercised prior
to completion of the Acquisition, a maximum number of approximately 20.5
million New TMN Shares will be issued, such that IBG Shareholders will hold New
TMN Shares representing approximately 29 per cent. of the enlarged issued share
capital of TMN immediately after completion of the Acquisition. The New TMN
Shares will be allotted and issued credited as fully paid and will rank pari
passu in all respects with the TMN Shares in issue at the time the New TMN
Shares are allotted and issued, including the right to receive and retain
dividends and other distributions declared, made or paid after the Effective
Date.
Fractions of New TMN Shares will not be allotted or issued to Scheme
Shareholders pursuant to the Acquisition and all fractional entitlements to New
TMN Shares will be rounded down to the nearest whole number of New TMN Shares.
Fractional entitlements of New TMN Shares will not be issued to the holders of
Scheme Shareholders and nor will they be aggregated and sold in the market.
3. Irrevocable undertakings
TMN has received irrevocable undertakings from certain IBG Directors and
Connected Parties to vote (or procure the vote) in favour of the Scheme in
respect of 28,649,270 IBG Shares, in aggregate representing approximately 37.11
per cent. of IBG's existing issued share capital. TMN has also received
irrevocable undertakings from other IBG Shareholders to vote in favour of the
Scheme in respect of 8,701,000 IBG Shares, in aggregate representing
approximately 11.27 per cent. of IBG's existing issued share capital. Such
undertakings from these other IBG Shareholders will cease to be binding,
broadly speaking, in the event of a higher competing offer being made for IBG.
In aggregate, therefore, TMN has received irrevocable undertakings to vote in
favour of the Scheme in respect of 37,350,270 IBG Shares, in aggregate
representing approximately 48.39 per cent. of IBG's existing issued share
capital.
Further details of these irrevocable undertakings received by TMN (including
those from the IBG Directors and the circumstances when such undertakings cease
to be binding) are set out in Appendix III to this announcement.
4. Background to and reasons for recommending the Acquisition
IBG was incorporated in 1999. Its subsidiary, Mazware Ltd, was incorporated in
1996 offering web design and web hosting services. Following a severe downturn
in the internet professional services market subsequent to the well-documented
"dotcom crash", the directors of the Company, at that time, focused the IBG
Group's activities on e-commerce and online advertising. The organically
created e-commerce business was expanded in late 2001 following the acquisition
of the majority stake in Sweatband Ltd, not already owned IBG. The online
advertising business was developed in-house and was launched in February 2002
as AffiliateFuture. This operation has achieved significant growth and
accounted for over 85 per cent. of IBG's sales in the financial year ended 31
October 2007.
During its 2006 financial year, IBG established a discrete media division,
bringing together its media brokering business with intangible assets
(primarily domain names) acquired in July 2006 in order to operate as an online
publisher, generating revenues from advertising on its own properties. This
division provides IBG with a comparatively higher margin operation in its own
right as well as a point of difference for the AffiliateFuture operation.
In the last few years, IBG has achieved significant growth in sales and made
progress in diversifying its business internationally in addition to
establishing a media operation.
As reported in both the conclusion of the interim results statement, published
on 30 July 2007, and more recently in the preliminary results statement
announced on 14 December 2007, IBG has continued to focus on the medium to long
term goal of creating a substantially larger advertising and media operation.
Whilst the IBG Directors remain confident as to the medium to long-term
prospects of IBG, they believe that there are potential disadvantages
associated with remaining at its current size. These include:
* Reduced client influence as a result of relative size compared with larger
competitors
* Competitive disadvantage for IBG resulting from only being able to offer one
element (affiliate marketing) of the overall online marketing activities of
most clients.
The IBG Directors believe that their strategy of creating a substantially
larger advertising and media operation can best be achieved at this time by
means of the Acquisition. This will allow the IBG Directors the opportunity to
focus on growing the business within the TMN Group and without the distraction
to operational matters that the on-going requirements of being a smaller
independently quoted business bring.
TMN operates in the complementary areas of operating media assets, e-mail
campaign management, e-mail sales representation and market research and has
demonstrable expertise in both sales and account management. In addition, TMN
owns complementary technology and know-how in the lead generation market.
In addition, there is little cross-over at present between the TMN and IBG
customer bases, providing potential opportunities to cross-sell products and
services.
As a result of these factors, the IBG Directors have concluded that IBG would
be better placed to achieve the opportunities available to it within a larger
integrated group. As the acquisition of IBG by TMN is equity based, resulting
in IBG Shareholders being interested in approximately 29 per cent of the
enlarged TMN group following the Acquisition (on the basis that no options over
TMN Shares and IBG Shares as at 13 December 2007 are exercised thereafter), IBG
shareholders may have the opportunity to gain from the potential medium to long
term upside offered by IBG, as part of a larger media and marketing services
organisation. Furthermore, the IBG Directors believe there to be a strong
commercial rationale for the Acquisition, beneficial to all IBG stakeholders,
including IBG Shareholders, employees and customers. The IBG Directors believe
that the Acquisition will allow IBG to accelerate its existing growth strategy
by leveraging TMN's complementary resources and expertise.
Taking all of the above factors into account, the IBG Directors believe that
the Acquisition is in the best interests of IBG Shareholders and therefore
unanimously recommend that they vote in favour of the resolutions to be
proposed at the Court Meeting and the General Meeting.
5. Reasons for the Acquisition and intentions for IBG
The IBG Directors and TMN Directors believe that the Acquisition should result
in an Enlarged Group with significant commercial and financial advantages for
both the shareholders of TMN as well as the IBG Shareholders, who will, through
their subsequent shareholdings in the Enlarged Group, partake in the potential
benefits that are expected to result from the Acquisition. As one of the UK's
premier online direct marketing groups, TMN will bring to the Enlarged Group
extensive experience and scale advantages. TMN's strategy is to increase its UK
online direct marketing service range with view to controlling more of
advertisers' online spend in a rapidly expanding market. Paragraph 4 above sets
out the background to and reasons for the IBG Directors recommending that IBG
shareholders vote in favour of the Acquisition.
Enhanced service range
The Enlarged Group will be able to offer its respective clients a competitive
menu of services from its different divisions: affiliate marketing
(AffiliateFuture), email media planning and buying (EDR), media ownership and
representation (TMN Media and IBG Media) and research services (The iD Factor
and ICD Research). The services that IBG provides strategically supplement in
TMN's service portfolio, and should allow TMN to grow both online businesses
through exploiting market opportunities with an enhanced service range and
leveraged sales across its divisions, together with an enlarged complementary
client base.
Expansion of client base
The majority of the largest clients of TMN and IBG are currently not major
clients of the other, and this could offer an instant synergy to up-sell the
broader service offering of the Enlarged Group. In particular, the ability of
TMN to offer affiliate marketing as a service will further its appeal to
existing clients while offering increased opportunities to acquire new clients
who can utilise a full range of internet advertising services via one provider.
Scale benefits
TMN and IBG operate within a market that has started to consolidate, with major
market participants in both the US and Europe increasing their control of the
media and agency sectors. The Directors believe that following the Acquisition,
the Enlarged Group would be in a more advantageous position to strengthen its
current market position, as well as to continue to grow its operations at a
strong pace and offer its clients a broader and more effective service through
increased resource, cross-Group synergies and a single Group focused on
benefiting an advertiser by servicing a larger proportion of their internet
advertising spend.
TMN intends to focus primarily on strategically positioning the Affiliate
Future and IBG Media divisions of the IBG business as part of the Enlarged
Group, through using the service offerings of these divisions as a platform to
broaden the online marketing activities that TMN is able to provide to both its
current and new clients. The strategic direction in which TMN intends to carry
the IBG business is not expected to change, however TMN intends to accelerate
the growth of all parts of the Enlarged Group via the increased opportunities
arising from the Acquisition, as discussed above. The proposed enlargement of
the Group will bring long-term commercial scalability and opportunities to
deliver a broader solution to clients. The strategic objective of the Group
remains focused on bringing together various marketing services, with the
current retail operations of IBG being disposed in due course.
6. Management and employees
The Enlarged Group will continue to be managed and run on a day to day basis by
the current executive management team of TMN. Upon completion of the
Acquisition the board of TMN will comprise:
Peter Harkness Non Executive Chairman
Mark Smith Chief Executive Officer
Craig Dixon Chief Financial Officer
Vincent Smith Non Executive Director
Bruce Fair Non Executive Director
TMN attaches great importance to the skills and experience of the existing
management and employees of IBG and believes that opportunities for the
employees of the Enlarged Group will be enhanced in the event that the
Acquisition is completed.
TMN confirms that it has no plans to alter existing arrangements with employees
or management of the IBG Group. As such, the employees and management of the
IBG Group will continue to be employed on the basis of their current terms. TMN
also has no plans to change the locations of IBG Group's places of business and
it has confirmed that following completion of the Acquisition all existing
employment rights, including pension rights, of employees of IBG will be fully
safeguarded.
The IBG Directors have each entered into a lock-in agreement pursuant to which
they have agreed: (a) not to dispose of any interest in such number of TMN
Shares as shall equal or exceed 25 per cent. of the TMN Shares received by them
pursuant to the Scheme from the period from Admission to 31 July 2008; (b) not
to dispose of any interest in such number of TMN Shares as shall equal or
exceed 62.5 per cent. of the TMN Shares received by them pursuant to the Scheme
from the period from 31 July 2008 to 31 December 2008; and (c) not to dispose
of any interest in the TMN Shares received by them pursuant to the Scheme
during the 24 month period from Admission otherwise than through Investec (or
broker to TMN at that time) so as to ensure an orderly market in the TMN Shares
for that period.
The IBG Board has given due consideration to TMN's statements above and
assurances noted above in deciding to recommend the Acquisition.
7. Information on TMN
TMN was established in 1999 under the name "themutual.net" as an internet
community in which members could obtain a stake and receive information free of
charge through a message board system. Themutual.net was listed on AIM in 2000,
and gained expertise in the email marketing sector. After substantial growth
and the acquisitions of Electronic Direct Response and iD Factor Limited in
2005, themutual.net, now a bigger company that had transformed itself via
organic and acquisitional growth into a major online direct marketing
specialist, changed its name to TMN Group plc in order to reflect better
divisional structure and the substantial expertise that the business has
developed. TMN has since evolved significantly through continued investment in
staff and infrastructure, and is far removed from the business it was when
first established.
TMN is now one of the UK's largest online direct marketing organisations,
operating through four divisions: TMN Media, EDR, The iD Factor and ICD
Research. Each divisional brand provides a specialist approach to its field of
expertise. In addition, TMN has a number of further pipeline opportunities,
including the launch of Envoy, an email delivery platform.
TMN Media - media division
TMN Media specialises in email and website marketing, with access to over 10
million highly profiled, permission-based email addresses, millions of visitors
to its websites, and distribution technology that ensures strong
deliverability. TMN Media manages one of the most comprehensive portfolio of
email databases in the UK, and offers a full online advertising solution.
EDR - digital advertising agency division
TMN acquired EDR, an online interactive advertising agency, in November 2005
for a maximum consideration of �6.0m. EDR was established in 2000 to offer full
services in email broadcast, sales and delivery. TMN's EDR division fulfils the
full planning and buying marketing requirements for numerous blue chip clients.
In 2006, EDR divested its owned and managed lists to TMN Media, and now focuses
purely on email strategy and investment, with access to over 30 million opt-in
email addressees from around 100 email lists. EDR is one of the UK's largest
email-buying agencies, and plans campaigns across a large number of third party
lists, including TMN Media.
iD Factor - online fieldwork solutions division
Specialist online market research agency, the iD Factor, was formed in 2001 to
offer online survey management and fieldwork services to the market research
industry and was acquired by TMN in December 2005 for a consideration of �1.2
million. Core services of this division include sample provision, the design
and implementation of web based surveys as well as full data processing and
tabulation. With over 250,000 panel members in the UK, access to 4 million
members across 41 territories and extensive synergies with the rest of TMN, iD
Factor aims to capitalise on the trend of market research migration online,
which is driven by the superior speed, efficiency and targeting accuracy that
online offers against traditional fieldwork.
ICD Research - Research analysis division
ICD Research was established as an autonomous division providing clients with
insight and analysis of market research data.
For the year ended 30 April 2007, TMN reported revenue of �16.1 million (a 79
per cent. increase over the prior year), and operating profit of �3.3 million
(a 93 per cent. increase over the prior year). For the six months ended 31
October 2007, TMN reported revenue of �9.0 million (a 13 per cent. increase
over the prior year), and headline profit before tax of �1.4 million (a 4 per
cent. increase over the prior year).
8. Information on IBG
IBG was incorporated in 1999. Its subsidiary, Mazware Ltd, was incorporated in
1996, offering web design and web hosting services.
With its core skills in technology, design and marketing, IBG has developed
into a business focused on online advertising, online publishing and online
retailing. IBG's operations are divided primarily into the following three
divisions:
* AffiliateFuture - a Performance Marketing network;
* IBG Media - brokering traffic as well as publishing a variety of websites;
and,
* E-commerce - websites retailing product lines across several sectors within
sports and lifestyle.
AffiliateFuture
Launched in February 2002, AffiliateFuture is IBG's largest division. It
operates in the UK, US and European markets with offices in London, New York
and Northern Spain, delivering tens of thousands of transactions per week to
hundreds of clients who range from small businesses to major international
operators. AffiliateFuture operates primarily on a CPA (Cost Per Acquisition)
model, whereby clients pay an agreed percentage of or a fixed amount for sales
or leads that are generated by the network, as such directly linking results to
advertising costs.
IBG Media
IBG Media is IBG's most recently established division and offers targeted
advertising solutions to advertisers through its own network of websites and
email publications including Henoo.com, CheapHolidayDeals.co.uk,
CheapAccommodation.com and NetFreeStuff.com. Henoo.com is a travel search
engine, allowing consumers to compare prices of package holidays, scheduled
flights, worldwide hotels and car hire from multiple suppliers.
CheapHolidayDeals.co.uk and CheapAccommodation.com are price comparison
websites featuring deals from numerous travel and accommodation suppliers. Net
Free Stuff is a "freebie", discount voucher and competition website with over
100,000 UK members. In addition to the above, IBG Media also brokers traffic.
This entails purchasing traffic from third party sources and monetising this
traffic through affiliate networks.
E-commerce
IBG's e-commerce strategy is to focus on products that are not readily
available to consumers on the high street. IBG offers a range of products
across its network of consumer websites including www.Sweatband.com, and
www.GadgetHub.co.uk. Through a network of Sweatband.com branded websites, IBG
offers consumers a specialist range of active sports equipment, for example in
the areas of tennis, fitness and squash. Focused on lifestyle products,
GadgetHub's product lines include table games such as football tables, pool,
snooker and air hockey.
IBG is today announcing its preliminary results for the financial year ended 31
October 2007, reporting revenue of �16.4 million, profit before interest,
taxation, depreciation, amortisation, IFRS share based charges and movement in
investments of �1.6 million; and profit before taxation of �0.92 million. As at
31 October 2007 IBG had net assets of �4.4 million.
9. Financial effects of the Acquisition
Following the Acquisition, IBG will become a subsidiary of TMN as a result of
which the assets and liabilities of the IBG Group will be consolidated into the
financial statements of the TMN Group. The TMN Directors expect that the
Acquisition will be earnings enhancing in the first full year of ownership,
before taking into account the amortisation of identified acquired intangibles.
The foregoing statement should not be interpreted as a profit forecast nor to
mean that TMN's future earnings per share will necessarily be greater than or
equal to its historical earnings per share. As neither TMN nor IBG have paid or
declared a dividend in the last financial year ended 30 April 2007 and 31
October 2007 respectively, there will be no change in the income position of
IBG's shareholders arising from the Acquisition. Based on the Closing Price of
48 pence per TMN Share and 12.75 pence per IBG Share on 13 December 2007, being
the last business day prior to the announcement, the terms of the Acquisition
imply a nil-premium offer, which would mean no change in the capital position
of IBG shareholders arising from the Acquisition.
10. Timing
IBG anticipates that it will despatch the Scheme Document to IBG Shareholders
and, for information only, to holders of options granted under the IBG Share
Schemes on or about 19 December 2007, but in any event within the next 28 days
(or such later date as may be agreed with the Panel); that the Court Meeting
and General Meeting will take place during January 2008; and subject to the
Scheme becoming unconditional and effective in accordance with its terms, the
Effective Date is expected to occur at the end of February 2008. The timing of
events which relate to the implementation of the Scheme is, however, subject to
the approval of the Court and is therefore subject to change. A full
anticipated timetable will be set out in the Scheme Document.
11. IBG Share Scheme
The offer to acquire the IBG Shares under the Acquisition extends to all IBG
Shares which are allotted and issued or transferred pursuant to the exercise of
IBG Options before the Scheme Record Time. Pursuant to the terms of the IBG
Option Scheme, all of the IBG Options will become exercisable upon the sanction
of the Scheme by the Court. IBG Options will continue to be exercisable at any
time within 30 days after the Scheme is sanctioned by the Court, but they will
lapse to the extent that they have not been exercised at the end of that 30 day
period. Proposed amendments to the Articles provide that any IBG Shares which
are allotted and issued pursuant to the exercise of IBG Options after the
Scheme Record Time will be immediately transferred to TMN, or a wholly owned
subsidiary of TMN, conditional on and in exchange for the same consideration
for each IBG Share as was due to a holder of Scheme Shares under the Scheme.
This will avoid any person (other than TMN, or a wholly owned subsidiary of
TMN) holding IBG Shares after dealings in such shares have ceased on AIM, which
is expected to occur at the close of business on the Effective Date. IBG
Optionholders will be sent details by IBG of the proposals made in respect of
the exercise of their outstanding IBG Options.
12. Implementation Agreement
IBG and TMN have entered into the Implementation Agreement, which governs their
relationship until the Effective Date. Amongst other things, TMN and IBG have
agreed to co-operate with regard to the process required to implement the
Scheme and each has also entered into certain undertakings concerning the
conduct of its business during that period. The Implementation Agreement
contains provisions for an inducement and break fee agreement pursuant to which
IBG has agreed to pay an inducement fee of an amount equal to one per cent. of
the aggregate value of the fully diluted share capital of IBG (calculated by
reference to the price of an IBG share as valued pursuant to the Offer and on
the basis set out in Practice Statement 15 published by the Panel and inclusive
of non-recoverable VAT) to TMN if, following the Announcement and subject to
certain exceptions, an IBG Competing Transaction is announced and subsequently
concluded or the IBG Board withdraws or adversely amends its recommendation of
the Acquisition and, in either case, the Acquisition lapses or is withdrawn as
a result. In addition, TMN has also agreed to pay a break fee to IBG of an
amount equal to one per cent. of the aggregate value of the fully diluted share
capital of IBG (calculated by reference to the price of an IBG share as valued
pursuant to the Offer and on the basis set out in Practice Statement 15
published by the Panel and inclusive of non-recoverable VAT) in the event that,
following the Announcement a TMN Competing Transaction is announced and is
subsequently concluded and, the Acquisition lapses or is withdrawn as a result.
13. The Scheme and the Meetings
The Acquisition is being implemented by means of a scheme of arrangement
between IBG and the IBG Shareholders under section 425 of the Act. The Scheme
involves the cancellation of the Scheme Shares by way of a Court approved
reduction of capital and the application of the reserve arising from such
cancellation in paying up in full a number of New IBG Shares which is equal to
the number of cancelled Scheme Shares and issuing the same to TMN in
consideration for which Scheme Shareholders will receive New TMN Shares to the
extent of their entitlement. On the Effective Date, TMN will become the owner
of the whole of the issued share capital of IBG. To become effective, the
Scheme requires, amongst other things, the approval at the Court Meeting of a
majority in number representing not less than three-fourths in value of the
Scheme Shares held by Scheme Shareholders present and voting, either in person
or by proxy, at the Court Meeting, or at any adjournment thereof, and the
passing of the Special Resolutions necessary to approve matters to give effect
to the Scheme at the General Meeting, or at any adjournment thereof.
Following the Court Meeting and the General Meeting and the satisfaction (or,
where applicable, waiver) of the other Conditions, the Scheme must also be
sanctioned by the Court at the Scheme Court Hearing and the associated Capital
Reduction must be confirmed by the Court at the Reduction Court Hearing.
14. Disclosure of interests in IBG
Save for the irrevocable undertakings referred to paragraph 3 above, neither
TMN nor any of its subsidiaries nor any of theTMN Directors, their immediate
families, related trusts or (so far as the TMN Directors are aware having made
due and careful enquiry) connected persons (within the meaning of section 346
of the Act) nor any persons acting in concert with TMN nor any person with whom
TMN or any person acting in concert with TMN has an arrangement, were
interested, directly or indirectly, in any IBG Shares or any rights over
securities convertible or exchangeable into, or any rights to subscribe for or
purchase, or any options to purchase, any IBG Shares, or any derivatives
referenced to IBG Shares nor borrowed or lent (save for any borrowed shares
which have been either on-lent or sold) nor had any right to subscribe for, or
any short position under a derivative, any agreement to sell or any delivery
obligation or right to require another person to purchase or take delivery in
relation to, such securities.
15. Recommendation
The IBG Directors, who have been so advised by Strand Partners, consider the
terms of the Acquisition to be fair and reasonable. In providing its advice to
the IBG Directors, Strand Partners has taken into account the commercial
assessments of the IBG Directors. Accordingly, the IBG Directors unanimously
recommend IBG Shareholders to vote in favour of the resolutions to be proposed
at the Court Meeting and the General Meeting, as they have irrevocably
undertaken to do in respect of their own entire legal and beneficial holdings
of IBG Shares which, in aggregate, total 25,310,316 IBG Shares, representing
approximately 32.79 per cent. of IBG's existing issued share capital.
Appendix I
Conditions and Certain Further Terms of the Offer
PART A - Conditions of the Offer
1. The implementation of the Scheme is conditional upon, inter alia:
i. the approval of the Scheme by a majority in number, representing not less
than three-fourths in value, of the Scheme Shares held by the holders of
Scheme Shares, present and voting, either in person or by proxy, at the
Court Meeting or any adjournment of that meeting;
ii. the resolutions required to approve and implement the Scheme and give
effect to the reduction of capital set out in the notice of the General
Meeting being passed by the requisite majority at the General Meeting, or
any adjournment of that meeting;
iii. the sanction (with or without modification as agreed by IBG and TMN) of
the Scheme and the confirmation of the Capital Reduction by the Court,
office copies of the Court Orders and the Minute being delivered for
registration to the Registrar of Companies and the registration of the
Reduction Court Order confirming the Capital Reduction with the Registrar
of Companies;
iv. the admission of the New TMN Shares to trading on AIM, in accordance with
the AIM Rules becoming effective
2. In addition, the Scheme is conditional upon the following matters and,
accordingly, the necessary actions to make the Scheme effective will not be
taken unless such conditions (as amended, if appropriate) have been
satisfied or waived:
Authorisations:
i. all authorisations in any jurisdiction which TMN or IBG, acting reasonably,
considers reasonably necessary or appropriate for, or in respect of, the
Scheme and/or its implementation (where the absence of such authorisation
would have a material and adverse effect on the Scheme) having been
obtained in terms and in a form reasonably satisfactory to TMN and IBG,
acting reasonably, from any relevant person and all such authorisations
remaining in full force and effect and IBG not having received written
notice of any intention to revoke or not renew the same; and
ii. all authorisations which TMN or IBG, acting reasonably. considers
reasonably necessary to carry on the business of any member of the IBG
Group (where the absence of such authorisation would have a material and
adverse effect on the IBG Group taken as a whole) remaining in full force
and effect and IBG not having received written notice of any intention to
revoke or not to renew the same; and
iii. all filings in connection with the Scheme, its implementation or the
acquisition or proposed acquisition of any shares in, or control or
management of, the IBG Group which TMN or IBG, acting reasonably, considers
reasonably necessary or appropriate, and where the absence of such filing
would have a material and adverse effect on the Scheme, having been made
and all applicable waiting periods having expired, lapsed or been
terminated.
3. Regulatory Intervention
No regulatory body having taken, instituted, implemented or threatened in
writing any legal proceedings, or having required any action to be taken or
otherwise having done anything or having enacted, made or proposed any statute,
regulation, order or decision or taken any other step and there not continuing
to be outstanding any statute, regulation, order or decision that is reasonably
likely to (in each case to an extent which is material in the context of the
IBG Group taken as a whole):
i. make the Scheme, its implementation or the acquisition or proposed
acquisition of any shares in, or control or management of, the IBG Group by
TMN illegal, void or unenforceable; or
ii. otherwise, directly or indirectly, prevent, prohibit or otherwise
materially restrict, restrain, delay or interfere in the implementation of
or impose additional conditions or obligations with respect to or otherwise
challenge or require amendment of the Scheme or the proposed acquisition of
IBG by TMN or any acquisition of shares in IBG by TMN; or
iii. require, prevent or materially delay the divestiture by TMN of any shares
or other securities in IBG; or
iv. impose any material limitation on the ability of any member of the TMN
Group or any member of the IBG Group to acquire or hold or exercise
effectively, directly or indirectly, any rights of ownership of shares or
other securities or the equivalent in any member of the IBG Group or
management control over any member of the IBG Group in any such case in a
manner or to an extent which is material to TMN in the context of the
Scheme or, as the case may be, in the context of the TMN Group or the IBG
Group taken as a whole; or
v. require, prevent or materially delay the disposal by IBG or any member of
the IBG Group, or require the disposal or alter the terms of any proposed
disposal by any member of the IBG Group, of all or any part of their
respective businesses, assets or properties or impose any limitation on the
ability of any of them to conduct their respective businesses or own their
respective assets or properties; or
vi. require any member of the TMN Group or any member of the IBG Group to offer
to acquire any shares or other securities (or the equivalent) in any member
of the IBG Group owned by any third party (in each case, other than in
connection with the implementation of the Scheme); or
vii. impose any limitation on the ability of TMN or any member of the IBG Group
to integrate or co-ordinate its business, or any part of it, with the
businesses or any part of the businesses of TMN and/or any member of the
IBG Group; or
viii. otherwise adversely affect any or all of the businesses, assets,
prospects or profits of any member of TMN or the IBG Group; and all
applicable waiting and other time periods during which any such regulatory
body could institute, or implement or threaten any legal proceedings,
having expired, lapsed or been terminated;
Consequences of the Scheme
Save as Disclosed, there being no provision of any agreements to which any
member of the IBG Group is a party, or by or to which any such member, or any
part of its assets, may be bound, entitled or subject, which would or might, in
each case as a consequence of the Scheme, its implementation or of the
acquisition or proposed acquisition of all or any part of the issued share
capital of, or change of control or management of, IBG or any other member of
the IBG Group reasonably be expected to result (in each case to an extent which
is material to TMN in the context of the Scheme or, as the case may be, in the
context of the IBG Group taken as a whole) in:
i. any material assets or interests of any member of the IBG Group being or
falling to be disposed of or charged in any way or ceasing to be available
to any member of the IBG Group or any rights arising under which any such
asset or interest could be required to be disposed of or charged in any way
or could cease to be available to any member of the IBG Group otherwise
than in the ordinary course of business; or
ii. any monies borrowed by or other indebtedness (actual or contingent) of, or
any grant available to, any member of the IBG Group being or becoming
repayable or capable of being declared repayable immediately or earlier
than the repayment date stated in such agreement or the ability of such
member of the IBG Group to incur any such borrowing or indebtedness
becoming or being capable of becoming withdrawn, inhibited or prohibited;
or
iii. any such agreement or the rights, liabilities, obligations or interests of
any such member under it being terminated or adversely modified or affected
or any onerous obligation arising or any adverse action being taken under
it; or
iv. the interests or business of any such member in or with any third party (or
any arrangements relating to any such interests or business) being
terminated or adversely modified or affected; or
v. the financial or trading position of any member of the IBG Group being
prejudiced or adversely affected; or
vi. the creation of any mortgage, charge or other security interest over the
whole or any part of the business, property or assets of any member of the
IBG Group or any such security (whenever arising or having arisen) becoming
enforceable or being enforced; or
vii. any member of the IBG Group ceasing to be able to carry on business under
any name under which or on the terms on which it currently does so or any
person presently not able to carry on business under any name under which
any member of the IBG Group currently does becoming able to do so; or
viii. the creation of actual or contingent liabilities by any member of the IBG
Group;
No Corporate Action Taken Since the Accounting Date
Since the Accounting Date, save as otherwise Disclosed or pursuant to
transactions in favour of IBG or a wholly-owned subsidiary of IBG or pursuant
to transactions between members of the IBG Group otherwise pursuant to the
Scheme, no member of the IBG Group having (to an extent which is material and
adverse in the context of the IBG Group taken as a whole):
i. issued or agreed to issue or authorised or proposed the issue or grant of
additional shares of any class or securities convertible into or
exchangeable for, or rights, warrants or options to subscribe for or
acquire, any such shares or convertible securities (save pursuant to the
exercise of options granted or the exercise of rights under the IBG Share
Scheme); or
ii. redeemed, purchased, repaid or reduced or proposed the redemption,
purchase, repayment or reduction of any part of its share capital or made
or proposed the making of any other change to its share capital; or
iii. recommended, declared, paid or made or proposed to recommend, declare, pay
or make any dividend, bonus issue or other distribution whether payable in
cash or otherwise; or
iv. merged or demerged with or from, or acquired, any body corporate or
authorised or proposed or announced any intention to propose any such
merger or demerger; or
v. other than in the ordinary course of business acquired or disposed of,
transferred, mortgaged or charged, or created or granted any security
interest over, any assets (including shares and trade investments) or
authorised or proposed or announced any intention to propose any
acquisition, disposal, transfer, mortgage, charge or creation or grant of
any security interest; or
vi. issued or authorised or proposed the issue of any debentures or incurred or
save in the ordinary course of business increased any borrowings,
indebtedness or liability (actual or contingent) of any aggregate amount
which is material in the context of the IBG Group as a whole; or
vii. entered into or varied, or authorised or proposed the entry into or
variation of, or announced its intention to enter into or vary, any
material transaction, arrangement, contract or commitment (whether in
respect of capital expenditure or otherwise) which is of a long term,
onerous or unusual nature or magnitude or could involve an obligation of
such nature or magnitude or which is or could be restrictive to the
existing business of any member of the IBG Group or which is other than in
the ordinary course of business (save pursuant to the IBG Options (if
any)); or
viii. entered into, implemented, effected, authorised or proposed or announced
its intention to enter into, implement, effect, authorise or propose any
contract, reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of
business; or
ix. waived or compromised any material claim; or
x. entered into or varied or made any offer (which remains open for
acceptance) to enter into or vary the terms of any material contract with
any of the directors or senior executives of IBG or any of the directors or
senior executives of any other member of the IBG Group (save pursuant to
the IBG Options (if any)); or
xi. taken any corporate action or had any legal proceedings instituted or
threatened against it or petition presented for its winding-up (voluntary
or otherwise), dissolution or reorganisation or for the appointment of a
receiver, administrator, administrative receiver, trustee or similar
officer of all or any material part of its assets and revenues or for any
analogous proceedings or steps in any jurisdiction or for the appointment
of any analogous person in any jurisdiction which in any case is material
in the context of the IBG Group taken as a whole; or
xii. been unable, or admitted in writing that it is unable, to pay its debts or
has 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; or
xiii. made any material alteration to its memorandum or articles of
association, or other incorporation documents; or
xiv. in relation to the pension schemes established for its directors and/or
other employees and/or their dependants, made or consented to any change
to:
xv.
+ the terms of the trust deeds constituting such pension schemes or to
the benefits which accrue;
+ the pensions which are payable, under them;
+ the basis on which qualifications for or accrual of or entitlement to
such benefits or pensions are calculated or determined;
+ the basis upon which the liabilities (including pensions) of such
pension schemes are funded or made;
+ or agreed or consented to any change to the trustees of such pension
schemes; or
xv. entered into any agreement or passed any resolution or made any offer
(which remains open for acceptance) or proposed or announced any intention
with respect to any of the transactions, matters or events referred to in
this condition;
Other Events Since the Accounting Date
In the period since the Accounting Date, save as Disclosed:
i. other than in the ordinary course of business no litigation or arbitration
proceedings, prosecution, investigation or other legal proceedings having
been announced, instituted, threatened or remaining outstanding by, against
or in respect of, any member of the IBG Group or to which any member of the
IBG Group is or may become a party (whether as claimant, respondent or
otherwise) which is material in the context of the IBG Group taken as a
whole; or
ii. no adverse change or deterioration having occurred in the business or
assets or financial or trading position, assets or profits of any member of
the IBG Group which is material in the context of the IBG Group taken as a
whole; or
iii. no enquiry or investigation by, or complaint or reference to, any relevant
person against or in respect of any member of the IBG Group having been
threatened in writing, announced, implemented or instituted or remaining
outstanding by, against or in respect of, any member of the IBG Group which
in any such case is material in the context of the IBG Group taken as a
whole; or
iv. no contingent or other liability having arisen or become apparent or
increased which is material in the context of the IBG Group taken as a
whole;
Other issues
Save as Disclosed, TMN not having discovered that:
i. Information
* The financial, business or other information Disclosed at any time by any
member of the IBG Group, whether publicly or in the context of the Scheme,
either contained a material misrepresentation of fact or omitted to state a
fact necessary to make the information disclosed not materially misleading
and such information not being subsequently corrected or remedied;
ii. Intellectual Property
* any member of the IBG Group does not own or have licensed to it or
otherwise possess legally enforceable rights to use all intellectual
property that is (a) required for the conduct of business of the relevant
member of the IBG Group as currently conducted; or (b) under development
for such business; and, in either case, the absence of which, individually
or in the aggregate, would be material in the context of the IBG Group
taken as a whole; or
* any member of the IBG Group has infringed any intellectual property rights
of any third party where the consequences of which would be material in the
context of the IBG Group taken as a whole; or
3. TMN may waive (wholly or partly) all or any of the conditions in paragraph
2. (Authorisations) above.
4. If TMN is required by the Panel to make an offer or offers for the IBG
Shares under the provisions of Rule 9 of the City Code, TMN may make such
alterations to the terms and conditions of the Acquisition as may be
necessary to comply with the provisions of that Rule.
5. The Acquisition will not complete and the Scheme will not become effective
if before the date of the Court Meeting, the Acquisition, or any matter
arising from it, is referred to the Competition Commission. In such
circumstances, the Scheme will be withdrawn and will lapse.
6. The Acquisition and the Scheme are governed by English law and are subject
to the jurisdiction of the English Courts. The rules of the City Code, so
far as they are appropriate, apply to the Acquisition and the Scheme.
Appendix II
Sources of Information and Bases of Calculation
Unless otherwise stated, the following constitute the bases and sources of
information referred to in the Scheme and this announcement:
1. Financial information relating to IBG has been extracted or derived
(without material adjustment) from the audited financial statements of IBG
for the financial year ended 31 October 2006, and the preliminary statement
of annual results for the financial year ended 31 October 2007
2. Financial information relating to TMN has been extracted or derived
(without material adjustment) from the audited financial statements of TMN
for the year ended 30 April 2007, and from the unaudited interim statement
for the six months ended 31 October 2007.
3. The value of IBG for the purposes of the Acquisition is calculated:
i. by reference to a price of 48 pence per TMN Share (being the Closing Price
of a TMN Share on 13 December 2007, the last business day prior to the date
of this announcement); and
ii. by reference to a price of 12.75 pence per IBG Share (being the Closing
Price of an IBG Share on 13 December 2007, the last business day prior to
the date of this announcement); and
1. The fully diluted share capital of IBG (being 79,138,010 IBG Shares) is
calculated on the basis of 77,190,800 IBG shares in issue on 13 December
2007, with a further maximum of 1,947,210 IBG shares under option which are
either capable of exercise or will become capable of exercise prior to the
Scheme Record Time :
2. The percentage that IBG Directors will be interested in, in aggregate, of
TMN's enlarged issued share capital is calculated on the following basis:
i. by reference to TMN's existing issued share capital of 51,092,351 TMN
Shares; and
ii. by reference to IBG's existing issued share capital of 77,190,800 IBG
Shares
1. The market capitalisation of the Enlarged Group is calculated on the basis
of the number of TMN Shares in issue on 13 December 2007, being 51,092,351,
and 20,503,806 New TMN Shares being issued pursuant to the Acquisition,
based on the Closing Prices as set out in paragraphs 3(i) and(ii) above,
which assumes that no options over TMN and IBG Shares as at 13 December
2007 are exercised thereafter.
2. There are currently options outstanding in respect of 315,000 unissued IBG
Shares whose exercise price is below the Option Price
3. The Closing Price of an IBG Share (or a TMN Share (as the case may be)) is
derived from the AIM Appendix of the Daily Official List for 13 December
2007.
Appendix III
Details of Irrevocable Undertakings
TMN has received irrevocable undertakings to vote (or procure the vote) in
favour of the Scheme in respect of, in aggregate 37,350,270 IBG Shares,
representing approximately 48.39 per cent. of IBG's existing issued share
capital. This includes irrevocable undertakings from certain of the IBG
Directors and Connected Parties in respect of 28,649,270 IBG Shares,
representing approximately 37.11 per cent. of IBG's existing issued share
capital held by them and by the Connected Parties, as follows:
Name Number of IBG Shares Percentage of existing
issued share capital of
IBG
Directors
Maziar Darvish 17,318,283 22.44%
Daniel Chick 3,688,233 4.78%
Nicola De Oliveira Costa 1,923,243 2.49%
Ricki Bothamley 1,224,722 1.59%
Pierre Jean De Villiers 955,835 1.24%
Andrew Doe 200,000 0.26%
Connected Parties
Kamal Darvish 1,896,394 2.46%
Niloufar Darvish 1,404,800 1.82%
Salimeh Mahshid Darvish 37,760 0.05%
The undertakings given by the IBG Directors and Connected Parties are
conditional on the despatch of the Scheme Document within 28 days of the date
on which this announcement is made, being 14 December 2007.
Other irrevocable undertakings to vote in favour of the Scheme have been given
by:
Registered Holder Beneficial Number of IBG Percentage of existing
Holder Shares issued share capital of
IBG
William Currie William Currie 2,650,000 3.43%
William Currie William Currie 200,000 0.26%
Pension Fund
Hargreave Hale Ltd Marlborough 2,350,000 3.04%
Special
Situations Fund
Hargreave Hale Ltd Marlborough UK 2,000,000 2.59%
MIcroCap Growth
Fund
Hargreave Hale Ltd Keydata AIM VCT 1,501,000 1.94%
Appendix IV
Definitions of terms used
In this announcement, the following words and expressions have the following
meanings, unless the context requires otherwise:
"Accounting Date" 31 October 2007
"Acquisition" the proposed acquisition by TMN of the entire issued
and to be issued share capital of IBG pursuant to the
Scheme
"Act" the Companies Act 1985 (as amended or re-enacted)
"acting in concert" has the meaning set out in the Code
"Admission" the admission of the New TMN Shares to trading on AIM
becoming effective in accordance with the AIM Rules
"agreements" arrangements, agreements, commitments, licences,
permits, franchises, partnerships, joint ventures,
authorisations or other instruments
"AIM" AIM, a market operated by the London Stock Exchange
"AIM Rules" the AIM Rules for Companies published by the London
Stock Exchange (as amended)
"Articles" the articles of association of IBG as at the date of
the Scheme and Article shall mean any article of
those Articles
"authorisations" authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances,
permissions and approvals
"Business Day" a day (excluding Saturdays, Sundays and public
holidays) on which banks are generally open for
business in the City of London
"Capital Reduction" the proposed reduction of the share capital of IBG
pursuant to the Scheme as described in this
announcement
"certificated" or "in where a share or other security is not in
certificated form" uncertificated form (that is, not in CREST)
"Code" or "City Code" the City Code on Takeovers and Mergers, issued by the
Panel on Takeovers and Mergers
"Court" the High Court of Justice in England and Wales
"Closing Price" the closing middle market quotation of an IBG Share or
a TMN Share (as the case may be) as derived from the
AIM Appendix of the Daily Official List
"Competition Commission" the Competition Commission established under the
Competition Act 1998
"Conditions" the conditions to the Scheme and the Acquisition which
are set out in Part III of this announcement
"Connected Parties" Kamal Darvish, Niloufar Darvish and Salimeh Mahshid
Darvish
"Conventional Offer" Should TMN so elect and IBG consent, a takeover offer
to be made by or on behalf of TMN to acquire all of
"Court Hearings" the IBG Shares
each of the Scheme Court Hearing and the Reduction
Court Hearing
"Court Meeting" the meeting of the Scheme Shareholders to be convened
pursuant to an order of the Court pursuant to section
425 of the Act for the purposes of considering and, if
thought fit, approving the Scheme (with or without
amendment) and any adjournment of such meeting
"Court Orders" the Scheme Court Order and/or the Reduction Court
Order
"CREST" the relevant system (as defined in the CREST
Regulations) of which Euroclear is the Operator (as
defined in the CREST Regulations)
"CREST Manual" the CREST Manual referred to in agreements entered
into by Euroclear
"CREST payment" has the meaning given in the CREST Manual
"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI
2001 No. 3755)
"CREST sponsor" a CREST participant admitted to CREST as a CREST
sponsor
"Daily Official List" the daily official list of the London Stock Exchange
"Disclosed" means: (i) as disclosed in IBG's report and accounts
for the year ended 31 October 2006; (ii) as publicly
announced by IBG to a Regulatory Information Service;
(iii) as may be disclosed in this announcement; or
(iv) as fairly disclosed in writing by or on behalf of
IBG to TMN or its advisers
"disclosure period" the 12 month period commencing on the date on which
the Offer Period commences
"EDR" Electronic Direct Response plc, now re-registered with
the name Electronic Direct Response Limited
"Effective" in the context of the Acquisition the Scheme having
become Effective pursuant to its terms
"Effective Date" the date on which the Scheme becomes effective in
accordance with its terms
"Enlarged Group" the TMN Group after completion of the Acquisition
"Euroclear" Euroclear UK & Ireland Limited
"Explanatory Statement" the explanatory statement relating to the Scheme, as
set out in Part II of the Scheme Document, which
together with the documents incorporated therein
constitute the explanatory statement relating to the
Scheme as required by section 426 of the Act
"Forms of Proxy" as the context may require, either or both of (i) the
blue form of proxy for use at the Court Meeting, and
(ii) the white form of proxy for use at the General
Meeting, each of which accompanies the Scheme
Document
"FSA" the Financial Services Authority
"FSMA" the Financial Services and Markets Act 2000 (as
amended)
"General Meeting" the General Meeting of IBG Shareholders to be held at
for the purpose of the Acquisition, notice of which
will be set out in the Scheme Document, and any
adjournment of such meeting
"holder" a registered holder of shares, including any person
entitled by transmission
"IBG" means Internet Business Group plc (registered number
03718515) whose registered office is situated at
Threeways House, 40-44 Clipstone Street, London, W1W
5DW
"IBG Board" or "IBG the directors of IBG, being Maziar Darvish, Pierre
Directors" Jean De Villliers, Daniel Chick, Ricki Bothamley,
Nicola de Oliveira Costa and Andrew Doe, and "IBG
Director" means any one of them
"IBG Group" IBG and its subsidiaries, subsidiary undertakings,
associated undertakings and any other undertakings in
which IBG and/or such subsidiaries or undertakings
(aggregating their interests) have a substantial
interest
"IBG Options" an option, award or other right over an IBG Share
granted pursuant to the terms of the IBG Share Scheme
"IBG Optionholders" the holders of IBG Options pursuant to the IBG Option
Scheme
"IBG Shareholders" the holders of IBG Shares
"IBG Shares" ordinary shares of 1 pence each in the issued share
capital of IBG
"IBG Share Scheme" means the 2000 Executive Share Option Scheme (as
adopted by IBG on 2 March 2000)
"IBG Competing means a general offer for the IBG Shares or business
Transaction" or all or a material part of the assets of IBG or any
proposal for a merger of IBG (including by way of a
scheme of arrangement) with any entity other than
TMN, or an associate or concert party of TMN
"IFRS" International Financial Reporting Standards
"Implementation the agreement dated 13 December 2007 between TMN and
Agreement" IBG and relating, among other things, to the
implementation of the Acquisition further details of
which are set out in this announcement
"Intellectual Property" all patents, trademarks, trade names, service marks,
copyrights, designs, databases and any applications
therefore, schematics, technology, know how, computer
software, programs or applications (in both source
code and object code form), and tangible or
intangible proprietary information or material has
the meaning set out in Appendix 1 to this
announcement
"interest" as defined in the Code
"Investec" Investec Bank (UK) Limited
"legal proceedings" actions, suits, proceedings, investigations,
references or enquiries
"London Stock Exchange" London Stock Exchange plc
"Meetings" the Court Meeting and the General Meeting and
"Meeting" means either of them
"members" members of IBG on the register of members at any
relevant date
"Memorandum" the memorandum of association of IBG
"Minute" the minute (approved by the Court) showing, as
altered by the Reduction Court Order, the information
required by section 138 of the Act with respect to
IBG's share capital
"New IBG Shares" the new ordinary shares of 1 pence each in the capital
of IBG to be allotted and issued credited as fully
paid to TMN pursuant to the Scheme
"New TMN Shares" the new ordinary shares of �0.0001 each in the capital
of TMN to be allotted and issued credited as fully
"Offer" paid to Scheme Shareholders pursuant to the Scheme
the recommended offer being made by TMN to acquire the
entire issued and to be issued share capital of IBG,
which offer is to be effected by means of the Scheme
and, where the context requires, any subsequent
revision, variation, extension or renewal of such
offer
"Offer Period" the period commencing on the date of this announcement
and ending on the Effective Date
"Official List" the official list of the UK Listing Authority
"Overseas Shareholders" Scheme Shareholders who are resident in, ordinarily
resident in, or citizens of, jurisdictions outside the
United Kingdom
"Panel" the Panel on Takeovers and Mergers
"participant ID" means the identification code or membership number
used in CREST to identify a particular CREST member or
other CREST participant
"pounds", "�", "pence" the lawful currency of the United Kingdom
or "Sterling"
"Reduction Court Order" the order of the Court confirming the Capital
Reduction
"Registrar of Companies" the Registrar of Companies in England and Wales,
within the meaning of the Act
"Registrars" or "Capita IBG's registrars, Capita Registrars, a trading name of
Registrars" Capita Registrars Limited, of The Registry, 34
Beckenham Road, Beckenham, Kent BR3 4TU
"Regulatory Information as defined in the AIM Rules
Service" or "RIS"
"relevant asset" land, property or other asset now or previously owned,
occupied or made use of by any past or present member
of the IBG Group
"relevant persons" governments, governmental, quasi governmental,
supranational, statutory, investigative, regulatory or
administrative bodies or trade agencies, associations,
institutions or courts, or professional or
environmental bodies, or any other persons or bodies
whatsoever in any jurisdiction
"Relevant Court the hearings by the Court of the petition to approve
Hearings" the Scheme and confirm the Capital Reduction
"Scheme" the scheme of arrangement under section 425 of the Act
between IBG and the Scheme Shareholders to implement
the Acquisition, with or subject to any modification
thereof or addition thereto or condition approved or
imposed by the Court and agreed by IBG and TMN
"Scheme Court Hearing" the hearing by the Court of the petition to sanction
the Scheme
"Scheme Court Order" the order of the Court sanctioning the Scheme under
Section 425 of the Act
"Scheme Document" the document to be sent by IBG to the IBG
Shareholders, of which the Scheme forms part
"Scheme Record Time" 6 p.m. on the business day immediately preceding the
Effective Date
"Scheme Shareholders" holders of a Scheme Share, and a "Scheme Shareholder"
shall mean any one of these Scheme Shareholders
"Scheme Shares" IBG Shares:
(i) in issue at the date of this announcement;
(ii) issued after the date of the Scheme Document,
but before the Voting Record Time; and
(iii) issued at or after the Voting Record Time but
before the Scheme Record Time on terms that the
original or any subsequent holders are, or shall
have agreed in writing to be, bound by the
Scheme
"SDRT" stamp duty reserve tax
"SEC" the United States Securities and Exchange Commission
"Securities Act" the United States Securities Act 1933, as amended and
the rules and regulations promulgated under such Act
"securities" has the meaning set out in the Code
"Special Resolutions" the special resolutions to be proposed at the General
Meeting and to be set out in the notice of General
Meeting attached to the Scheme Document
"Strand Partners" Strand Partners Limited
"substantial interest" a direct or indirect interest in 20 per cent. or more
of the equity capital of an undertaking
"Takeover Offer" an offer made or to be made by or on behalf of TMN for
the entire issued and to be issued share capital of IBG
and, where the context so requires, any subsequent
revision, extension or variation thereof
"TMN" TMN Group plc
"TMN Board" or the board of directors of TMN
"TMN Competing means (a) a general offer for the TMN Shares or
Transaction" business or all or a material part of the assets of TMN
(including by way of a scheme of arrangement) with any
"TMN Directors" entity other than IBG and/or (b) any transaction
outside the ordinary course of business that would
require announcement or notification by TMN pursuant to
the AIM Rules
Mark Smith, Craig Dixon, Peter Harkness, Vincent Smith
and Bruce Fair
"TMN Group" TMN and its subsidiaries, subsidiary undertakings,
associated undertakings and any other undertakings in
which TMN and/or such subsidiaries or undertakings
(aggregating their interests) have a substantial
interest
"TMN Shareholders" the holders of TMN Shares
"TMN Shares" ordinary shares of �0.0001 each in the issued share
capital of
TMN
"US" or "United States" the United States of America, its territories and
possessions, any state of the United States of America
and the District of Columbia and all other areas
subject to its jurisdiction
"US person" as defined in Regulation S under the Securities Act
"US Securities Act" the United States Securities Act of 1933, as amended
from time to time
"Voting Record Time" 6 p.m. on the day which is two days before the date
scheduled for the Court Meeting or, if such Court
Meeting is adjourned, 6 p.m. on the day which is two
days before the date of such adjourned meeting
In this announcement, the expressions "subsidiary, "subsidiary undertaking,
associated undertaking and "undertaking" have the meanings given by the Act
(but for this purpose ignoring paragraph 20(l)(b) of Schedule 4A to the Act).
In this announcement, the references to the singular includes the plural and
vice versa, unless the context otherwise requires. References to time are to
London time.
END
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