NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY
OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS
OR REGULATIONS OF SUCH JURISDICTION.
THE FOLLOWING
ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR PROSPECTUS
EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW BBOX SHARES EXCEPT ON THE BASIS OF
THE INFORMATION IN THE SCHEME DOCUMENT AND THE COMBINED CIRCULAR
AND PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE
COURSE.
THIS
ANNOUNCEMENT CONTAINS INSIDE INFORMATION. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS CONSIDERED TO BE IN
THE PUBLIC DOMAIN.
FOR IMMEDIATE
RELEASE.
21 March
2024
Recommended All-Share
Combination
of
Tritax Big Box REIT plc
("BBOX")
and UK Commercial Property REIT Limited ("UKCM")
to be effected by means of a
Court-sanctioned scheme of arrangement under Part VIII of the
Companies Law of Guernsey
Summary and highlights
The Boards of BBOX and UKCM are pleased to
announce that they have reached agreement on the terms of a
recommended all-share combination of BBOX and UKCM pursuant to
which BBOX will acquire the entire issued and to be issued ordinary
share capital of UKCM (the "Combination").
Under the terms of the Combination, each UKCM
Shareholder will be entitled to receive:
0.444 New BBOX Shares for each UKCM
Share
(the "Exchange Ratio")
The Exchange Ratio is on an EPRA NTA for EPRA
NTA basis with reference to BBOX's 31 December 2023 EPRA NTA of
177.2 pence per share and UKCM's 31 December 2023 EPRA NTA of 78.7
pence per share.
Following completion of the Combination, UKCM
Shareholders will own approximately 23.3 per cent. and existing
BBOX Shareholders will own approximately 76.7 per cent. of the
issued ordinary share capital of the Combined Group.
Based on BBOX's Closing Price of 160.2 pence
per BBOX Share on 9 February 2024 (being the day of the
commencement of the Offer Period), the Combination implies a value
of 71.1 pence per UKCM Share and approximately £924 million for the
entire issued and to be issued ordinary share capital of UKCM,
which represents:
(i) a
premium of 10.8 per cent. to the UKCM undisturbed Closing Price of
64.2 pence per UKCM Share on 9 February 2024 (being the day of the
commencement of the Offer Period); and
(ii) a premium of
23.0 per cent. to the volume weighted average price of 57.8 pence
per UKCM Share for the six-month period ended 9 February 2024
(being the day of the commencement of the Offer Period).
Strategic and
Financial Rationale
The Boards of BBOX and UKCM believe that the
Combination has a compelling strategic and
financial rationale, building on
BBOX's existing strategy and proven track record of delivering
attractive and sustainable returns for shareholders, further
details of which are set out below:
(a) High-quality, complementary
logistics-focused portfolios, offering
significant and near-term rental growth potential with 39 per cent.
rental reversion within UKCM's £740 million logistics portfolio and
24 per cent. rental reversion within UKCM's overall
portfolio;
(b) Enhanced BBOX customer
offering, via a broader range of logistics
property sizes, locations and tenant uses from "Mega-Boxes" to
smaller, strategically located, logistics assets within key urban
locations;
(c) Value creation from capital
recycling, with UKCM's £475 million
non-logistics assets offering attractive asset management and
capital recycling opportunities which provides the potential for
accelerated investment into BBOX's development pipeline, targeting
the delivery of new, "triple net" leased, best-in-class logistics
assets at a 6 to 8 per cent. yield on cost (noting
that a 7.0 per cent. yield on cost is being targeted
for 2024 development activity);
(d) Immediately identifiable costs
savings, with the Combination expected to
generate immediately identifiable cost savings of c.£4.0 million
per annum, helping to drive earnings growth and dividend
progression;
(e) Robust and conservatively leveraged
balance sheet, with a reduced loan-to-value
ratio of 29 per cent. and net debt to EBITDA of 7.4x, significant
available liquidity and no near-term debt maturities;
and
(f) Creation of the fourth largest UK
REIT, with a combined EPRA NTA of approximately
£4.4 billion, benefitting from enhanced financial flexibility,
expected cost of capital benefits, and increased share liquidity
given its enlarged scale and index weightings.
Recommendations
Recommendation of UKCM
Directors
The UKCM Recommending Directors, who have been
so advised by Rothschild & Co as to the financial terms of the
Combination, consider the terms of the Combination to be fair and
reasonable. In providing its advice to the UKCM Directors,
Rothschild & Co has taken into consideration the commercial
assessments of the UKCM Directors. Rothschild & Co is providing
independent financial advice to the UKCM Directors for the purposes
of Rule 3 of the Takeover Code.
Accordingly,
taking into account the factors set out in paragraph 6 of this
Announcement, the UKCM Recommending Directors intend to recommend
unanimously that Scheme Shareholders vote in favour of the Scheme
at the Court Meeting and UKCM Shareholders vote in favour of the
resolution(s) to be proposed to shareholders at the UKCM General
Meeting (or, if implemented by a Takeover Offer, to accept such
Takeover Offer) as the UKCM Recommending Directors have irrevocably
undertaken to do so in respect of their own beneficial holdings of
427,666 UKCM Shares representing, in aggregate, approximately 0.03
per cent. of the issued ordinary share capital of UKCM on 20 March
2024 (being the last Business Day prior to the release of this
Announcement).
Recommendation of BBOX
Directors
As a result of its size, the Combination
constitutes a Class 1 transaction for BBOX for the purposes of the
Listing Rules. Accordingly BBOX will be required to seek the
approval of the BBOX Shareholders for the Combination at the BBOX
General Meeting. The Combination will also be conditional on the
approval of the BBOX Shareholders of the issuance of the New BBOX
Shares at the BBOX General Meeting. The BBOX Directors consider the Combination to
be in the best interests of BBOX and the BBOX Shareholders as a
whole and intend unanimously to recommend that BBOX Shareholders
vote in favour of all of the resolutions to be proposed at the BBOX
General Meeting which will be convened in connection with the
Combination, as they have irrevocably undertaken to do, or procure,
in respect of their own beneficial holdings of 390,170 BBOX Shares
representing, in aggregate, approximately 0.02 per cent. of BBOX's
issued ordinary share capital in issue on 20 March 2024 (being the
last Business Day prior to the release of this
Announcement).
The BBOX Directors have received financial
advice from Jefferies and J.P. Morgan Cazenove in relation to the
Combination. In providing their advice to the BBOX Directors,
Jefferies and J.P. Morgan Cazenove have relied upon the BBOX
Directors' commercial assessment of the Combination.
Shareholder
Support
In addition to the irrevocable undertakings
received from the UKCM Recommending Directors, BBOX has received an
irrevocable undertaking from Phoenix Life Limited ("Phoenix") to vote in favour of the
Combination, if it is implemented by way of the Scheme or, if
implemented by way of a Takeover Offer, to accept such Takeover
Offer, in respect of 563,773,465 UKCM Shares, representing
approximately 43.4 per cent. of UKCM's total issued ordinary share
capital on 20 March 2024 (being the last Business Day prior to the
release of this Announcement).
Commenting on the Combination, Michael Eakins,
Group Chief Investment Officer of Phoenix said: "We look forward to
becoming a shareholder of Tritax Big Box. The allocation to Tritax
Big Box forms a core part of our strategic asset allocation for
long term savings products within our With-Profits
Funds".
BBOX has also received a non-binding letter of
intent from Investec Wealth & Investment Limited ("Investec") to vote in favour the
Combination, if it is implemented by way of the Scheme or, if
implemented by way of a Takeover Offer, to accept such Takeover
Offer, in respect of 170,000,000 UKCM Shares representing
approximately 13.1 per cent. of UKCM's total issued ordinary share
capital on 20 March 2024 (being the last Business Day prior to the
release of this Announcement).
In total, therefore, BBOX has received from
UKCM Shareholders (including the UKCM Recommending Directors)
irrevocable undertakings and a letter of intent representing, in
aggregate, approximately 56.5 per cent. of the issued ordinary
share capital of UKCM on 20 March 2024 (being the last Business Day
prior to the release of this Announcement).
Further details of the irrevocable undertakings
and the letter of intent are set out in Appendix 3 to this
Announcement.
Dividends
BBOX and UKCM have agreed that both BBOX
Shareholders and UKCM Shareholders will be entitled to receive and
retain certain permitted quarterly dividends in the period to
completion of the Combination, that are made in accordance with
their respective existing dividend policies, consistent with past
practice in relation to the payment of dividends, including as to
time and quantum, without any adjustment to the Exchange
Ratio.
Further details are set out in
paragraph 13 of
this Announcement.
Transaction
Structure and Timetable
It is intended that the Combination will be
implemented by way of a Court-sanctioned scheme of arrangement
between UKCM and the Scheme Shareholders under Part VIII of the
Companies Law of Guernsey, further details of which are contained
in the full text of this Announcement and which will be set out in
full in the Scheme Document.
BBOX reserves the right, with the consent of
the Panel and UKCM or, in certain circumstances, without the
consent of UKCM, to implement the Combination by way of a Takeover
Offer.
The Combination will be subject to the
Conditions and certain further terms set out in Appendix 1 to this
Announcement and to the full terms and conditions which will be set
out in the Scheme Document, including the approval of the Scheme by
the Scheme Shareholders, the sanction of the Scheme by the Court
and the approval of BBOX Shareholders.
The Scheme Document will include full details
of the Scheme, together with notices of the Court Meeting and the
UKCM General Meeting, details of the expected timetable, and
specify the actions to be taken by Scheme Shareholders and UKCM. It
is expected that the Scheme Document, together with the Forms of
Proxy, will be published as soon as practicable and in any event
within 28 days of the date of this Announcement (or such later date
as may be agreed by BBOX and UKCM with the consent of the Panel and
(if required) that the Court may allow).
The Combination will be put to Scheme
Shareholders at the Court Meeting and to UKCM Shareholders at the
UKCM General Meeting. In order to become Effective, the Scheme must
be approved by a majority in number representing 75 per cent. or
more in value of votes cast by the Scheme Shareholders (or the
relevant class thereof, if applicable) who are on the register of
members of UKCM at the Scheme Voting Time and who are present and
vote, whether in person or by proxy, at the Court Meeting. In
addition, a special resolution to approve all actions necessary for
carrying the Scheme into effect and the adoption of amended
articles of incorporation of UKCM must be passed by UKCM
Shareholders representing at least 75 per cent. of the votes cast
on that resolution at the UKCM General Meeting.
Pursuant to the Listing Rules, BBOX is required
to produce a circular in connection with the Combination to be sent
to BBOX Shareholders containing, amongst other things, (i) the
background to and reasons for the Combination and (ii) a notice
convening the BBOX General Meeting at which, amongst other things,
the BBOX Resolution will be proposed for the approval by BBOX
Shareholders. BBOX is also required to prepare a prospectus in
connection with the Admission of the New BBOX Shares. It is
expected that the circular and prospectus will be a combined
circular and prospectus (the "Combined Circular and Prospectus") and
published and made available to BBOX Shareholders at or around the
same time as the Scheme Document is published and posted to UKCM
Shareholders.
The Scheme is expected to become effective in
May 2024, subject to the satisfaction or waiver of the Conditions
and certain further terms set out in Appendix 1 to this
Announcement and the full terms and conditions which will be set
out in the Scheme Document.
Comments on
the Combination
(a) Commenting on
the Combination, Aubrey Adams, Chairman of BBOX said:
"The Board
of BBOX believes the Combination has compelling strategic and
financial rationale for both BBOX and UKCM Shareholders. UKCM has
assembled a high-quality logistics-oriented portfolio with a
South-East and Midlands focus and significant embedded rental
reversion potential, all characteristics which are complementary to
BBOX's current portfolio. The Combination grows BBOX's exposure to
"last mile" and urban logistics assets which have the potential to
enhance returns of the existing portfolio. This Combination
represents a continuation of the highly successful strategy that
BBOX has delivered since IPO and which over recent years has
included acquiring selected "last mile" and urban logistics
assets.
Shareholders
in the Combined Group will benefit from immediately identifiable
cost savings creating increased scope to deliver higher earnings
and dividends, while capital recycling and asset management
opportunities in the UKCM portfolio represent significant further
opportunities to enhance total shareholder
returns."
(b) Commenting on
the Combination, Margaret Littlejohns, Senior Independent Director
of UKCM said:
"The UKCM
Recommending Directors believe this transaction allows all UKCM
shareholders to benefit from continued investment in a REIT, but
with significantly larger scale and improved share liquidity, as
well as addressing the factors we believe have contributed to the
persistent discount at which UKCM's shares have traded for many
years. The combined business will be invested in a high-quality UK
logistics portfolio, where BBOX has a strong track record of
delivering attractive, sustainable returns which will drive
improved earnings for UKCM shareholders and support a fully covered
dividend. By combining the businesses on an EPRA NTA-to-EPRA NTA
basis, shareholders will be able to share fully in the future
potential valuation upside whether that is delivered from asset
management initiatives, rental growth, the potential of the BBOX
development pipeline or a broader improvement in real estate sector
sentiment. These factors together with the compelling strategic and
financial rationale of the transaction lead us to recommend this
deal to all shareholders."
This summary
should be read in conjunction with, and is subject to, the full
text of this Announcement and its Appendices.
The
Combination will be subject to the Conditions and further terms set
out in Appendix 1 to this Announcement and to the full terms and
conditions which will be set out in the Scheme Document. Appendix 2
contains the sources of information and bases of calculation of
certain information contained in this summary and this
Announcement. Appendix 3 contains a summary of the irrevocable
undertakings and letter of intent received in relation to the
Combination that are referred to in this Announcement. Appendix 4
contains details of and bases of calculation of the anticipated
quantified financial benefits of the Combination together with the
various associated reports referred to below. Appendix 5 contains
the property valuation reports for UKCM and BBOX referred to below.
Appendix 6 contains definitions of certain terms used in this
summary and this Announcement.
For the
purposes of Rule 28 of the Takeover Code, the quantified financial
benefits statement contained in this Announcement is the
responsibility of BBOX and the BBOX Directors. Part A of Appendix 4
sets out the anticipated quantified financial benefits statement
relating to cost savings and synergies arising out of the
Combination and provides underlying information and bases of
belief. Parts B and C of Appendix 4 include reports from BBOX's
reporting accountant, BDO, and its lead financial
adviser, Jefferies, in connection
with the anticipated quantified financial benefits statement, as
required pursuant to Rule 28.1(a) of the Takeover Code, and
provides underlying information and bases for the accountant's and
financial adviser's respective reports. Each of BDO and Jefferies
has given and not withdrawn its consent to the inclusion of its
report in this Announcement in the form and context in which it is
included.
For the
purposes of Rule 29.5 of the Takeover Code, the UKCM Board confirms
that CBRE has confirmed to it that an
updated valuation of UKCM's property portfolio as at the date of
this Announcement would not be materially different from the
valuation given by CBRE as at 31 December 2023 and contained in the
CBRE property valuation report set out in Part A of Appendix 5 to
this Announcement.
For the purposes of Rule 29.5 of the Takeover Code, the BBOX
Board confirms that CBRE has confirmed to it that an updated
valuation as at the date of this Announcement, of that part of
BBOX's property portfolio valued by CBRE would not be materially
different from the valuation given by CBRE as at 31 December
2023 and contained in the
CBRE
property valuation report set out in Part B of
Appendix 5 to this Announcement.
For the purposes of Rule 29.5 of the Takeover Code, the BBOX
Board confirms that Colliers has confirmed to it that an updated
valuation as at the date of this Announcement, of that part of
BBOX's property portfolio valued by Colliers would not be
materially different from the valuation given by Colliers as at 31
December 2023 and contained in
the Colliers property valuation report set out in
Part C of Appendix 5 to this Announcement.
Analyst and
Investor Presentation
BBOX will host a presentation for analysts and
investors via conference call and webcast at 9 a.m. (UK time) today
(21 March 2024) to discuss the Combination. To participate in this
conference call or webcast, please use the following access
details:
Webcast
|
https://brrmedia.news/BBOX_UKCM
|
Conference Call
|
|
UK
|
+44 (0)
33 0551 0200
|
US
|
+1 786
697 3501
|
The presentation will also be accessible
on-demand later today on BBOX's website:
https://www.tritaxbigbox.co.uk/investors/shareholder-information/possible-all-share-offer-for-ukcm/
Enquiries:
BBOX
|
|
Colin Godfrey, CEO
|
+44 (0)
20 8051 5060
|
Frankie Whitehead, Chief Financial
Officer
|
|
Ian Brown, Head of Corporate
Strategy & Investor Relations
|
|
Jefferies (Joint Lead Financial Adviser and Corporate Broker
to BBOX)
|
+44 (0)
20 7029 8000
|
Philip Noblet
Rishi Bhuchar
Paul Bundred
Stuart Klein
Andrew Morris
James Umbers
|
|
J.P. Morgan Cazenove (Joint Lead Financial
Adviser and Corporate Broker to BBOX)
Massimo Saletti
James A. Kelly
Paul Pulze
Jonty Edwards
|
+44 (0)
203 493 8000
|
Akur (Financial Adviser to BBOX)
|
+44 (0)
20 7493 3631
|
Anthony Richardson
Siobhan Sergeant
|
|
Kekst CNC (BBOX Media Enquiries)
|
|
Richard Campbell
Guy Bates
|
+44 (0)
7775 784 933
+44 (0)
7581 056 415
|
UKCM
|
|
Margaret Littlejohns, Senior
Independent Director
|
+44
(0) 20 7280 5569
|
Rothschild & Co (Lead Financial Adviser and Sole Rule 3
adviser to UKCM)
|
+44 (0)
20 7280 5000
|
Alex Midgen
|
|
Sam Green
|
|
Jake Shackleford
|
|
Deutsche Numis (Joint Financial Adviser and Corporate Broker
to UKCM)
Hugh Jonathan
George Shiel
|
+44 (0)
20 7260 1000
|
FTI
Consulting (UKCM Media Enquiries)
|
+44 (0)
20 3727 1000
|
Richard Sunderland
|
|
Andrew Davies
|
|
Emily Smart
|
|
Ashurst LLP is acting as legal
adviser to BBOX and Dickson Minto W.S. is acting as legal adviser
to UKCM in connection with the Combination.
Further Information
This Announcement is for
information purposes only and is not intended to and does not
constitute or form part of an offer, invitation or the solicitation
of an offer or invitation to purchase, or otherwise acquire,
subscribe for, sell or otherwise dispose of any securities or the
solicitation of any vote or approval in any jurisdiction pursuant
to the Combination or otherwise nor shall there be any purchase,
sale, issuance, exchange or transfer of securities of BBOX
or UKCM or such solicitation pursuant to the Combination in any jurisdiction in which such
offer, invitation, solicitation, purchase, sale, issuance, exchange
or transfer is unlawful. The Combination will be implemented solely
pursuant to the terms of the Scheme Document (or, in the event that
the Combination is to be implemented by means of a Takeover Offer,
the Offer Document), which together with the Forms of Proxy (or
form of acceptance, if applicable), will contain the full terms and
conditions of the Combination, including details of how to vote in
respect of the Combination. Any decision in respect of, or other
response to, the Combination should be made on the basis of the
information contained in the Scheme Document and the Combined
Circular and Prospectus.
BBOX will prepare the Combined
Circular and Prospectus to be distributed to BBOX Shareholders,
containing information on the New BBOX Shares and the Combined
Group. UKCM and BBOX urge UKCM Shareholders to read the Scheme
Document and the Combined Circular and Prospectus carefully when
they become available because they will contain important
information in relation to the Combination, the New BBOX Shares and
the Combined Group. Any vote in respect of resolutions to be
proposed at the UKCM Meetings or the BBOX General Meeting to
approve the Combination, the Scheme or related matters, should be
made only on the basis of the information contained in the Scheme
Document and the Combined Circular and Prospectus (in the case of
UKCM Shareholders) and the Combined Circular and Prospectus (in the
case of BBOX Shareholders).This Announcement does not constitute a
prospectus or prospectus equivalent document or an exempted
document.
The statements contained in this Announcement
are made as at the date of this Announcement, unless some other
time is specified in relation to them, and publication of this
Announcement shall not give rise to any implication that there has
been no change in the facts set forth in this Announcement since
such date.
Neither the GFSC nor the States of Guernsey
take any responsibility for the financial soundness of UKCM or for
the correctness of any of the statements made or opinions expressed
with regard to it.
Information
Relating to UKCM Shareholders
Please be aware that addresses, electronic
addresses and certain other information provided by UKCM
Shareholders, persons with information rights and other relevant
persons for the receipt of communications from UKCM may be provided
to BBOX during the Offer Period as required under Section 4 of
Appendix 4 of the Takeover Code.
Overseas
Jurisdictions
The release, publication or distribution of
this Announcement in, into or from jurisdictions other than the
United Kingdom or Guernsey may be restricted by law and/or
regulation and therefore any persons who are subject to the laws of
any jurisdiction other than the United Kingdom or Guernsey should
inform themselves about and observe any applicable legal or
regulatory requirements. In particular, the ability of persons who
are not resident in the United Kingdom or Guernsey to vote their
UKCM Shares with respect to the Scheme at the Court Meeting or the
UKCM General Meeting, or to execute and deliver Forms of Proxy
appointing another person to vote at the Court Meeting or the UKCM
General Meeting on their behalf, may be affected by the laws of the
relevant jurisdictions in which they are located. Any failure to
comply with the applicable restrictions may constitute a violation
of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law the companies and persons
involved in the Combination disclaim any responsibility or
liability for the violation of such restrictions by any person.
This Announcement has been prepared for the purpose of complying
with English law, Guernsey law and the Takeover Code and the
information disclosed may not be the same as that which would have
been disclosed if this Announcement had been prepared in accordance
with the laws of jurisdictions outside the United Kingdom or
Guernsey.
Unless otherwise determined by BBOX or required
by the Takeover Code, and permitted by applicable law and
regulation, the New BBOX Shares to be issued pursuant to the
Combination to UKCM Shareholders will not be made available,
directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no
person may vote in favour of the Combination by any such use,
means, instrumentality or form within a Restricted Jurisdiction or
any other jurisdiction if to do so would constitute a violation of
the laws of that jurisdiction. Accordingly, copies of this
Announcement and any formal documentation relating to the
Combination are not being, and must not be, directly or indirectly,
mailed or otherwise forwarded, distributed or sent in, into or from
any Restricted Jurisdiction or any other jurisdiction where to do
so would constitute a violation of the laws of that jurisdiction,
and persons receiving such documents (including custodians,
nominees and trustees) must not mail or otherwise forward,
distribute or send such documents in, into or from any Restricted
Jurisdiction. Doing so may render invalid any related purported
vote in respect of the Combination. If the Combination is
implemented by way of a Takeover Offer (unless otherwise permitted
by applicable law and regulation), the Takeover Offer may not be
made directly or indirectly, in or into, or by the use of mails or
any means or instrumentality (including, but not limited to,
facsimile, e-mail or other electronic transmission or telephone) of
interstate or foreign commerce of, or of any facility of a
national, state or other securities exchange of, any Restricted
Jurisdiction and the Takeover Offer may not be capable of
acceptance by any such use, means, instrumentality or facilities or
from within any Restricted Jurisdiction.
The availability of New BBOX Shares pursuant to
the Combination to UKCM Shareholders who are not resident in the
United Kingdom or Guernsey, or the ability of those persons to hold
such shares may be affected by the laws or regulatory requirements
of the relevant jurisdictions in which they are resident. Persons
who are not resident in the United Kingdom or Guernsey should
inform themselves of, and observe, any applicable legal or
regulatory requirements. UKCM Shareholders who are in doubt about
such matters should consult an appropriate independent professional
adviser in the relevant jurisdiction without delay.
Further details in relation to UKCM
Shareholders in overseas jurisdictions will be contained in the
Scheme Document.
Additional
Information for US Investors
The Combination relates to the shares of a
Guernsey company with a listing on the London Stock Exchange and is
proposed to be implemented pursuant to a scheme of arrangement
provided for under Guernsey company law. A transaction effected by
means of a scheme of arrangement is not subject to the proxy
solicitation or the tender offer rules under the US Exchange Act.
Accordingly, the Combination is subject to the procedural and
disclosure requirements, rules and practices applicable in the
United Kingdom or Guernsey involving a target company incorporated
in Guernsey and listed on the London Stock Exchange, which differ
from the requirements of US proxy solicitation or tender offer
rules. Financial information included in this Announcement and the
Scheme Document has been or will be prepared in accordance with UK
IFRS or EU IFRS and thus may not be comparable to financial
information of US companies or companies whose financial statements
are prepared in accordance with generally accepted accounting
principles in the United States. Generally accepted accounting
principles in the United States differ in certain significant
respects from UK IFRS and EU IFRS.
If, in the future, BBOX elects, with the
consent of the Panel, to implement the Combination by means of a
Takeover Offer and determines to extend such Takeover Offer into
the United States, such Takeover Offer will be made in compliance
with all applicable laws and regulations, including, without
limitation, to the extent applicable, Section 14(e) of the US
Exchange Act and Regulation 14E thereunder, and subject, in the
case of participation by UKCM Shareholders resident in the United
States, to the availability of an exemption (if any) from the
registration requirements of the US Securities Act and of the
securities laws of any state or other jurisdiction of the United
States. Such Takeover Offer would be made by BBOX and no one else.
In addition to any such Takeover Offer, BBOX, certain affiliated
companies and the nominees or brokers (acting as agents) may make
certain purchases of, or arrangements to purchase, shares in UKCM
outside such Takeover Offer during the period in which such
Takeover Offer would remain open for acceptance. If such purchases
or arrangements to purchase were to be made, they would be made
outside the United States and would comply with applicable law,
including the US Exchange Act. Any information about such purchases
will be disclosed as required in the United Kingdom and Guernsey,
will be reported to a Regulatory Information Service of the FCA and
will be available on the London Stock Exchange website:
www.londonstockexchange.com.
The New BBOX Shares have not been and will not
be registered under the US Securities Act or under the securities
laws of any state or other jurisdiction of the United States.
Accordingly, the New BBOX Shares may not be offered, sold, resold,
delivered, distributed or otherwise transferred, directly or
indirectly, in or into or from the United States absent
registration under the US Securities Act or an exemption therefrom
and in compliance with the securities laws of any state or other
jurisdiction of the United States. The New BBOX Shares are expected
to be issued in reliance upon the exemption from the registration
requirements of the US Securities Act provided by section 3(a)(10)
thereof.
None of the securities referred to in this
Announcement have been approved or disapproved by the SEC, any
state securities commission in the United States or any other US
regulatory authority, nor have such authorities passed upon or
determined the fairness or merits of such securities or the
Combination or upon the adequacy or accuracy of the information
contained in this Announcement. Any representation to the contrary
is a criminal offence in the United States.
It may be difficult for US holders of UKCM
Shares to enforce their rights and claims arising out of the US
federal securities laws, since BBOX and UKCM are organised in
countries other than the United States, and some or all of their
officers and directors may be residents of, and some or all of
their assets may be located in, jurisdictions other than the United
States. US holders of UKCM Shares may have difficulty effecting
service of process within the United States upon those persons or
recovering against judgments of US courts, including judgments
based upon the civil liability provisions of the US federal
securities laws. US holders of UKCM Shares may not be able to sue a
non-US company or its officers or directors in a non-US court for
violations of US securities laws. Further, it may be difficult to
compel a non-US company and its affiliates to subject themselves to
a US court's judgment.
The receipt of New BBOX Shares pursuant to the
Combination by a US UKCM Shareholder may be a taxable transaction
for US federal income tax purposes, and may also be a taxable
transaction under applicable state and local tax laws, as well as
foreign and other tax laws. Each UKCM Shareholder is urged to
consult its independent professional adviser immediately regarding
the tax consequences of the Combination.
Important
Notices Relating to Financial Advisers
Jefferies International Limited ("Jefferies") and Akur Limited
("Akur") which are each
authorised and regulated by the FCA in the United Kingdom, are
acting exclusively for BBOX and no one else in connection with the
matters set out in this Announcement and will not be responsible to
anyone other than BBOX for providing the protections afforded to
clients of Jefferies or Akur nor for providing advice in relation
to any matter referred to in this Announcement. Neither Jefferies
nor Akur nor any of their affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Jefferies or Akur in connection with
this Announcement, any statement contained herein or
otherwise.
J.P. Morgan Securities PLC, which
conducts its UK investment banking business as J.P. Morgan Cazenove
("J.P. Morgan Cazenove"),
and which is authorised in the United Kingdom by the Prudential
Regulation Authority (the "PRA") and regulated by the PRA and the
FCA, is acting as financial adviser exclusively for BBOX and no one
else in connection with the Combination and will not regard any
other person as its client in relation to the Combination and will
not be responsible to anyone other than BBOX for providing the
protections afforded to clients of J.P. Morgan Cazenove or its
affiliates, nor for providing advice in relation to the Combination
or any other matter or arrangement referred to in this
Announcement.
N.M. Rothschild & Sons Limited
("Rothschild & Co"),
which is authorised and regulated by the FCA in the United Kingdom,
is acting exclusively as financial adviser to UKCM and for no one
else in connection with the matters described in this Announcement
and will not be responsible to anyone other than UKCM for providing
the protections afforded to clients of Rothschild & Co nor for
providing advice in connection with any matter of this referred to
herein. Neither Rothschild & Co nor any of its affiliates (nor
their respective directors, officers, employees or agents) owes or
accepts any duty, liability or responsibility whatsoever (whether
director or indirect, whether in contract, in tort, under statute
or otherwise) to any person who is not a client of Rothschild &
Co in connection with this Announcement, any statement contained
herein, the Combination or otherwise.
Numis Securities Limited (trading
for these purposes as Deutsche Numis) ("Deutsche Numis"), which is authorised
and regulated by the FCA in the United Kingdom, is acting
exclusively for UKCM and for no one else in connection with the
subject matter of this Announcement and will not be responsible to
anyone other than UKCM for providing the protections afforded to
its clients or for providing advice in connection with the subject
matter of this Announcement. Neither Deutsche Numis nor any of its
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct, indirect, consequential, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Deutsche Numis in connection with this
Announcement, any statement or other matter or arrangement referred
to herein or otherwise.
Cautionary
Note Regarding Forward Looking Statements
This Announcement (including information
incorporated by reference into this Announcement), oral statements
regarding the Combination and other information published by BBOX
and UKCM contain certain forward looking statements with respect to
the financial condition, strategies, objectives, results of
operations and businesses of BBOX and UKCM and their respective
groups and certain plans and objectives with respect to the
Combined Group. These forward looking statements can be identified
by the fact that they do not relate only to historical or current
facts. Forward looking statements are prospective in nature and are
not based on historical facts, but rather on current expectations
and projections of the management of BBOX and UKCM about future
events, and are therefore subject to risks and uncertainties which
could cause actual results to differ materially from the future
results expressed or implied by the forward looking statements. The
forward looking statements contained in this Announcement include
statements relating to the expected effects of the Combination on
BBOX and UKCM, the expected timing and scope of the Combination and
other statements other than historical facts. Forward looking
statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "goal", "believe", "hope",
"aims", "continue", "will", "may", "should", "would", "could", or
other words of similar meaning. These statements are based on
assumptions and assessments made by BBOX, and/or UKCM in light of
their experience and their perception of historical trends, current
conditions, future developments and other factors they believe
appropriate. By their nature, forward looking statements involve
risk and uncertainty, because they relate to events and depend on
circumstances that are expected to occur in the future 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. Although it is believed that the
expectations reflected in such forward looking statements are
reasonable, no assurance can be given that such expectations will
prove to have been correct and readers are therefore cautioned not
to place undue reliance on these forward looking
statements.
There are several factors which could cause
actual results to differ materially from those expressed or implied
in forward looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward looking statements are changes in global, political,
economic, business and/or competitive conditions, market and
regulatory forces, future exchange and interest rates, changes in
tax rates and future business combinations or
dispositions.
Each forward looking statement speaks only as
at the date of this Announcement. Neither BBOX nor UKCM, nor their
respective groups assumes any obligation to update or correct the
information contained in this Announcement (whether as a result of
new information, future events or otherwise), except as required by
applicable law or by the rules of any competent
regulatory authority.
No Profit
Forecasts or Estimates
No statement in this Announcement (including
any statement of estimated synergies) is intended as a profit
forecast or estimate for any period and no statement in this
Announcement should be interpreted to mean that earnings or
earnings per share or dividend per share for BBOX, UKCM or the
Combined Group, as appropriate, for the current or future financial
periods would necessarily match or exceed the historical published
earnings or earnings per share or dividend per share for BBOX, UKCM
or the Combined Group as appropriate.
Quantified
Financial Benefits Statement
The statements in the Quantified Financial
Benefits Statement relate to future actions and circumstances
which, by their nature, involve risks, uncertainties and
contingencies. The synergies and cost savings referred to may not
be achieved, or may be achieved later or sooner than estimated, or
those achieved could be materially different from those estimated.
For the purposes of Rule 28 of the Takeover Code, the Quantified
Financial Benefits Statement contained in this Announcement is the
responsibility of BBOX and the BBOX Directors.
Dealing and
Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any
person who is interested in one per cent. or more of any class of
relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is
likely to be, solely in cash) must make an Opening Position
Disclosure following the commencement of the Offer Period and, if
later, following the announcement in which any securities exchange
offeror is first identified.
An Opening Position Disclosure must contain
details of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s). An
Opening Position Disclosure by a person to whom Rule 8.3(a) applies
must be made by no later than 3.30 p.m. (London time) on the 10th
Business Day (as defined in the Takeover Code) following the
commencement of the Offer Period and, if appropriate, by no later
than 3.30 p.m. (London time) on the 10th Business Day (as defined
in the Takeover Code) following the announcement in which any
securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a
securities exchange offeror prior to the deadline for making an
Opening Position Disclosure must instead make a Dealing
Disclosure.
Under Rule 8.3(b) of the Takeover Code, any
person who is, or becomes, interested in one per cent. or more of
any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or
of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s), save to the extent that these
details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by
no later than 3.30 p.m. (London time) on the Business Day (as
defined in the Takeover Code) following the date of the relevant
dealing. If two or more persons act together pursuant to an
agreement or understanding, whether formal or informal, to acquire
or control an interest in relevant securities of an offeree company
or a securities exchange offeror, they will be deemed to be a
single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made
by the offeree company and by any offeror and Dealing Disclosures
must also be made by the offeree company, by any offeror and by any
persons acting in concert with any of them (see Rules 8.1, 8.2 and
8.4). Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
Offer Period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44 20
7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing
Disclosure.
Rounding
Certain figures included in this
Announcement have been subjected to rounding adjustments.
Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in
certain tables may not be an arithmetic aggregation of the figures
that precede them.
Publication on
Website and Availability of Hard Copies
A copy of this Announcement and the
documents required to be published pursuant to Rules 26.1 and 26.2
of the Takeover Code will be available, subject to certain
restrictions relating to persons resident in Restricted
Jurisdictions, for inspection on BBOX's website at
https://www.tritaxbigbox.co.uk/investors/shareholder-information/possible-all-share-offer-for-ukcm/
and on UKCM's website at https://www.ukcpreit.com/en-gb/merger/access
by no later than 12 noon (London time) on the
Business Day following this Announcement. For the avoidance of
doubt, the contents of the websites referred to in this
Announcement are not incorporated into and do not form part of this
Announcement.
In accordance with Rule 30.3 of the Takeover
Code, UKCM Shareholders and persons with information rights may
request a hard copy of this Announcement by contacting UKCM's
registrars, Computershare Investor Services (Guernsey) Limited, c/o
13 Castle Street, St Helier, Jersey JE1 1ES or by calling
Computershare Investor Services (Guernsey) Limited on +0370 707
4040. Calls are charged at the standard geographical rate and will
vary by provider. Calls outside the United Kingdom will be charged
at the applicable international rate. Lines are open between 8.30
a.m. to 5.30 p.m. (London time), Monday to Friday (except public
holidays in England and Wales). Please note that Computershare
Investor Services (Guernsey) Limited cannot provide any financial,
legal or tax advice. Calls may be recorded and monitored for
security and training purposes. For persons who receive a copy of
this Announcement in electronic form or via a website notification,
a hard copy of this Announcement will not be sent unless so
requested. Such persons may also request that all future documents,
announcements and information to be sent to them in relation to the
Combination should be in hard copy form.
If you are in any doubt about the contents of
this Announcement or the action you should take, you are
recommended to seek your own independent financial advice
immediately from your stockbroker, bank manager, solicitor,
accountant or independent financial adviser duly authorised under
the Financial Services and Markets Act 2000 (as amended) if you are
resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser.
NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY
OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS
OR REGULATIONS OF SUCH JURISDICTION.
THE FOLLOWING
ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR PROSPECTUS
EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW BBOX SHARES EXCEPT ON THE BASIS OF
THE INFORMATION IN THE SCHEME DOCUMENT AND THE COMBINED CIRCULAR
AND PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE
COURSE.
THIS
ANNOUNCEMENT CONTAINS INSIDE INFORMATION. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS CONSIDERED TO BE IN
THE PUBLIC DOMAIN.
FOR IMMEDIATE
RELEASE.
21 March
2024
Recommended All-Share
Combination
of
Tritax Big Box REIT plc
("BBOX")
and UK Commercial Property REIT Limited ("UKCM")
to be effected by means of a
Court-sanctioned scheme of arrangement under Part VIII of the
Companies Law of Guernsey
1.
Introduction
The Boards of BBOX and UKCM are pleased to
announce that they have reached agreement on the terms of a
recommended all-share combination of BBOX and UKCM, pursuant to
which BBOX will acquire the entire issued and to be issued ordinary
share capital of UKCM (the "Combination"), intended to be effected
by means of a Court-sanctioned scheme of arrangement between UKCM
and the Scheme Shareholders under Part VIII of the Companies Law of
Guernsey (the "Scheme").
2.
The Combination
Under the terms of the Combination, which will
be subject to the Conditions and other terms set out in this
Announcement and to the full terms and conditions which will be set
out in the Scheme Document, Scheme Shareholders will be entitled to
receive:
0.444 New BBOX Shares for each UKCM
Share
(the "Exchange Ratio")
The Exchange Ratio is on an EPRA NTA for EPRA
NTA basis with reference to BBOX's 31 December 2023 EPRA NTA of
177.2 pence per share and UKCM's 31 December 2023 EPRA NTA of 78.7
pence per share.
Following completion of the Combination, UKCM
Shareholders will own approximately 23.3 per cent. and existing
BBOX Shareholders will own approximately 76.7 per cent. of the
issued ordinary share capital of the Combined Group.
Based on BBOX's Closing Price of 160.2 pence
per BBOX Share on 9 February 2024 (being the day of the
commencement of the Offer Period), the Combination implies a value
of 71.1 pence per UKCM Share and approximately £924 million for the
entire issued and to be issued ordinary share capital of UKCM which
represents:
· a premium of
10.8 per cent. to the UKCM undisturbed Closing Price of 64.2 pence
per UKCM Share on 9 February 2024 (being the day of the
commencement of the Offer Period); and
· a premium of
23.0 per cent. to the volume weighted average price of 57.8 pence
per UKCM Share for the six month period ended 9 February 2024
(being the day of the commencement of the Offer Period).
The New BBOX Shares will be issued credited as
fully paid-up and will rank pari
passu in all respects with the BBOX Shares in issue at that
time, including the right to receive and retain dividends and other
distributions (if any) announced, declared, made or paid by
reference to a record date on or after the Effective Date (save,
for the avoidance of doubt, any BBOX Permitted Dividend).
Applications will be made to the FCA for the New BBOX Shares to be
admitted to the Official List and to the London Stock Exchange for
the New BBOX Shares to be admitted to trading on the London Stock
Exchange's Main Market for listed securities.
The UKCM Shares which will be acquired under
the Combination will be acquired fully paid and free from all
liens, equities, charges, encumbrances, options, rights of
pre-emption and any other third party rights and interests of any
nature and together with all rights now or hereafter attaching or
accruing to them, including voting rights and the right to receive
and retain in full all dividends and other distributions (if any)
declared, made or paid, or any other return of capital (whether by
reduction of share capital or share premium account or otherwise)
made or paid on or after the date of this Announcement, save for
the UKCM Permitted Dividends.
3.
Background to and Reasons for the
Combination
BBOX is the largest listed investor in UK
high-quality logistics warehouse assets and controls the UK's
largest logistics-focused development land platform, with a
portfolio valued at approximately £5.1 billion. BBOX focuses on
acquiring, developing and actively managing well-located, modern
logistics assets to deliver attractive and sustainable returns for
its shareholders.
BBOX owns and manages a portfolio of
high-quality "Big Box" (very large) logistics warehouses which have
delivered a 100 per cent. rent collection record since IPO over 10
years ago. With the objective of broadening its "end to end"
customer offering in terms of building size and location, BBOX has
more recently acquired "last mile" and urban logistics assets which
have the potential to enhance returns by providing significant
scope for near term rental growth. In line with this, during 2023
BBOX successfully completed the acquisition of approximately £110
million of urban logistics assets and will continue to selectively
acquire similar attractive assets.
BBOX also continues to invest in its
development pipeline, whereby shareholders benefit from the
attractive financial returns from development activities targeting
a 6 to 8 per cent. yield on cost as well as enhancing BBOX's
overall portfolio quality from the development of new,
best-in-class logistics assets across a variety of size bands, from
"Small Box" to "Big Box". For the financial year ending 31 December
2024, BBOX is targeting a yield on cost of 7.0 per cent. for its
development activity.
Over the last 18 months, BBOX has funded its
acquisitions and investments in its pipeline of development
opportunities substantially through portfolio recycling, with £327
million of disposals completed in 2023 (in aggregate above book
value). A continuation of this successful strategy would require
BBOX to sell further core logistics real estate assets, which it
may ideally prefer to retain.
BBOX recognises the quality of
the UKCM portfolio and sees a Combination with UKCM as being highly
complementary to its current strategy through
simultaneously:
(a) Acquiring a
c.£740 million portfolio of high-quality logistics assets, across a
range of sizes and locations which benefit from substantial
near-term rental reversionary potential, in line with
BBOX's objective of increasing its range
of building sizes. The UKCM portfolio has a strong weighting
towards the key logistics markets of the Midlands and South East
(including London) where the BBOX Manager believes supply is
particularly constrained and occupational demand remains robust and
where the BBOX Manager has extensive experience; and
(b) Providing BBOX
with an attractive portfolio of c.£475 million of non-logistics
assets including retail parks, supermarkets, student accommodation
and offices which can further drive returns for shareholders
through a combination of active asset management and recycling of
capital through disposals to provide the potential for accelerated
investment into BBOX's accretive development pipeline and other
accretive investment opportunities. The phasing of such disposals
will be based upon the completion of individual asset specific
optimisation plans, prevailing market conditions and the timing of
its development commitments, however BBOX's current expectation is
that it will have substantially exited this non-logistics portfolio
within approximately 24 months from completion of the
Combination.
The Boards of BBOX and UKCM believe the
Combination has compelling strategic and
financial rationale, building on
BBOX's existing strategy and proven track record of delivering
attractive and sustainable returns for shareholders, further
details of which are set out below:
(a) High-quality, logistics-focused
portfolio with significant rental reversion potential
- the Combination creates a c.£6.3 billion portfolio focused
on high-quality logistics assets, with a diverse customer base
generating over £293 million of rental income per annum with
significant embedded and growing rental reversion potential. BBOX
believes that this is a unique opportunity to acquire a
high-quality logistics-focused portfolio of scale, which otherwise
is unavailable to acquire in the open market, and, as a specialist
in UK logistics, to utilise its extensive experience to deliver
further value from these assets;
(b) Significant near-term rental growth
potential - UKCM's portfolio provides
significant near term rental growth potential, with a portfolio ERV
of £80 million, 24 per cent. ahead of current contracted rent and
79 per cent. of the logistics portfolio rental reversion subject to
lease events occurring by 2026:
(i) 85 per
cent. of the portfolio rental reversion is within UKCM's £740
million logistics portfolio, which comprises 19 assets with a total
gross lettable area of 4.4 million square feet, with identified
asset management providing value enhancement potential, and is
weighted towards the Midlands and South East (including
London);
(ii) BBOX's
exclusive focus on UK logistics, and active approach to asset
management, better enables it to secure the capture of rental
reversion in respect of logistics assets, in addition
to identifying further asset management opportunities to drive
value; and
(iii) while BBOX's
intention is not to be a long-term owner of UKCM's remaining
portfolio of non-logistics assets, it is high-quality
and diversified across a mix of commercial property sectors, in
core locations across the UK, with a diverse customer base and
provides an attractive net initial yield of 6.4 per cent. It also
has the potential for value creation through identified asset
management opportunities to sale.
(c) Enhanced BBOX customer
offering - the Combination represents a
compelling opportunity for BBOX to immediately enhance its overall
offering to customers by further diversifying its portfolio across
a broader range of logistics property sizes, locations and tenant
uses, from "Mega-Boxes" to smaller, strategically located,
logistics assets within key urban locations, in an efficient and
cost-effective manner;
(d) Non-logistics assets to fund attractive
investment and development opportunities through capital
recycling - the Combined Group will adopt a
disciplined approach to substantially exiting the non-logistics
assets (expected to be c.8 per cent. of the Combined Group's GAV on
completion of the Combination) within approximately 24 months from
completion of the Combination. The capital recycling will provide
approximately two years of development capex funding. This builds
on BBOX's successful track record of targeted disposals to recycle
capital into development opportunities for new, "triple net"
leased, best-in-class logistics assets at a 6 to 8 per cent. yield
on cost, with 2024 development activity targeting a yield on cost
of 7.0 per cent. This will result in a Combined Group portfolio
that comprises best-in-class logistics assets capable of delivering
superior total returns to shareholders;
(e) Attractive and liquid non-logistics
portfolio with proven value - UKCM's
non-logistics assets are typically modern, in strong locations
which are expected to be both appealing to occupiers and attractive
to the investment market if offered for sale, reflected by the
disposal of two office assets post the 2023 year end, both of which
were in line with prevailing book values. BBOX also believes that
an improving macro-economic environment could impact favourably on
investment values in the commercial property investment market,
thus improving liquidity and enhancing value;
(f) Immediately identifiable cost
savings - the Combined Group will benefit from
savings in recurring costs of approximately c.£4.0 million per
annum, the majority of which are expected to be effective
immediately on completion of the Combination arising from the
unification of investment management services under the BBOX
Manager and operational cost savings, as outlined in the Quantified
Financial Benefits Statement set out in this Announcement, with
additional anticipated medium-term costs savings from rotation into
"triple net" leases and financing synergies;
(g) Enhanced earnings -
the Combination is expected to be immediately accretive to adjusted
earnings per share for both sets of shareholders, enhancing the
Combined Group's ability to target sustainable earnings and
dividend progression, with the potential for future synergies
resulting from enhanced scale and operational
efficiencies;
(h) Compelling excess returns over cost of
capital - BBOX expects UKCM's logistics assets
to deliver unlevered returns materially above BBOX's cost of
capital over the medium-term. BBOX also believes the market has
opportunities for value growth in line with the macro-economic
environment. BBOX expects the capital allocation to the
non-logistics assets to be temporary, until the capital is recycled
into BBOX's logistics development pipeline and/or other accretive
investment opportunities;
(i) Value creation from capital
recycling - taking into account the financial
effects of recycling capital by disposing of UKCM's c.£475 million
of non-logistics assets and funding accelerated investments into
BBOX's logistics development platform, and excluding the impact of
future rental growth and yield movements, such development activity
would be expected to generate upon stabilisation
mid-single digit growth in EPRA NTA per share, adjusted
earnings per share and dividends per share;
(j) Active asset management and sector
leading environmental, social and governance
("ESG")
credentials unlocking value - BBOX has a strong history of
active asset management, coupled with sector leading ESG
credentials. A skillset which can add additional value to UKCM's
c.£1.2 billion portfolio and provide significant scope for
increased earnings efficiency post completion of the Combination.
The BBOX team has the sector knowledge which has identified
opportunities to add value through asset management prior to
disposal of UKCM's non-logistics assets;
(k) Significant opportunity to unlock value
from specialised, experienced, and entrepreneurial
manager - BBOX Manager will act as sole
investment manager to the Combined Group enabling it to benefit
from BBOX Manager's in-house team of experts who have a proven
track record of successfully managing funds across a diverse range
of asset classes. BBOX Manager's
entrepreneurial culture and direct proactive approach to asset
management, undertaken in-house will help to drive value creation
in the combined portfolio by creating unique insight, stronger
customer relationships, and ensuring opportunities to add value are
rigorously pursued;
(l) Robust balance sheet with potential
financing synergies - the Combined Group will
seek to preserve a robust and conservatively leveraged balance
sheet with a reduced loan-to-value ratio of approximately 29 per
cent., significant available liquidity, no near-term debt
maturities, expected cost of capital benefits and greater financial
flexibility around net investment activity, while BBOX's investment
grade credit rating provides the potential for a lower cost of
capital for the Combined Group; and
(m)
Greater share liquidity with
more diversified shareholder base - the
Combination would create the fourth largest UK REIT, with a
combined EPRA NTA of approximately £4.4 billion, and a more
diversified, broader shareholder base with shareholders benefitting
from increased share liquidity from enlarged scale and index
weightings.
4.
Quantified Financial Benefits
Statement
The BBOX Directors, having reviewed and
analysed the potential cost savings of the Combined Group, as well
as taking into account factors they can influence, believe the
Combined Group can deliver shareholder value through the expected
realisation of approximately £4.0 million of pre-tax recurring cost
synergies. The cost synergies are expected to be realised
principally from:
(a) Investment
management fees: unification of investment management services
under the BBOX Manager, delivering an expected £2.6 million of cost
synergies per annum derived from lower investment management fees
charged on the UKCM EPRA NTA ; and
(b) Corporate and
administrative costs: de-duplication and rationalisation of
duplicated listing, administration and operational expenses
delivering an estimated £1.4 million of cost synergies per
annum.
The identified cost savings are contingent on
the completion of the Combination and would not be achieved
independently. The estimated cost synergies referred to above
reflect both the beneficial elements and the relevant
costs.
The UKCM Manager has agreed to waive the early
termination payment of £6.7 million which would be contractually
payable by UKCM on completion of the Combination as a result of the
UKCM IMA being agreed to be terminated at such time under the UKCM
IMA Termination Agreement. The BBOX Directors have considered other
recurring or one-off costs in connection with realising the
expected cost synergies and have reflected these in the expected
recurring cost synergy figure.
Potential areas of dis-synergy have been
considered by the BBOX Directors and are reflected in the
analysis.
These statements relating to estimated
investment management fee savings and other identified cost savings
relate to future actions or circumstances which by their nature
involve risks, uncertainties and contingencies. As a consequence,
the identified synergies and estimated savings referred to may not
be achieved, may be achieved later or sooner than estimated, or
those achieved could be materially different from those
estimated.
Further information on the bases of belief
supporting the Quantified Financial Benefits Statement, including
the principal assumptions and sources of information, is set out in
Appendix 4 to this Announcement.
5.
Recommendations
Recommendation of UKCM
Directors
The UKCM Recommending Directors, who have been
so advised by Rothschild & Co as to the financial terms of the
Combination, consider the terms of the Combination to be fair and
reasonable. In providing its advice to the UKCM Directors,
Rothschild & Co has taken into consideration the commercial
assessments of the UKCM Directors. Rothschild & Co is providing
independent financial advice to the UKCM Directors for the purposes
of Rule 3 of the Takeover Code.
Accordingly,
taking into account the factors set out below, the UKCM
Recommending Directors intend to recommend unanimously that Scheme
Shareholders vote in favour of the Scheme at the Court Meeting and
the UKCM Shareholders in favour of the resolutions to be proposed
to shareholders at the UKCM General Meeting (or, if implemented by
a Takeover Offer, to accept such Takeover Offer), as the UKCM
Recommending Directors have irrevocably undertaken to do so in
respect of their own beneficial holdings of 427,666 UKCM Shares
representing, in aggregate, approximately 0.03 per cent. of the
issued ordinary share capital of UKCM on 20 March 2024 (being the
last Business Day prior to the release of this
Announcement).
Recommendation of BBOX
Directors
As a result of its size, the Combination
constitutes a Class 1 transaction for BBOX for the purposes of the
Listing Rules. Accordingly BBOX will be required to seek the
approval of the BBOX Shareholders for the Combination at the BBOX
General Meeting. The Combination will also be conditional on the
approval of the BBOX Shareholders of the issuance of the New BBOX
Shares at the BBOX General Meeting. The BBOX Directors consider the Combination to
be in the best interests of BBOX and the BBOX Shareholders as a
whole and intend unanimously to recommend that BBOX Shareholders
vote in favour of all of the resolutions to be proposed at the BBOX
General Meeting which will be convened in connection with the
Combination, as they have irrevocably undertaken to do, or procure
to be done, in respect of their own beneficial holdings of 390,170
BBOX Shares representing, in aggregate, approximately 0.02 per
cent. of BBOX's issued ordinary share capital on 20 March 2024,
being the last Business Day prior to the release of this
Announcement.
The BBOX Directors have received financial
advice from Jefferies and J.P. Morgan Cazenove in relation to the
Combination. In providing their advice to the BBOX Directors,
Jefferies and J.P. Morgan Cazenove have relied upon the BBOX
Directors' commercial assessment of the Combination.
6.
Background to and Reasons for the
UKCM Board recommendation
Background on UKCM
UKCM's strategy is to
provide shareholders with an attractive and growing level of income
with the potential for capital growth.
UKCM holds a diversified portfolio
of property, weighted towards industrial and logistics (61 per
cent. of the portfolio value), retail warehouses and supermarkets
(14 per cent.), offices (9 per cent.), leisure and hotels (11 per
cent.) and student halls (5 per cent.). Whilst sector activity has
been impacted by recent economic uncertainty, industrial and
logistics, retail warehousing and student halls are sectors that
are supported by macroeconomic or demographic trends.
Since IPO in 2007,
UKCM's portfolio has
marginally outperformed the MSCI Balanced
Portfolios Quarterly Property Index against which it reports (the
"Benchmark Index"), with an
annualised total property return of 4.7 per cent. compared to an
annualised total property return of 3.9 per cent. for the Benchmark
Index over the same period. On a total accounting return basis
(defined as EPRA NTA per share growth plus cumulative dividends per
share), UKCM has delivered a return of 4.0 per cent., 3.0 per cent.
and 56.0 per cent. over the 3, 5 and 10 year periods to 31 December
2023, respectively. In 2023 UKCM delivered 3.0 per cent.
EPRA NTA total return and 6.3 per
cent. growth in EPRA EPS.
UKCM has a robust and flexible
balance sheet with, following disposals post 31 December 2023, a
loan-to-value ratio of 15.2 per cent., weighted average cost of
drawn debt of 3 per cent. and 98 per cent. of UKCM's debt being at
a low fixed rate. All covenants are fully covered.
Background to
and Reasons for the Recommendation
Over recent years,
UKCM's share price has traded
at a persistent discount to EPRA NTA. This discount has averaged
21.0 per cent. over the last 5 years, 26.3 per cent. over the last
3 years and 33.7 per cent. over the last 12 months, in each case
measured to 31 December 2023. The Board of UKCM believes the
following factors have contributed to
UKCM's persistent trading
discount:
·
a highly concentrated shareholder register, in
particular with Phoenix's
43.4 per cent. shareholding;
·
against the background of sector consolidation,
the relative lack of scale and relevance of UKCM for UK public
market REIT investors; and
·
UKCM's
relatively low share liquidity for a FTSE 250
constituent.
In addition,
UKCM's growth potential has
been constrained by its inability, due to its trading discount and
shareholder register, to raise new equity capital on attractive
terms from the public markets.
In May 2023, the Board of UKCM
appointed Rothschild & Co to undertake a strategic review,
including of the options to narrow
UKCM's share trading discount
relative to EPRA NTA. The review considered a range of options for
UKCM, both as a standalone company and combinations with other
listed groups, with an initial focus on M&A opportunities where
UKCM might act as consolidator. The review also formed the
framework against which the financial and strategic merits of
subsequent proposals were measured.
On 8 November 2023, the Board of
UKCM announced it was in discussions with Picton Property Income
Limited ("Picton") in
relation to a possible all-share merger on an EPRA NTA to EPRA NTA
basis. UKCM shareholders would have held approximately two thirds
of the combined group.
Whilst the Board of UKCM was in
favour of a combination with Picton on the terms proposed,
discussions with Picton were terminated following the Board of UKCM
receiving confirmation from its largest shareholder, Phoenix, that
it was not supportive of the merger.
Following the public announcement
described above, the Board of UKCM has received expressions of
interest from other listed and private counterparties, including
BBOX. Aside from BBOX, no other formal alternative proposal for
UKCM has been received from any other third party.
The Combination follows UKCM
receiving four proposals from BBOX over a period of negotiation of
approximately two months. The Exchange Ratio of 0.444 New BBOX
Shares for each UKCM Share represents a very material increase
relative to the terms of the initial proposal from BBOX.
The Board of UKCM remains confident
in the fundamental strength of
UKCM's portfolio, comprising
a resilient and reversionary industrial weighted portfolio, a
strong balance sheet with low gearing, and recent successful
re-cycling of capital through selected disposals at book value.
However, the Board of UKCM also believes that the structural
factors and constraints outlined above are
likely to persist, in particular the concentrated shareholder
register and persistent relatively low levels of liquidity,
impacting UKCM's share price
and ability to execute on alternative strategic options.
Strategic and Financial Rationale for the Combination with
BBOX
The Board of UKCM has carefully
considered the financial and strategic benefits of the Combination
with BBOX. In particular, the Board of UKCM has considered the
following benefits of a Combination:
·
As an all-share combination, UKCM Shareholders
are not crystallising an offer in cash at a discount to EPRA NTA
per UKCM Share, but instead will continue to benefit from the
opportunity, benefits and risks of share ownership in the Combined
Group;
·
The Exchange Ratio of 0.444 New BBOX Shares per
UKCM Share held will result UKCM Shareholders owning approximately
23.3 per. cent of the issued share capital of the Combined Group,
regardless of the BBOX Share price on any one day. This ownership
percentage represents UKCM's share of the Combined Group's EPRA
NTA. This means that, before the costs of the proposed Combination,
UKCM shareholders will hold the equivalent 31 December 2023 EPRA
NTA in the Combined Group as UKCM's 31 December 2023 EPRA NTA,
being approximately 78.7 pence per UKCM share, meaning UKCM
shareholders are suffering no loss or dilution of fundamental EPRA
NTA per share from the Combination;
· BBOX, like UKCM, benefits from a low cost and predominantly
fixed rate debt structure, which has significant mark-to-market
value which is not included in the EPRA NTA measure. The
mark-to-market value of fixed rate debt is greater for BBOX as a
proportion of its Net Asset Value, than for UKCM as a proportion of
its own Net Asset Value, which is favourable for UKCM shareholders
given the Exchange Ratio is based on EPRA NTA;
·
Notwithstanding the fluctuation in the BBOX Share
price since 9 February 2024 (being the day of the commencement of
the Offer Period), the Combined Group is expected to benefit from
an improvement in long-term share price rating relative to EPRA
NTA, versus UKCM standalone, as evidenced by BBOX having traded, on
average, at a stronger share price to EPRA NTA ratio than UKCM by
+15 ppts over the last 5 years, +19 ppts over the last 3 years and
+10 ppts over 12 months (each period being to 31 December 2023).
The UKCM Recommending Directors' view is that this has in part been
driven by BBOX's superior total accounting returns over similar
time periods;
·
The Combination represents a share price premium
of 10.8 per cent. to the undisturbed Closing Price of a UKCM Share
on 9 February 2024 (being the day of the commencement of the Offer
Period);
·
A significant increase in scale, becoming the
fourth largest UK REIT with a combined portfolio value of £6.3
billion and EPRA NTA of £4.4 billion. Further, this increased scale
is expected to improve overall share liquidity for UKCM
Shareholders from a higher free-float and a more diverse
shareholder base;
·
An immediate, significant increase in earnings
per share for UKCM Shareholders together with a covered
dividend;
·
A saving in annual running costs for the Combined
Group are expected, with synergies of approximately £4.0 million
per annum to be realised principally through BBOX's lower
management fee and removal of duplicate corporate and
administrative costs, as outlined in the Quantified Financial
Benefits Statement set out in this Announcement;
·
BBOX's land bank and development capability
provide a differentiated source of income growth and development
profit in attractive sub-markets, supporting further earnings
enhancement alongside the embedded rental reversion present in both
portfolios;
·
BBOX's confirmation of its intention to pay a
well-covered full year 2024 dividend which is to be not less than
the full year 2023 equivalent UKCM dividend; and
·
The support of UKCM's two largest shareholders,
Phoenix and Investec, who together have given support representing
56.5 per cent. of UKCM's issued ordinary share capital on 20 March
2024 (being the last Business Day prior to release of this
Announcement).
Other
Considerations
In reaching their recommendation,
the UKCM Recommending Directors have also considered that an
investment in the Combined Group will differ from an investment in
UKCM, given the Combined Group will (i) primarily be exposed to the
performance, opportunities and risks of a significantly higher
weighting towards the industrial and logistics sector with a more
concentrated tenant base; (ii) have higher leverage than UKCM; and
(iii) have a higher exposure to logistics development than
UKCM's current overall
development exposure. However, in reaching their recommendation,
the UKCM Recommending Directors also noted that, amongst other
things:
·
The combined portfolio will have strong
fundamentals including a weighted average unexpired lease term of
10.5 years, mix of rental review types with 42 per cent.
index-linked, significant embedded reversion and a high-quality
tenant base. Further, BBOX has achieved a 100 per cent. rent
collection in the period from IPO to 31 December 2023;
·
Although the Combined Group's gearing is expected
to be higher than UKCM's
current gearing levels, BBOX's leverage remains in-line with key peers and the staggered
nature of the debt maturities is expected to help mitigate interest
rate risks; and
·
BBOX's
development platform provides an additional source of future
growth, with a high-quality, specialist, in-house development team
with a proven track record.
Accordingly, taking into account
the factors set out above, the UKCM Recommending Directors intend
to recommend unanimously that Scheme Shareholders vote in favour of
the Scheme at the Court Meeting and the UKCM Shareholders to vote
in favour of the resolution to be proposed to UKCM Shareholders at
the UKCM General Meeting (or, if implemented by a Takeover Offer,
to accept such Takeover Offer), as the UKCM Recommending Directors
have irrevocably undertaken to do so in respect of their own
beneficial holdings of 427,666 UKCM Shares, in aggregate,
representing approximately 0.03 per cent. of the issued ordinary
share capital of UKCM on 20 March 2024 (being the last Business Day
prior to release of this Announcement).
The opinion reflects the views of
the UKCM Recommending Directors, which are not shared by the UKCM
Dissenting Director and for which the UKCM Dissenting Director is
not responsible. The UKCM Dissenting Director's opinion is set out
in paragraph 7 below.
7.
Dissenting
Director's
Statement
Mr Pereira Gray, the Chairman of
UKCM, is not recommending the Combination to UKCM Shareholders,
though given the support of UKCM's two largest shareholders, he
accepts that the proposed Combination should be put to UKCM
Shareholders.
In arriving at his dissenting view,
he has considered the following matters, amongst others.
Mr Pereira Gray believes that there
is an ongoing role in the UK REIT landscape for diversified, low
geared, listed UK real estate exposure for investors in companies
such as UKCM, possibly increased in scale by means of a combination
with another UK REIT.
Mr Pereira Gray recognises the
merits of the Combination as described elsewhere in this
Announcement but does not consider that the Combination makes for a
compelling strategic rationale for UKCM Shareholders given the
different investment strategies and asset make-up of the two
businesses. BBOX employs a single-sector specialist "Big Box"
property investment strategy with a higher proportion of long
index-linked and fixed rental uplift leases, a significant
development programme, and a higher level of gearing than UKCM.
Whilst recognising that industrial property is an attractive
property market sector today, Mr Pereira Gray values the
flexibility provided by a diversified investment strategy and does
not believe that shares in UKCM and shares in BBOX will perform
similarly for shareholders over time.
Mr Pereira Gray acknowledges that
UKCM's market capitalisation has shown a persistent discount to Net
Asset Value in recent years. The strong rising trend of the last
six months has, however, led to UKCM delivering the second highest
share price total return within the Listed Property Sector over the
last 12 months. UKCM now offers a narrower than average discount to
underlying Net Asset Value relative to its Listed Property Sector
peers, and Mr Pereira Gray wishes to continue to promote the merits
of the company to investors.
The undisturbed share price of UKCM
at close of business 8 February 2024, the day after the
announcement of the end of year results, and the day before the
leak of the dialogue with BBOX was 65.40 pence per share. The
current implied merger price offers a limited premium over the
undisturbed share price on 8 February 2024 in return for giving up
control of UKCM. There remains no certainty of the price at which
UKCM Shares might actually convert into BBOX Shares given daily
volatility in the BBOX share price.
Mr Pereira Gray believes that other
parties would have come forward had there been a more open and
comprehensive sales process, and that this could have led to an
alternative and potentially improved proposal for UKCM. It is
recognised that the two largest shareholders support the
Combination, but Mr Pereira Gray does not know that this is the
highest price or the best value that could have been achieved for
all UKCM Shareholders in other circumstances and given a longer
time period.
Mr Pereira Gray believes that an
orderly liquidation would generate a higher net return to
shareholders than the implied offer price but acknowledges that a
merger with BBOX could deliver a higher net present value to UKCM
Shareholders over time assuming growth in the value of BBOX's core
investment portfolio and possible narrowing of the discount at
which the BBOX Shares currently trade.
Mr Pereira Gray recognises the
attractions of the proposed merger for larger shareholders but, in
the light of his concerns that the Combination has not been
sufficiently market tested, he does not on balance feel able to
recommend the Combination to UKCM Shareholders and will abstain
from voting at the Court Meeting and the UKCM General
Meeting.
The opinion above reflects the
views of the UKCM Dissenting Director, which are not shared by the
UKCM Recommending Directors and for which the UKCM Recommending
Directors are not responsible.
8.
Further Information Relating to
UKCM
UKCM is a FTSE 250 UK REIT listed on the
premium segment of the Official List. UKCM aims to provide its
shareholders with an attractive level of income together with the
potential for capital and income growth from investing in a
diversified portfolio of high-quality UK commercial properties,
weighted towards sectors that benefit from strong underlying
structural and societal drivers.
UKCM's portfolio of 37 properties is valued at
£1.21 billion with a net initial yield of 5.1 per cent.,
reversionary yield of 6.3 per cent. and EPRA NTA of £1.0 billion.
UKCM has a conservatively leveraged balance sheet with a
loan-to-value ratio of 15 per cent. and a weighted cost of drawn
debt of 3.0 per cent. (following disposals post 31 December 2023).
As at 20 March 2024 (being the last Business Day prior to release
of this Announcement), UKCM had a market capitalisation of £841
million.
UKCM's portfolio comprises assets across a
diverse mix of sectors:
(a) Industrial
logistics (c.61 per cent. of total
GAV; 4.3 per cent. net initial yield
and 6.0 per cent. reversionary yield):
diverse logistics portfolio comprising mix of multi-let industrial
estates and single-let "Big Box" distribution units in strategic
locations predominantly throughout the South East and the
Midlands;
(b) Alternatives
(Leisure, Hotel and Student Accommodation)
(c.16 per cent. of total GAV;
6.4 per cent. net initial yield and 6.2 per
cent. reversionary yield): portfolio of diverse alternative assets
including: three cinema-anchored leisure schemes; two purpose built
student accommodation assets in Edinburgh and Exeter; and two hotel
assets including a Hyatt development scheduled for completion in Q3
2024;
(c) Retail
(c. 14 per cent. of total GAV;
6.3 per cent. net initial yield and
6.1 per cent. reversionary yield) portfolio
comprising two supermarkets and four retail parks dominated by
either bulky goods retailers or convenience and discount operators;
and
(d) Offices (c.9
per cent. of total GAV; 6.7 per cent. net initial yield and 9.0 per
cent. reversionary yield): portfolio of five well-located regional
and South East focused office assets.
9.
Information Relating to
BBOX
BBOX is a FTSE 250 UK REIT listed on the
premium segment of the Official List. BBOX is the largest listed UK
REIT that invests primarily in UK high-quality logistics warehouse
assets and controls the largest logistics-focused development land
platform in the UK. BBOX is committed to delivering attractive and
sustainable returns for shareholders by investing in and actively
managing existing built investments and land suitable for logistics
development. BBOX focuses on well-located, modern logistics assets,
typically let to institutional-grade tenants on long-term leases
with upward-only rent reviews and geographic and tenant
diversification throughout the UK. BBOX's portfolio is valued at
£5.1 billion with an EPRA NTA per share of 177.2 pence. As at 20
March 2024 (being the last Business Day prior to the release of
this Announcement), BBOX had a market capitalisation of £2.9
billion.
In the period from its IPO in December 2013 to
20 March 2024, (being the last Business Day prior to the release of
this Announcement), BBOX has delivered on a total accounting return
basis, a return of approximately 145.8 per cent., a total
shareholder return of approximately 139.6 per cent. and has grown
its market capitalisation to £2,858 million. This has resulted in
outperformance versus the FTSE 350 Real Estate index.
10.
Intentions for the Combined
Group
Property
strategy
With effect from the completion of
the Combination, BBOX Manager will provide investment management,
administrative and advisory services to the Combined Group. BBOX
expects to continue BBOX's stated strategy and invest in
high-quality industrial and logistics assets. As part of this
strategy BBOX will, over the short to medium term, actively manage
the non-logistics assets including retail parks, supermarkets,
student accommodation and offices and seek to recycle capital
through disposals, with the recycled capital being invested in
BBOX's high-quality and accretive development pipeline. The timing
and phasing of such disposals will be based upon prevailing market
conditions and the required asset optimisation (which will
necessarily be individual asset specific) of any such disposals,
however BBOX's current expectation is that it will have
substantially exited this entire portfolio within approximately 24
months of completion of the Combination.
Board composition and
governance arrangements
BBOX intends to delist UKCM
immediately following the Effective Date. Consequently, UKCM will
not require listed company governance structures and accordingly,
it is intended that each of the UKCM Directors will step down from
the Board of UKCM and its subsidiaries (as applicable) upon the
Effective Date.
Employees, fixed assets,
research and development
As UKCM is an externally-managed
UK REIT, UKCM does not have any employees and therefore does not
operate any pension schemes, nor does it have any arrangements in
place for any employee involvement in its capital.
UKCM has no place of business,
fixed assets (other than its property portfolio), research and
development function or headquarters.
Investment management
arrangements
BBOX Manager, which provides
investment management services to BBOX, will provide such services
to the Combined Group. Accordingly, on completion of the
Combination, the UKCM IMA between UKCM and UKCM Manager will be
terminated. The UKCM Manager has agreed to waive the
early termination payment of £6.7 million which would be
contractually payable by UKCM on completion of the Combination as a
result of the UKCM IMA being agreed to be terminated at such
time.
As a result of the termination of the UKCM
IMA, upon completion of the Combination, certain persons employed
by the UKCM Manager (or one of its group companies), who are wholly
or mainly assigned to provide services to UKCM (the "Employees"), would, under TUPE,
transfer their employment to BBOX Manager. BBOX Manager and UKCM
Manager intend to cooperate on the employee consultation process
required in relation to the Employees.
The arrangements relating to the
termination of the UKCM IMA and certain provisions relating to the
Employees are provided for in the UKCM IMA Termination Agreement.
The key terms of the UKCM IMA Termination Agreement are described
in paragraph 11 below.
Investment management
fees
With effect from completion of the
Combination, the fee payable to BBOX Manager for the provision of
investment management services to the Combined Group is set out in
the BBOX IMA. Such fee will be payable in cash by the Combined
Group each quarter and is calculated based on a percentage of the
Combined Group's EPRA NTA disregarding cash or cash equivalents
held. The fee is payable quarterly in arrears and BBOX Manager is
obliged to apply 25 per cent. of the fee in the subscription or
acquisition (as applicable) of shares of BBOX. If the Combined
Group buys or sells any assets after the date at which the relevant
EPRA NTA is calculated, the EPRA NTA is adjusted pro rata for the
net purchase or sale price, less any third-party debt drawn or
repaid whilst remaining capped at EPRA NTA.
The relevant advisory fee
percentage for the Combined Group (in each instance applied to EPRA
NTA disregarding cash and cash equivalents) will be 0.7 per cent.
up to and including £2 billion, 0.6 per cent. above £2 billion and
up to and including £3 billion, 0.5 per cent. above £3 billion and
up to and including £3.5 billion and 0.4 per cent. above £3.5
billion. The basis and calculation of the advisory fee is in line
with the existing BBOX fee structure.
Listing and registered
office
Following the Effective Date, BBOX will remain
listed on the Official List and admitted to trading on the Main
Market. The registered office of BBOX will remain in
London.
UK REIT status
Both BBOX and UKCM fall within the UK REIT
regime and benefit from the tax efficiencies provided by that
regime. The Combined Group is expected to fall within the UK REIT
regime and the relevant tax measures will continue to apply to the
Combined Group.
Trading facilities
It is intended that dealings in, and
registration of transfers of, UKCM Shares (other than the
registration of the transfer of the Scheme Shares to BBOX pursuant
to the Scheme) will be suspended shortly before the Effective Date
at a time to be set out in the Scheme Document. It is further
intended that applications will be made to the London Stock
Exchange to cancel trading in the UKCM Shares on the Main Market,
and to the FCA to cancel the listing of the UKCM Shares on the
Official List, in each case with effect from or shortly following
the Effective Date. Further details about the de-listing and
cancellation of trading of the UKCM Shares can be found in
paragraphs 16
and 17 of
this Announcement.
No statements in this paragraph
10 are "post-offer
undertakings" for the purposes of Rule 19.5 of the Takeover
Code.
11.
Offer-related
Arrangements
Confidentiality
Agreements
BBOX and UKCM have entered into a mutual
non-disclosure agreement dated 22 November 2023 pursuant to which
each of BBOX and UKCM has undertaken, among other things, to keep
certain information relating to the Combination and the other party
confidential and not to disclose it to third parties (other than to
permitted parties) unless required by law or regulation.
BBOX and UKCM have also entered into a
supplemental confidentiality agreement dated 29 February 2024 which
sets out how any confidential information that is commercially
sensitive can be disclosed, used or shared.
UKCM IMA Termination
Agreement
BBOX, BBOX Manager, UKCM and UKCM
Manager, amongst others, have entered into an agreement dated 21
March 2024 concerning the termination of the UKCM IMA and related
matters (the "UKCM IMA Termination
Agreement").
Pursuant to the UKCM IMA
Termination Agreement, the parties have agreed the following key
terms:
· The
UKCM IMA will terminate conditional upon and with effect from the
Scheme becoming Effective;
· No
compensation shall be payable to the UKCM Manager under the UKCM
IMA in relation to such termination being earlier than the notice
period to terminate required under the UKCM IMA; and
· Following completion of the Combination, the UKCM Manager
will provide all books of account, records, registers,
correspondence and amounts and any necessary assistance and
guidance to UKCM, BBOX (or to the BBOX Manager on its behalf) to
facilitate an orderly transition process.
In addition, the UKCM IMA
Termination Agreement includes a number of TUPE-related
provisions which relate to the Employees,
including:
· Undertakings from the UKCM Manager and the BBOX Manager to
comply with their respective duties under TUPE;
· Obligations of
BBOX to reimburse the UKCM Manager and the BBOX Manager
respectively in relation to certain employee related payments up to
£0.7 million in aggregate; and
·
Cross-indemnities from the UKCM Manager and the BBOX Manager
for pre and post-TUPE transfer employment
liabilities associated with Employees who would transfer under TUPE
to the BBOX Manager.
The parties to the UKCM IMA Termination
Agreement have agreed that, if the Panel determines that any
provision of the UKCM IMA Termination Agreement that requires the
parties to take or not to take action, whether as a direct
obligation or as a condition to any other person's obligation
(however expressed) prior to the date of completion of the
Combination, is not permitted by Rule 21.2 of the Takeover Code,
that provision shall have no effect and shall be
disregarded.
12.
Irrevocable Undertakings and
Letter of Intent
The BBOX Directors have irrevocably undertaken
to vote in favour of the resolutions to be proposed at the BBOX
General Meeting in respect of their own beneficial holdings
totalling 390,170 BBOX Shares, representing in aggregate
approximately 0.02 per cent. of BBOX's issued ordinary share
capital on 20 March 2024 (being the last Business Day prior to the
release of this Announcement). The UKCM Recommending Directors have
irrevocably undertaken to vote in favour of the Scheme (or, if
implemented by a Takeover Offer, to accept such Takeover Offer) in
respect of their own beneficial holdings totalling 427,666 UKCM
Shares, representing, in aggregate, approximately 0.03 per cent. of
UKCM's issued ordinary share capital on 20 March 2024 (being the
last Business Day prior to the release of this
Announcement).
In addition to the irrevocable undertakings
received from the UKCM Recommending Directors, BBOX has received an
irrevocable undertaking from Phoenix Life Limited ("Phoenix") to vote in favour of the
Combination if it is implemented by way of the Scheme or, if
implemented by way of a Takeover Offer, to accept such Takeover
Offer, in respect of 563,773,465 UKCM Shares, representing
approximately 43.4 per cent. of UKCM's total issued ordinary share
capital on 20 March 2024 (being the last Business Day prior to the
release of this Announcement).
BBOX has also received a non-binding letter of
intent from Investec Wealth & Investment Limited ("Investec") to vote in favour of the
Combination if it is implemented by way of the Scheme or, if
implemented by way of a Takeover Offer, to accept such Takeover
Offer, in respect of 170,000,000 UKCM Shares representing
approximately 13.1 per cent. of UKCM's total issued ordinary share
capital on 20 March 2024 (being the last Business Day prior to the
release of this Announcement).
In total, therefore, BBOX has received
irrevocable undertakings and a letter of intent representing, in
aggregate, approximately 56.5 per cent. of the issued ordinary
share capital of UKCM on 20 March 2024 (being the last Business Day
prior to the release of this Announcement).
Further details of the irrevocable undertakings
and letter of intent are set out in Appendix 3 to this
Announcement.
13.
Dividends
UKCM Dividends
UKCM Shareholders will be entitled
to receive, to the extent the Scheme Record Time occurs after the
record date in respect of, any UKCM dividend in respect of each of
the successive quarterly periods ending after 31 December 2023,
provided in each case that such dividend is payable in accordance
with UKCM's existing dividend policy, consistent with past practice
in relation to the payment of dividends, including as to time and
quantum, and UKCM and BBOX have agreed the record date for such
dividend (each such dividend a "UKCM Quarterly Permitted
Dividend").
If, on or after the date of this
Announcement and on or prior to the Effective Date, UKCM announces,
declares, makes or pays: (i) a UKCM Quarterly Permitted Dividend or
a UKCM Equalising Dividend (as defined below), and the quantum of
such dividend is in excess of the amount which UKCM is entitled to
pay to UKCM Shareholders in accordance with this Announcement; or
(ii) any other dividend, distribution or form of capital return,
BBOX shall be entitled to either:
a) Adjust the Exchange
Ratio by an amount equivalent to all or any part of such excess (in
the case of a UKCM Quarterly Permitted Dividend or a UKCM
Equalising Dividend (as relevant)) or by the amount of all or part
of any such other dividend, distribution or form of capital return,
in which case references to the Exchange Ratio will be deemed to be
a reference to the Exchange Ratio as so adjusted; or
b) Pay an equalising
dividend to BBOX Shareholders so as to reflect the value
attributable to all or any part of such excess (in the case of a
UKCM Quarterly Permitted Dividend or a UKCM Equalising Dividend (as
relevant)) or the amount of all or part of any such other dividend,
distribution or form of capital return (a "BBOX Equalising Dividend"), without any
consequential change to the Exchange Ratio.
BBOX Dividends
BBOX Shareholders will be entitled to receive
a dividend of 2.05 pence per BBOX Share in respect of the quarter
ended 31 December 2023, as announced on 1 March 2024, scheduled to
be paid on or around 2 April 2024 (the "BBOX Q4 2023 Dividend").
In addition to the BBOX Q4 2023
Dividend, BBOX Shareholders will be entitled to receive, to the
extent the Scheme Record Time occurs after the record date in
respect of, any BBOX dividend in respect of each of the successive
quarterly periods ending after 31 December 2023, provided in each
case that such dividend is payable in accordance with BBOX's
existing dividend policy, consistent with past practice in relation
to the payment of dividends, including as to time and quantum, and
BBOX and UKCM have agreed the record date for such dividend (each
such dividend a "BBOX Quarterly
Permitted Dividend").
If, on or after the date of this
Announcement and on or prior to the Effective Date, BBOX announces,
declares, makes or pays: (i) the BBOX Q4 2023 Dividend, a BBOX
Quarterly Permitted Dividend or a BBOX Equalising Dividend, and the
quantum of such dividend is in excess of the amount which BBOX is
entitled to pay to BBOX Shareholders in accordance with this
Announcement; or (ii) any other dividend, distribution or form of
capital return, UKCM shall be entitled to either:
a) Adjust the Exchange
Ratio by an amount equivalent to all or any part of such excess (in
the case of the BBOX Q4 2023 Dividend, a BBOX Quarterly Permitted
Dividend or a BBOX Equalising Dividend (as relevant)) or by the
amount of all or part of any such other dividend, distribution or
form of capital return, in which case references to the Exchange
Ratio will be deemed to be a reference to the Exchange Ratio as so
adjusted; or
b) Pay an equalising
dividend to UKCM Shareholders so as to reflect the value
attributable to all or any part of such excess (in the case of the
BBOX Q4 2023 Dividend, a BBOX Quarterly Permitted Dividend or a
BBOX Equalising Dividend (as relevant)) or the amount of all or
part of any such other dividend, distribution or form of capital
return (a "UKCM Equalising
Dividend"), without any consequential change to the Exchange
Ratio.
Any exercise of rights referred to in this
paragraph 13
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 Combination.
Combined
Group
Following the completion of the Combination,
the Combined Group would continue to pursue BBOX's strategy of
delivering sustainable income and capital growth, expected to
result in attractive performance through the economic cycle that
underpins a predictable and progressive dividend. BBOX's dividend
policy is for the three quarterly dividends to each represent 25
per cent. of the previous full year dividend. BBOX then uses the
fourth quarter dividend to determine any progression and achieve an
overall pay-out ratio in excess of 90 per cent. of adjusted
earnings (being the metric consistently used by BBOX).
In line with this policy, BBOX expects that
for the financial year ending 31 December 2024 and based on the
Exchange Ratio, UKCM Shareholders should receive following
completion of the Combination, at least the same income from
aggregate dividends in respect of the Combined Group as they
received in aggregate dividends for UKCM's financial year ended 31
December 2023, being not less than 3.40 pence per UKCM Share,
provided that there are sufficient adjusted earnings generated
during this period by the Combined Group for dividends to be
covered at this level.
The New BBOX Shares will be issued credited as
fully paid-up and will rank pari
passu in all respects with the BBOX Shares in issue at that
time, including the right to receive and retain dividends and other
distributions (if any) announced, declared, made or paid by
reference to a record date on or after the Effective Date (save,
for the avoidance of doubt, any BBOX Quarterly Permitted Dividends
and any BBOX Equalising Dividend). Accordingly, based on the
expected timetable for the Scheme to become Effective, Scheme
Shareholders who retain their New BBOX Shares following completion
of the Combination would receive the BBOX first quarterly interim
dividend in respect of the Combined Group for the quarterly period
January to March 2024, which is expected to be paid in May/June
2024.
14.
Scheme of
Arrangement
It is intended that the Combination will be
effected by a Court-sanctioned scheme of arrangement of UKCM,
between UKCM and the Scheme Shareholders, under Part VIII of the
Companies Law of Guernsey, full details of which will be set out in
the Scheme Document to be published by UKCM in due course. However,
BBOX reserves the right, with the consent of the Panel and UKCM or,
in certain circumstances, without the consent of UKCM, to implement
the Combination by way of a Takeover Offer. The procedure for the
Scheme involves, among other things, an application by UKCM to the
Court to sanction the Scheme, in consideration for which Scheme
Shareholders who are on the register of members at the Scheme
Record Time will receive the New BBOX Shares on the basis of the
Exchange Ratio. The purpose of the Scheme is to provide for BBOX to
become the holder of the entire issued ordinary share capital of
UKCM.
The Combination will be subject to the
Conditions and certain further terms set out in Appendix 1 to this
Announcement and to the full terms and conditions which will be set
out in the Scheme Document, including the approval of the Scheme by
the Scheme Shareholders, the sanction of the Scheme by the Court
and the approval of BBOX Shareholders.
To become Effective, the Scheme must be
approved by a majority in number representing 75 per cent. or more
in value of votes cast by the Scheme Shareholders (or the relevant
class thereof, if applicable) who are on the register of members of
UKCM at the Scheme Voting Time and who are present and whether in
person or by proxy, at the Court Meeting. In addition, a special
resolution relating to the Combination must be passed at the UKCM
General Meeting, which requires the approval of UKCM Shareholders
representing at least 75 per cent. of the votes cast at the UKCM
General Meeting (either in person or by proxy). The UKCM General
Meeting will be held immediately after the Court
Meeting.
The UKCM Meetings are to be held no later than
the 22nd day after the expected date of the UKCM Meetings to be set
out in the Scheme Document in due course (or such later date, if
any, as BBOX may determine with the agreement of UKCM or with the
consent of the Panel and (if required) that the Court may
allow).
Following the UKCM Meetings, the Scheme must be
sanctioned by the Court no later than the 22nd day after the
expected date of the Scheme Court Hearing to be set out in the
Scheme Document in due course (or such later date, if any, as BBOX
may determine with the agreement of UKCM or with the consent of the
Panel and approval of the Court, if such approval is required). If
the Court sanctions the Scheme, the Scheme will become Effective
upon the Court granting the Scheme Court Order.
The Scheme is expected to become effective in
May 2024, subject to the satisfaction or waiver of the Conditions
and certain further terms set out in Appendix 1 to this
Announcement and the full terms and conditions which will be set
out in the Scheme Document.
Upon the Scheme becoming Effective, it will be
binding on all UKCM Shareholders, irrespective of whether or not
they attended or voted at the UKCM Meetings and share certificates
in respect of UKCM Shares will cease to be valid and entitlements
to UKCM Shares held within the CREST system will be
cancelled.
The Scheme Document will include full details
of the Scheme, together with notices of the Court Meeting and the
UKCM General Meeting and the expected timetable, and will specify
the action to be taken by Scheme Shareholders. It is expected that
the Scheme Document, together with the Forms of Proxy, will be
published as soon as practicable and in any event within 28 days of
the date of this Announcement (or such later date as may be agreed
by BBOX and UKCM with the consent of the Panel).
The Scheme will be governed by Guernsey law
and will be subject to the jurisdiction of the Court. The Scheme
will be subject to, among other things, the applicable requirements
of the Takeover Code, the Panel, the London Stock Exchange, the
Companies Law of Guernsey and the FCA.
BBOX has reserved the right to elect, subject
to the consent of the Panel, for the Combination to be implemented
by way of a Takeover Offer. If the Combination is effected by way
of a Takeover Offer and such Takeover Offer becomes or is declared
unconditional in all respects and sufficient acceptances are
received, BBOX intends to: (i) request the London Stock Exchange
and the FCA cancel trading in UKCM Shares on the London Stock
Exchange's Main Market for listed securities and the listing of the
UKCM Shares from the Official List; and (ii) exercise its rights to
apply the provisions of section 337 of the Companies Law of
Guernsey to acquire compulsorily the remaining UKCM Shares in
respect of which the Takeover Offer has not been
accepted.
15.
BBOX Shareholder
Approval
The Combination constitutes a Class 1
transaction for BBOX for the purposes of the Listing Rules.
Accordingly, BBOX will be required to seek the approval of the BBOX
Shareholders for the Combination at the BBOX General Meeting. The
Combination is conditional on, among other things, the BBOX
Resolutions being passed by the requisite majority of BBOX
Shareholders at the BBOX General Meeting (but not, for the
avoidance of doubt, any other resolutions to be proposed at the
BBOX General Meeting which shall not be conditions to the
Combination).
Pursuant to the Listing Rules, BBOX is required
to produce a circular in connection with the Combination to be sent
to BBOX Shareholders containing, amongst other things, (i) the
background to and reasons for the Combination and (ii) a notice
convening the BBOX General Meeting at which, amongst other things,
the BBOX Resolution will be proposed for the approval by BBOX
Shareholders. BBOX is also required to prepare a prospectus in
connection with the Admission of the New BBOX Shares. It is
expected that the circular and prospectus will be a combined
circular and prospectus (the "Combined Circular and Prospectus") and
published and made available to BBOX Shareholders at or around the
same time as the Scheme Document is published and posted to UKCM
Shareholders.
16.
Admission of New BBOX
Shares
Applications will be made to the FCA and the
London Stock Exchange for the New BBOX Shares to be admitted to the
Official List and to trading on the London Stock Exchange's Main
Market for listed securities respectively. It is expected that
Admission will become effective and that dealings for normal
settlement in the New BBOX Shares will commence on the London Stock
Exchange at 8.00 a.m. on the first Business Day following the
Effective Date.
The New BBOX Shares will be issued credited as
fully paid-up and will rank pari
passu in all respects with the BBOX Shares in issue at that
time, including the right to receive and retain dividends and other
distributions (if any) announced, declared, made or paid by
reference to a record date on or after the Effective Date (save,
for the avoidance of doubt, any BBOX Quarterly Permitted Dividends
and any BBOX Equalising Dividend), and will be capable of being
held in both certificated and uncertificated form.
Fractions of New BBOX Shares will not be
allotted or issued pursuant to the Combination and entitlements of
Scheme Shareholders will be rounded down to the nearest whole
number of New BBOX Shares. All fractional entitlements to New BBOX
Shares will be aggregated and sold in the market as soon as
practicable after the Effective Date. The net proceeds of such sale
(after deduction of all expenses and commissions incurred in
connection with the sale) will be distributed by BBOX in due
proportions to Scheme Shareholders who would otherwise have been
entitled to such fractions provided that individual entitlements to
amounts of less than £5 will not be paid to Scheme Shareholders but
will be retained for the benefit of the Combined Group.
17.
Delisting
It is intended that dealings in UKCM Shares
should be suspended shortly prior to the Effective Date, at a time
to be set out in the Scheme Document. It is further intended that
an application will be made to the London Stock Exchange for the
cancellation of the trading of the UKCM Shares on the Main Market
and the FCA will be requested to cancel the listing of UKCM Shares
on the Official List to take effect on or shortly after the
Effective Date. The last day of dealings in UKCM Shares on the Main
Market is expected to be the Business Day immediately prior to the
Effective Date and no transfers will be registered after 6.00 p.m.
on that date.
On the Effective Date, UKCM will become a
wholly-owned subsidiary of BBOX and share certificates in respect
of the UKCM Shares will cease to be valid and should be
destroyed.
In addition, entitlements held within the CREST
system to the UKCM Shares will be cancelled.
18. Disclosure of Interests in
UKCM
As at the close of business on 20
March 2024, (being the last Business Day prior to the release of
this Announcement), the following interests in relevant securities
of UKCM were held by or on behalf of the following persons or
entities who are deemed to be acting in concert with BBOX for the
purposes of the Combination:
(a)
64,440 UKCM Shares in aggregate are held by or on behalf of Richard
Laing (Non-Executive Director of BBOX), his close relatives and
related trusts;
(b)
52,488 UKCM Shares in aggregate are held by or on behalf of Phil
Redding (a member of the BBOX Manager), his close relatives and
related trusts;
(c) 5,377,474 UKCM Shares in aggregate are held by or on behalf
of abrdn plc and its affiliates; and
(d)
As at the close of business on 20 March 2024, (being the last
Business Day prior to the release of this Announcement), save for
the irrevocable undertakings referred to in paragraph
12 above and as set out above in this paragraph
18, neither BBOX, nor any of the
BBOX Directors, nor, so far as BBOX is aware, any person acting in
concert (within the meaning of the Takeover Code) with BBOX
has:
(i) any interest in or
right to subscribe for any relevant securities of UKCM;
(ii)
any short positions in respect of relevant UKCM Shares (whether
conditional or absolute and whether in the money or otherwise),
including 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;
(iii)
borrowed or lent any relevant UKCM Shares (including, for these
purposes, any financial collateral arrangements of the kind
referred to in Note 3 on Rule 4.6 of the Takeover Code), save for
any borrowed shares which had been either on-lent or sold;
or
(iv) any
dealing arrangement of the kind referred to in Note 11(a) on the
definition of acting in concert in the Takeover Code in relation to
UKCM Shares or in relation to securities convertible or
exchangeable into UKCM Shares.
For these purposes:
"interests in
securities" arise, in summary, when a person has a long
economic exposure, whether absolute or conditional, to changes in
the price of securities (and a person who only has a short position
in securities is not treated as interested in those securities). In
particular, a person will be treated as having an 'interest' by
virtue of the ownership, voting rights or control of securities, or
by virtue of any agreement to purchase, option in respect of, or
derivative referenced to, securities; and
"relevant
securities of UKCM" are UKCM Shares or securities
convertible or exchangeable into UKCM Shares.
19.
Consents
Each of Jefferies, Akur, J.P. Morgan Cazenove,
Rothschild & Co and Deutsche Numis has given and not withdrawn
their consent to the publication of this Announcement with the
inclusion herein of the references to their name (and, in the case
of Jefferies, its report) in the form and context in which they
appear.
Each of Jefferies and BDO has given and not
withdrawn its consent to the inclusion in this Announcement of its
report on the Quantified Financial Benefits Statement in the form
and context in which it is included.
Each of CBRE and Colliers has given and not
withdrawn its consent to the publication of its property valuation
report(s) in this Announcement with the inclusion herein to the
references to its name and, where applicable, report in the form
and context in which it is included.
20.
Documents Available for
Inspection
Copies of the following documents
will, by no later than 12 noon on 22 March 2024, be published on
BBOX's website at https://www.tritaxbigbox.co.uk/investors/shareholder-information/possible-all-share-offer-for-ukcm/
and on UKCM's website at https://www.ukcpreit.com/en-gb/merger/access:
(a) this
Announcement;
(b) the
irrevocable undertakings and letters of intent listed in Appendix 3
to this Announcement;
(c) the
Confidentiality Agreement;
(d) the
Supplemental Confidentiality Agreement;
(e) the UKCM IMA
Termination Agreement;
(f) the
consent letters from each of Jefferies, Akur, J.P. Morgan Cazenove,
Rothschild & Co, Deutsche Numis, BDO, CBRE and Colliers
referred to in paragraph 19 above;
(g) the BDO and
Jefferies reports in respect of the Quantified Financial Benefits
Statement set out in Parts B and C of
Appendix 4 of this Announcement;
(h) the property
valuation reports from each of CBRE and Colliers as set out in
Appendix 5 of this Announcement; and
(i) the no
material difference letters from each of CBRE and
Colliers.
21.
General
The bases and sources for certain financial
information contained in this Announcement are set out in Appendix
2 to this Announcement. A summary of the irrevocable undertakings
and the letter of intent given in relation to the Combination is
set out in Appendix 3 to this Announcement. The details of and
bases of calculation of the anticipated quantified financial
benefits of the Combination together with the various reports
pursuant to Rule 28 of the Takeover Code are set out in Appendix 4
to this Announcement. Property valuation reports for UKCM and BBOX
are set out in Appendix 5 to this Announcement pursuant to Rule 29
of the Takeover Code. Certain terms used in this Announcement are
defined in Appendix 6 to this Announcement.
In the event that either UKCM's or BBOX's
property portfolio was to be sold at the valuations contained in
the property valuation reports set out in Appendix 5 to this
Announcement, any gains realised on such disposals may be subject
to taxation in the UK or, in respect of the assets located in the
UK and/or (in the case of UKCM) Guernsey. Generally, disposals by a
UK REIT of assets located in the UK held for the purpose of a
property rental business should be exempt from UK corporation tax;
however, there are specific rules which can result in assets held
as part of the property rental business being subject to tax on
disposal (for example when a property is materially developed and
sold within three years of completion of that
development).
For the purposes of Rule 28 of the Takeover
Code, the Quantified Financial Benefits Statement contained in this
Announcement is the responsibility of BBOX and the BBOX Directors.
Part A of Appendix 4 to this Announcement sets out the Quantified
Financial Benefits Statement relating to cost savings and synergies
arising out of the Combination and provides underlying information
and bases of belief. Parts B and C of Appendix 4 include reports
from BBOX's reporting accountant, BDO, and its lead financial
adviser, Jefferies, in connection with the anticipated Quantified
Financial Benefits Statement, as required pursuant to Rule 28.1(a)
of the Takeover Code, and provides underlying information and bases
for the reporting accountant's and lead financial adviser's
respective reports. Each of BDO and Jefferies has given and not
withdrawn its consent to the inclusion of its report in this
Announcement in the form and context in which it is
included.
For the purposes of Rule 29.5 of the Takeover
Code, the UKCM Board confirms that CBRE has confirmed to it that an
updated valuation of UKCM's property portfolio as at the date of
this Announcement would not be materially different from the
valuation given by CBRE as at 31 December 2023 and contained in the
CBRE property valuation report set out in Part A of Appendix 5 to
this Announcement.
For the purposes of Rule 29.5 of the Takeover
Code, the BBOX Board confirms that CBRE has confirmed to it that an
updated valuation as at the date of this Announcement, of that part
of BBOX's property portfolio valued by CBRE would not be materially
different from the valuation given by CBRE as at 31 December 2023
and contained in the CBRE property valuation report set out
in Part B of Appendix 5 to
this Announcement.
For the purposes of Rule 29.5 of the Takeover
Code, the BBOX Board confirms that Colliers has confirmed to it
that an updated valuation as at the date of this Announcement, of
that part of BBOX's property portfolio valued by Colliers would not
be materially different from the valuation given by Colliers as at
31 December 2023 and contained in the Colliers property valuation
report set out in Part C of Appendix
5 to this Announcement.
BBOX reserves the right, with the consent of
the Panel and UKCM or, in certain circumstances, without the
consent of UKCM, to implement the Combination by way of a Takeover
Offer for the entire issued and to be issued ordinary share capital
of UKCM not already held by BBOX as an alternative to the Scheme.
In such an event a Takeover Offer will be implemented on the same
terms (subject to appropriate amendments), so far as applicable, as
those which would apply to the Scheme and subject to the amendments
referred to in Part C of Appendix 1 to this
Announcement.
Further Information
This Announcement is for
information purposes only and is not intended to and does not
constitute or form part of an offer, invitation or the solicitation
of an offer or invitation to purchase, or otherwise acquire,
subscribe for, sell or otherwise dispose of any securities or the
solicitation of any vote or approval in any jurisdiction pursuant
to the Combination or otherwise nor shall there be any purchase,
sale, issuance, exchange or transfer of securities of BBOX or UKCM
or such solicitation pursuant to the Combination in any
jurisdiction in which such offer, invitation, solicitation,
purchase, sale, issuance, exchange or transfer is unlawful. The
Combination will be implemented solely pursuant to the terms of the
Scheme Document (or, in the event that the Combination is to be
implemented by means of a Takeover Offer,
the Offer Document), which together with the Forms of Proxy (or
form of acceptance, if applicable), will contain the full terms and
conditions of the Combination, including details of how to vote in
respect of the Combination. Any decision in respect of, or other
response to, the Combination should be made on the basis of the
information contained in the Scheme Document and the Combined
Circular and Prospectus.
BBOX will prepare the Combined
Circular and Prospectus to be distributed to BBOX Shareholders,
containing information on the New BBOX Shares and the Combined
Group. UKCM and BBOX urge UKCM Shareholders to read the Scheme
Document and the Combined Circular and Prospectus carefully when
they become available because they will contain important
information in relation to the Combination, the New BBOX Shares and
the Combined Group. Any vote in respect of resolutions to be
proposed at the UKCM Meetings or the BBOX General Meeting to
approve the Combination, the Scheme or related matters, should be
made only on the basis of the information contained in the Scheme
Document and the Combined Circular and Prospectus (in the case of
UKCM Shareholders) and the Combined Circular and Prospectus (in the
case of BBOX Shareholders).This Announcement does not constitute a
prospectus or prospectus equivalent document or an exempted
document.
The statements contained in this Announcement
are made as at the date of this Announcement, unless some other
time is specified in relation to them, and publication of this
Announcement shall not give rise to any implication that there has
been no change in the facts set forth in this Announcement since
such date.
Neither the GFSC nor
the States of Guernsey take any responsibility for the financial
soundness of UKCM or for the correctness of any of the statements
made or opinions expressed with regard to it.
Information
Relating to UKCM Shareholders
Please be aware that addresses, electronic
addresses and certain other information provided by UKCM
Shareholders, persons with information rights and other relevant
persons for the receipt of communications from UKCM may be provided
to BBOX during the Offer Period as required under Section 4 of
Appendix 4 of the Takeover Code.
Overseas
Jurisdictions
The release, publication or distribution of
this Announcement in, into or from jurisdictions other than the
United Kingdom or Guernsey may be restricted by law and/or
regulation and therefore any persons who are subject to the laws of
any jurisdiction other than the United Kingdom or Guernsey should
inform themselves about and observe any applicable legal or
regulatory requirements. In particular, the ability of persons who
are not resident in the United Kingdom or Guernsey to vote their
UKCM Shares with respect to the Scheme at the Court Meeting, or to
execute and deliver Forms of Proxy appointing another person to
vote at the Court Meeting on their behalf, may be affected by the
laws of the relevant jurisdictions in which they are located. Any
failure to comply with the applicable restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law the companies and
persons involved in the Combination disclaim any responsibility or
liability for the violation of such restrictions by any person.
This Announcement has been prepared for the purpose of complying
with English law, Guernsey law and the Takeover Code and the
information disclosed may not be the same as that which would have
been disclosed if this Announcement had been prepared in accordance
with the laws of jurisdictions outside the United Kingdom or
Guernsey.
Unless otherwise determined by BBOX or required
by the Takeover Code, and permitted by applicable law and
regulation, the New BBOX Shares to be issued pursuant to the
Combination to UKCM Shareholders will not be made available,
directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no
person may vote in favour of the Combination by any such use,
means, instrumentality or form within a Restricted Jurisdiction or
any other jurisdiction if to do so would constitute a violation of
the laws of that jurisdiction. Accordingly, copies of this
Announcement and any formal documentation relating to the
Combination are not being, and must not be, directly or indirectly,
mailed or otherwise forwarded, distributed or sent in, into or from
any Restricted Jurisdiction or any other jurisdiction where to do
so would constitute a violation of the laws of that jurisdiction,
and persons receiving such documents (including custodians,
nominees and trustees) must not mail or otherwise forward,
distribute or send such documents in, into or from any Restricted
Jurisdiction. Doing so may render invalid any related purported
vote in respect of the Combination. If the Combination is
implemented by way of a Takeover Offer (unless otherwise permitted
by applicable law and regulation), the Takeover Offer may not be
made directly or indirectly, in or into, or by the use of mails or
any means or instrumentality (including, but not limited to,
facsimile, e-mail or other electronic transmission or telephone) of
interstate or foreign commerce of, or of any facility of a
national, state or other securities exchange of, any Restricted
Jurisdiction and the Takeover Offer may not be capable of
acceptance by any such use, means, instrumentality or facilities or
from within any Restricted Jurisdiction.
The availability of New BBOX Shares pursuant to
the Combination to UKCM Shareholders who are not resident in the
United Kingdom or Guernsey, or the ability of those persons to hold
such shares may be affected by the laws or regulatory requirements
of the relevant jurisdictions in which they are resident. Persons
who are not resident in the United Kingdom or Guernsey should
inform themselves of, and observe, any applicable legal or
regulatory requirements. UKCM Shareholders who are in doubt about
such matters should consult an appropriate independent professional
adviser in the relevant jurisdiction without delay.
Further details in relation to UKCM
Shareholders in overseas jurisdictions will be contained in the
Scheme Document.
Additional
Information for US Investors
The Combination relates to the shares of a
Guernsey company with a listing on the London Stock Exchange and is
proposed to be implemented pursuant to a scheme of arrangement
provided for under Guernsey company law. A transaction effected by
means of a scheme of arrangement is not subject to the proxy
solicitation or tender offer rules under the US Exchange Act.
Accordingly, the Combination is subject to the procedural and
disclosure requirements, rules and practices applicable in the
United Kingdom or Guernsey involving a target company incorporated
in Guernsey and listed on the London Stock Exchange, which differ
from the requirements of US proxy solicitation or tender offer
rules. Financial information included in this Announcement and the
Scheme Document has been or will be prepared in accordance with UK
IFRS or EU IFRS and thus may not be comparable to financial
information of US companies or companies whose financial statements
are prepared in accordance with generally accepted accounting
principles in the United States. Generally accepted accounting
principles in the United States differ in certain significant
respects from UK IFRS and EU IFRS.
If in the future BBOX elects, with the consent
of the Panel, to implement the Combination by means of a Takeover
Offer and determines to extend such Takeover Offer into the United
States, such Takeover Offer will be made in compliance with all
applicable laws and regulations, including, without limitation, to
the extent applicable, Section 14(e) of the US Exchange Act and
Regulation 14E thereunder, and subject, in the case of
participation by UKCM Shareholders resident in the United States,
to the availability of an exemption (if any) from the registration
requirements of the US Securities Act and of the securities laws of
any state or other jurisdiction of the United States. Such Takeover
Offer would be made by BBOX and no one else. In addition to any
such Takeover Offer, BBOX, certain affiliated companies and the
nominees or brokers (acting as agents) may make certain purchases
of, or arrangements to purchase, shares in UKCM outside such
Takeover Offer during the period in which such Takeover Offer would
remain open for acceptance. If such purchases or arrangements to
purchase were to be made, they would be made outside the United
States and would comply with applicable law, including the US
Exchange Act. Any information about such purchases will be
disclosed as required in the United Kingdom and Guernsey, will be
reported to a Regulatory Information Service of the FCA and will be
available on the London Stock Exchange website:
www.londonstockexchange.com.
The New BBOX Shares have not been and will not
be registered under the US Securities Act or under the securities
laws of any state or other jurisdiction of the United States.
Accordingly, the New BBOX Shares may not be offered, sold, resold,
delivered, distributed or otherwise transferred, directly or
indirectly, in or into or from the United States absent
registration under the US Securities Act or an exemption therefrom
and in compliance with the securities laws of any state or other
jurisdiction of the United States. The New BBOX Shares are expected
to be issued in reliance upon the exemption from the registration
requirements of the US Securities Act provided by section 3(a)(10)
thereof.
None of the securities referred to in this
Announcement have been approved or disapproved by the SEC, any
state securities commission in the United States or any other US
regulatory authority, nor have such authorities passed upon or
determined the fairness or merits of such securities or the
Combination or upon the adequacy or accuracy of the information
contained in this Announcement. Any representation to the contrary
is a criminal offence in the United States.
It may be difficult for US holders of UKCM
Shares to enforce their rights and claims arising out of the US
federal securities laws, since BBOX and UKCM are organised in
countries other than the United States, and some or all of their
officers and directors may be residents of, and some or all of
their assets may be located in, jurisdictions other than the United
States. US holders of UKCM Shares may have difficulty effecting
service of process within the United States upon those persons or
recovering against judgments of US courts, including judgments
based upon the civil liability provisions of the US federal
securities laws. US holders of UKCM Shares may not be able to sue a
non-US company or its officers or directors in a non-US court for
violations of US securities laws. Further, it may be difficult to
compel a non-US company and its affiliates to subject themselves to
a US court's judgment.
The receipt of New BBOX Shares pursuant to the
Combination by a US UKCM Shareholder may be a taxable transaction
for US federal income tax purposes, and may also be a taxable
transaction under applicable state and local tax laws, as well as
foreign and other tax laws. Each UKCM Shareholder is urged to
consult its independent professional adviser immediately regarding
the tax consequences of the Combination.
Important
Notices Relating to Financial Advisers
Jefferies International Limited ("Jefferies") and Akur Limited
("Akur") which are each
authorised and regulated by the FCA in the United Kingdom, are
acting exclusively for BBOX and no one else in connection with the
matters set out in this Announcement and will not be responsible to
anyone other than BBOX for providing the protections afforded to
clients of Jefferies or Akur nor for providing advice in relation
to any matter referred to in this Announcement. Neither Jefferies
nor Akur nor any of their affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Jefferies or Akur in connection with
this Announcement, any statement contained herein or
otherwise.
J.P. Morgan Securities PLC, which
conducts its UK investment banking business as J.P. Morgan Cazenove
("J.P. Morgan Cazenove"),
and which is authorised in the United Kingdom by the Prudential
Regulation Authority (the "PRA") and regulated by the PRA and the
FCA, is acting as financial adviser exclusively for BBOX and no one
else in connection with the Combination and will not regard any
other person as its client in relation to the Combination and will
not be responsible to anyone other than BBOX for providing the
protections afforded to clients of J.P. Morgan Cazenove or its
affiliates, nor for providing advice in relation to the Combination
or any other matter or arrangement referred to in this
Announcement.
N.M. Rothschild & Sons Limited
("Rothschild & Co"),
which is authorised and regulated by the FCA in the United Kingdom,
is acting exclusively as financial adviser to UKCM and for no one
else in connection with the matters described in this Announcement
and will not be responsible to anyone other than UKCM for providing
the protections afforded to clients of Rothschild & Co nor for
providing advice in connection with any matter of this referred to
herein. Neither Rothschild & Co nor any of its affiliates (nor
their respective directors, officers, employees or agents) owes or
accepts any duty, liability or responsibility whatsoever(whether
director or indirect, whether in contract, in tort, under statute
or otherwise) to any person who is not a client of Rothschild &
Co in connection with this Announcement, any statement contained
herein, the Combination or otherwise.
Numis Securities Limited (trading
for these purposes as Deutsche Numis) ("Deutsche Numis"), which is authorised
and regulated by the FCA in the United Kingdom, is acting
exclusively for UKCM and for no one else in connection with the
subject matter of this Announcement and will not be responsible to
anyone other than UKCM for providing the protections afforded to
its clients or for providing advice in connection with the subject
matter of this Announcement. Neither Deutsche Numis nor any of its
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct, indirect, consequential, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Deutsche Numis in connection with this
Announcement, any statement or other matter or arrangement referred
to herein or otherwise.
Cautionary
Note Regarding Forward Looking Statements
This Announcement (including information
incorporated by reference into this Announcement), oral statements
regarding the Combination and other information published by BBOX
and UKCM contain certain forward looking statements with respect to
the financial condition, strategies, objectives, results of
operations and businesses of BBOX and UKCM and their respective
groups and certain plans and objectives with respect to the
Combined Group. These forward looking statements can be identified
by the fact that they do not relate only to historical or current
facts. Forward looking statements are prospective in nature and are
not based on historical facts, but rather on current expectations
and projections of the management of BBOX and UKCM about future
events, and are therefore subject to risks and uncertainties which
could cause actual results to differ materially from the future
results expressed or implied by the forward looking statements. The
forward looking statements contained in this Announcement include
statements relating to the expected effects of the Combination on
BBOX and UKCM, the expected timing and scope of the Combination and
other statements other than historical facts. Forward looking
statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "goal", "believe", "hope",
"aims", "continue", "will", "may", "should", "would", "could", or
other words of similar meaning. These statements are based on
assumptions and assessments made by BBOX and/or UKCM in light of
their experience and their perception of historical trends, current
conditions, future developments and other factors they believe
appropriate. By their nature, forward looking statements involve
risk and uncertainty, because they relate to events and depend on
circumstances that are expected to occur in the future 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. Although it is believed that the
expectations reflected in such forward looking statements are
reasonable, no assurance can be given that such expectations will
prove to have been correct and readers are therefore cautioned not
to place undue reliance on these forward looking
statements.
There are several factors which could cause
actual results to differ materially from those expressed or implied
in forward looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward looking statements are changes in global, political,
economic, business and/or competitive conditions, market and
regulatory forces, future exchange and interest rates, changes in
tax rates and future business combinations or
dispositions.
Each forward looking statement speaks only as
at the date of this Announcement. Neither BBOX nor UKCM, nor their
respective groups assumes any obligation to update or correct the
information contained in this Announcement (whether as a result of
new information, future events or otherwise), except as required by
applicable law or by the rules of any competent regulatory
authority.
No Profit
Forecasts or Estimates
No statement in this Announcement (including
any statement of estimated synergies) is intended as a profit
forecast or estimate for any period and no statement in this
Announcement should be interpreted to mean that earnings or
earnings per share or dividend per share for BBOX, UKCM or the
Combined Group, as appropriate, for the current or future financial
periods would necessarily match or exceed the historical published
earnings or earnings per share or dividend per share for BBOX, UKCM
or the Combined Group as appropriate.
Quantified
Financial Benefits Statement
The statements in the Quantified Financial
Benefits Statement relate to future actions and circumstances
which, by their nature, involve risks, uncertainties and
contingencies. The synergies and cost savings referred to may not
be achieved, or may be achieved later or sooner than estimated, or
those achieved could be materially different from those estimated.
For the purposes of Rule 28 of the Takeover Code, the Quantified
Financial Benefits Statement contained in this Announcement is the
responsibility of BBOX and the BBOX Directors.
Dealing and
Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any
person who is interested in one per cent. or more of any class of
relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is
likely to be, solely in cash) must make an Opening Position
Disclosure following the commencement of the Offer Period and, if
later, following the announcement in which any securities exchange
offeror is first identified.
An Opening Position Disclosure must contain
details of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s). An
Opening Position Disclosure by a person to whom Rule 8.3(a) applies
must be made by no later than 3.30 p.m. (London time) on the 10th
Business Day (as defined in the Takeover Code) following the
commencement of the Offer Period and, if appropriate, by no later
than 3.30 p.m. (London time) on the 10th Business Day (as defined
in the Takeover Code) following the announcement in which any
securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a
securities exchange offeror prior to the deadline for making an
Opening Position Disclosure must instead make a Dealing
Disclosure.
Under Rule 8.3(b) of the Takeover Code, any
person who is, or becomes, interested in one per cent. or more of
any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or
of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s), save to the extent that these
details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by
no later than 3.30 p.m. (London time) on the Business Day (as
defined in the Takeover Code) following the date of the relevant
dealing. If two or more persons act together pursuant to an
agreement or understanding, whether formal or informal, to acquire
or control an interest in relevant securities of an offeree company
or a securities exchange offeror, they will be deemed to be a
single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made
by the offeree company and by any offeror and Dealing Disclosures
must also be made by the offeree company, by any offeror and by any
persons acting in concert with any of them (see Rules 8.1, 8.2 and
8.4). Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
Offer Period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44 20
7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing
Disclosure.
Rounding
Certain figures included in this
Announcement have been subjected to rounding adjustments.
Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in
certain tables may not be an arithmetic aggregation of the figures
that precede them.
Publication on
Website and Availability of Hard Copies
A copy of this Announcement and the
documents required to be published pursuant to Rules 26.1 and 26.2
of the Takeover Code will be available, subject to certain
restrictions relating to persons resident in Restricted
Jurisdictions, for inspection on BBOX's website at
https://www.tritaxbigbox.co.uk/investors/shareholder-information/possible-all-share-offer-for-ukcm/
and on UKCM's website at https://www.ukcpreit.com/en-gb/merger/access
by no later than 12 noon (London time) on the
Business Day following this Announcement. For the avoidance of
doubt, the contents of the websites referred to in
this Announcement are not incorporated into and do not form part of
this Announcement.
In accordance with Rule 30.3 of the Takeover
Code, UKCM Shareholders and persons with information rights may
request a hard copy of this Announcement by contacting UKCM's
registrars, Computershare Investor Services (Guernsey) Limited, c/o
13 Castle Street, St Helier, Jersey JE1 1ES or by calling
Computershare Investor Services (Guernsey) Limited on +0370 707
4040. Calls are charged at the standard geographical rate and will
vary by provider. Calls outside the United Kingdom will be charged
at the applicable international rate. Lines are open between 8.30
a.m. to 5.30 p.m. (London time), Monday to Friday (except public
holidays in England and Wales). Please note that Computershare
Investor Services (Guernsey) Limited cannot provide any financial,
legal or tax advice. Calls may be recorded and monitored for
security and training purposes. For persons who receive a copy of
this Announcement in electronic form or via a website notification,
a hard copy of this Announcement will not be sent unless so
requested. Such persons may also request that all future documents,
announcements and information to be sent to them in relation to the
Combination should be in hard copy form.
If you are in any doubt about the contents of
this Announcement or the action you should take, you are
recommended to seek your own independent financial advice
immediately from your stockbroker, bank manager, solicitor,
accountant or independent financial adviser duly authorised under
the Financial Services and Markets Act 2000 (as amended) if you are
resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser.
appendix 1
CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE
COMBINATION
Part A:
Conditions of the Combination
1.
Long Stop Date
The Combination will be conditional upon the
Scheme becoming unconditional and becoming Effective, subject to
the provisions of the Takeover Code, by no later than 11.59 p.m. on
the Long Stop Date.
2.
Scheme approval
The Scheme will be conditional upon:
(a)
(i) its
approval by a majority in number representing 75 per cent. or more
in value of votes cast by the Scheme Shareholders (or the relevant
class or classes thereof, if applicable) who are on the register of
members of UKCM at the Scheme Voting Record Time and who are
present and vote, whether in person or by proxy, at the Court
Meeting and at any separate class meeting which may be required by
the Court or, in each case, at any adjournment or postponement of
any such meeting; and
(ii) the Court
Meeting and any separate class meeting which may be required by the
Court, or any adjournment or postponement of any such meeting,
being held on or before the 22nd day after the expected date of the
Court Meeting to be set out in the Scheme Document (or such later
date, if any, as BBOX may determine with the agreement of UKCM or
with the consent of the Panel and (if required) that the Court may
allow);
(b)
(i) all
resolutions in connection with, or necessary to approve and
implement the Scheme, as set out in the notice of the UKCM General
Meeting, being duly passed by the requisite majority or majorities
of UKCM Shareholders at the UKCM General Meeting or at any
adjournment or postponement of that meeting; and
(ii) the UKCM
General Meeting (or any adjournment or postponement of that
meeting) being held on or before the 22nd day after the expected
date of the UKCM General Meeting to be set out in the Scheme
Document (or such later date, if any, as BBOX may determine with
the agreement of UKCM or with the consent of the Panel and (if
required) that the Court may allow); and
(c)
(i) the
sanction of the Scheme by the Court with or without modification
(but subject to any such modification being on terms acceptable to
BBOX and UKCM); and
(ii) the Scheme
Court Hearing being held on or before the 22nd day after the
expected date of the Scheme Court Hearing to be set out either (X)
in the Scheme Document (or such later date, if any, as BBOX may
determine with the agreement of UKCM or with the consent of the
Panel and (if required) that the Court may allow); or (Y) in the
event that such expected date remains unknown at the time of
publication of the Scheme Document and the Scheme Document
identifies any date as indicative only, in any update announcement
issued through a Regulatory Information Service pursuant to
paragraph 6(a) of Appendix 7 of the Takeover Code (or such later
date (if any) as may be agreed by BBOX and UKCM, with the consent
of the Panel and (if required) that the Court may
allow).
3.
General
conditions
In addition, subject to: (i) the terms of Part
B of this Appendix 1; and (ii) the requirements of the Panel, BBOX
and UKCM have agreed that the Combination will be conditional on
the following Conditions having been satisfied or, where
applicable, waived and accordingly the necessary actions to make
the Scheme Effective will not be taken unless the following
Conditions (as amended if appropriate) have been so satisfied or,
where relevant, waived prior to the Scheme being sanctioned by the
Court:
(a) BBOX Shareholder approval
The passing at the BBOX General Meeting (or at
any adjournment or postponement thereof) by the requisite majority
or majorities of BBOX Shareholders of such resolution or
resolutions as are necessary to approve, implement and effect the
Combination and the acquisition of any UKCM Shares including a
resolution or resolutions to authorise the allotment of New BBOX
Shares pursuant to the Combination and to approve the Combination
in accordance with Class 1 requirements under Listing Rule
10.5.1R(2) (as such resolutions shall be set out in the notice of
the BBOX General Meeting to be included in the Combined Circular
and Prospectus);
(b) Admission to listing
The FCA having acknowledged to BBOX or its
agent (and such acknowledgement not having been withdrawn) that the
application for the admission of the New BBOX Shares to the
Official List with a premium listing has been approved and (after
satisfaction of any conditions to which such approval is expressed
to be subject ("Listing
Conditions")) that admission will become effective as soon
as a dealing notice has been issued by the FCA and any Listing
Conditions having been satisfied;
(c) Admission to trading
The London Stock Exchange having acknowledged
to BBOX or its agent (and such acknowledgement not having been
withdrawn) that the New BBOX Shares will be admitted to trading on
the Main Market;
(d) Third Party clearances
Other
consents or clearances
(i) No
government or governmental, quasi-governmental, supranational,
statutory, regulatory, environmental or investigative body, court,
trade agency, association, institution or any other body or person
whatsoever in any relevant jurisdiction (each a "Third Party") having given notice of a
decision to take, institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference (and, in each
case, not having withdrawn the same), or having enacted, made or
proposed any statute, regulation, decision, order or change to
published practice or having taken any other steps (and, in each
case, not having withdrawn the same) and there not continuing to be
outstanding any statute, regulation, decision or order, which in
each case would or might reasonably be expected to:
(A) require,
prevent or materially delay the divestiture, or materially alter
the terms envisaged for any proposed divestiture by any member of
the Wider BBOX Group or by any member of the Wider UKCM Group of
all or any part of their respective businesses, assets or property,
or impose any limitation on the ability of any of them to conduct
their respective businesses (or any of them) or to own, control or
manage any of their respective assets or properties or any part
thereof which, in any such case, is material in the context of the
Wider BBOX Group or the Wider UKCM Group, in either case taken as a
whole or in the context of the Combination;
(B) require,
prevent or materially delay the divestiture by any member of the
Wider BBOX Group of any shares or other securities in any member of
the Wider UKCM Group;
(C) impose any
material limitation on, or result in a material delay in, the
ability of any member of the Wider BBOX Group directly or
indirectly to acquire or to hold or to exercise effectively any
rights of ownership in respect of shares or loans or securities
convertible into shares or any other securities (or the equivalent)
in any member of the Wider UKCM Group or the Wider BBOX Group or on
the ability of any member of the Wider UKCM Group or any member of
the Wider BBOX Group, directly or indirectly, to hold or to
exercise effectively all or any rights of ownership in respect of
shares or loans or securities convertible into shares or any other
securities (or the equivalent) in, or to exercise voting or
management control over, any such member;
(D) otherwise
adversely affect the business, assets, profits or prospects of any
member of the Wider BBOX Group or of any member of the Wider UKCM
Group to an extent which is material in the context of the Wider
BBOX Group or the Wider UKCM Group, in either case taken as a whole
or in the context of the Combination;
(E) make the
Combination or its implementation or the acquisition or proposed
acquisition by BBOX or any member of the Wider BBOX Group of any
shares or other securities in, or control of, UKCM void, illegal,
and/or unenforceable under the laws of any relevant jurisdiction,
or otherwise, directly or indirectly, restrain, restrict, prohibit,
materially delay or otherwise interfere with the implementation of
the same, or impose additional conditions or obligations with
respect thereto, or otherwise challenge or interfere with the
Combination, or require material amendment to the terms of the
Combination to an extent which is or could be material in the
context of the Combined Group taken as a whole or in the context of
the Combination;
(F) save as
envisaged in the implementation of the Combination or by Part XVIII
of the Companies Law of Guernsey, require any member of the Wider
BBOX Group or the Wider UKCM Group to acquire, or to offer to
acquire, any shares or other securities (or the equivalent) in, or
any interest in any of the assets owned by, any member of the Wider
UKCM Group or any member of the Wider BBOX Group owned by any third
party, or to sell, or to offer to sell, any shares or other
securities (or their equivalent) in, or any interest in any of the
assets owned by, any member of the Wider UKCM Group or the Wider
BBOX Group;
(G) impose any
limitation on the ability of any member of the Wider UKCM Group or
the Wider BBOX Group to integrate or co-ordinate its business, or
any part of it, with the businesses of any other member of the
Wider UKCM Group or the Wider BBOX Group which is adverse to and
material in the context of the Wider UKCM Group or the Wider BBOX
Group, in each case taken as a whole, or in the context of the
Combination; or
(H) result in any
member of the Wider UKCM Group or the Wider BBOX Group ceasing to
be able to carry on business under any name under which it
presently carries on business,
and all applicable waiting and other time
periods (including any extensions thereof) during which any such
Third Party could institute, implement or threaten any such action,
proceeding, suit, investigation, enquiry or reference or take any
other step under the laws of any relevant jurisdiction in respect
of the Combination or the acquisition or proposed acquisition of
any UKCM Shares having expired, lapsed or been
terminated;
(ii) All necessary notifications, filings or applications
which are deemed necessary by BBOX or any member of the Wider BBOX
Group having been made, all necessary waiting and other time
periods (including any extensions of such waiting and other time
periods) under any applicable legislation or regulation of any
relevant jurisdiction having expired, lapsed or been terminated (as
appropriate) and all statutory or regulatory obligations in any
relevant jurisdiction having been complied with, in each case in
connection with the Combination or the acquisition by any member of
the Wider BBOX Group of any shares or other securities (or the
equivalent) in, or control of, any member of the Wider UKCM Group;
and
(iii) All
authorisations, orders, recognitions, grants, determinations,
exemptions, consents, licences, confirmations, clearances,
permissions and approvals deemed necessary by BBOX in any relevant
jurisdiction or any member of the Wider BBOX Group for or in
respect of the Combination including, without limitation, its
implementation and financing or the proposed direct or indirect
acquisition of any shares or other securities (or the equivalent)
in, or control of, UKCM by any member of the Wider BBOX Group
having been obtained in terms and in a form reasonably satisfactory
to BBOX from all appropriate Third Parties or persons with whom any
member of the Wider UKCM Group has entered into contractual
arrangements and all such authorisations, orders, recognitions,
grants, determinations, exemptions, consents, licences,
confirmations, clearances, permissions and approvals deemed
necessary by BBOX to carry on the business of any member of the
Wider UKCM Group which, in each case is material in the context of
the Wider BBOX Group or the Wider UKCM Group as a whole or for or
in respect of the Combination including, without limitation, its
implementation or financing, remaining in full force and effect and
all filings necessary for such purpose having been made and there
being no notice or intimation of any intention to revoke or not to
renew any of the same at the time at which the Combination becomes
otherwise unconditional;
(e) Certain matters arising as a result of any
arrangement, agreement etc.
Save as Disclosed, there being no provision of
any agreement, arrangement, licence, permit or other instrument to
which any member of the Wider UKCM Group is a party or by or to
which any such member or any of its assets may be bound, entitled
or subject, or any circumstance which in consequence of the
Combination or the proposed acquisition of any shares or other
securities (or equivalent) in UKCM or because of a change in the
control or management of UKCM or otherwise, would or might
reasonably be expected to result in (in each case to an extent
which is material and adverse in the context of the Wider UKCM
Group as a whole, or in the context of the Combination):
(i) any
monies borrowed by, or any other indebtedness or liabilities
(actual or contingent) of, or grant available to any member of the
Wider UKCM Group, being or becoming repayable or capable of being
declared repayable immediately or earlier than their or its stated
maturity date or repayment date, or the ability of any such member
to borrow monies or incur any indebtedness being withdrawn or
inhibited, or being capable of becoming or being withdrawn or
inhibited;
(ii) any such
agreement, arrangement, licence, permit or instrument or the
rights, liabilities, obligations or interests of any member of the
Wider UKCM Group thereunder being terminated or adversely modified
or affected or any adverse obligation or liability arising or any
action being taken or arising thereunder;
(iii) any assets
or interests of any member of the Wider UKCM Group being or falling
to be disposed of or charged or ceasing to be available to any such
member of the Wider UKCM Group or any right arising under which any
such asset or interest could be required to be disposed of or
charged or could cease to be available to any member of the Wider
UKCM Group otherwise than in the ordinary course of
business;
(iv) the creation
(other than in the ordinary course of business) or enforcement of
any mortgage, charge or other security interest over the whole or
any part of the business, property, assets or interest of any
member of the Wider UKCM Group or any such mortgage, charge or
other security interest (whenever arising or having arisen)
becoming enforceable;
(v) the rights,
liabilities, obligations or interests of any member of the Wider
UKCM Group in, or the business of any such member with, any person,
firm, company or body (or any arrangement or arrangements relating
to any such interest or business) being terminated, adversely
modified or adversely affected (other than as directed, requested
and/or required by BBOX or any other member of the Wider BBOX
Group);
(vi) the value of any
member of the Wider UKCM Group or its financial or trading
position, prospects or profits being prejudiced or adversely
affected;
(vii) any such member
ceasing to be able to carry on business under any name under which
it presently does so; or
(viii) the creation or
acceleration of any liability, actual or contingent, by any member
of the Wider UKCM Group (including any material tax liability or
any obligation to obtain or acquire any material authorisation,
order, grant, recognition, determination, confirmation, consent,
licence, clearance, permission, exemption, approval, notice,
waiver, concession, agreement or exemption from any Third Party or
any person) other than trade creditors or other liabilities
incurred in the ordinary course of business or in connection with
the Combination,
and no event having occurred which, under any
provision of any agreement, arrangement, licence, permit or other
instrument to which any member of the Wider UKCM Group is a party
or by or to which any such member or any of its assets may be
bound, entitled or subject, would or might reasonably be expected
to result in any of the events or circumstances as are referred to
in sub-paragraphs (i) to (viii) of this Condition;
(f)
Certain events occurring since 31
December 2023
Save as Disclosed, no member of the Wider UKCM
Group having, since 31 December 2023:
(i) save as
between UKCM and wholly-owned subsidiaries and subsidiary
undertakings of UKCM or between such wholly-owned subsidiaries and
subsidiary undertakings of UKCM, issued or agreed to issue,
authorised or proposed the issue of securities convertible into
shares of any class (or the equivalent) or rights, warrants or
options to subscribe for, or acquire, any such shares or
convertible securities (or the equivalent);
(ii) save as
between UKCM and wholly-owned subsidiaries and subsidiary
undertakings of UKCM or between such wholly-owned subsidiaries and
subsidiary undertakings of UKCM and save for the UKCM Permitted
Dividends, recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus issue, dividend or other
distribution whether payable in cash or otherwise;
(iii) save for
intra-UKCM Group transactions, merged or demerged with any body
corporate or acquired or disposed of or transferred, mortgaged or
charged or created any security interest over any assets or any
right, title or interest in any asset (including shares and trade
investments) or authorised or proposed or announced any intention
to propose any merger, demerger, acquisition or disposal, transfer,
mortgage, charge or security interest, in each case, other than in
the ordinary course of business and, in each case, to the extent
which is material in the context of the Wider UKCM Group taken as a
whole or in the context of the Combination;
(iv) save for
intra-UKCM Group transactions, made, authorised, proposed or
announced an intention to make, propose or authorise any change in
its loan capital in each case, to the extent which is material in
the context of the Wider UKCM Group taken as a whole or in the
context of the Combination;
(v) issued,
authorised, proposed or announced its intention to issue, or made
any change in or to, any debentures or (save for intra-UKCM Group
transactions), save in the ordinary course of business, incurred or
increased any indebtedness or become subject to any guarantee or
actual or contingent liability;
(vi) purchased,
redeemed, repaid or announced any proposal to purchase, redeem or
repay any of its own shares or other securities (or the equivalent)
or reduced or, save in respect to the matters mentioned in
sub-paragraph (i) above, made any other change to any part of its
share capital in each case, to the extent which is material in the
context of the Wider UKCM Group taken as a whole or in the context
of the Combination;
(vii) save for
intra-UKCM Group transactions and other than pursuant to the
Combination, implemented, or authorised, proposed or announced its
intention to implement, any reconstruction, amalgamation, scheme,
commitment or other transaction or arrangement other than in the
ordinary course of business;
(viii) entered into, or
materially varied the terms of, or made an offer (which remains
open for acceptance) to materially vary the terms of any contract,
service agreement, letter of appointment or arrangement with any
director or senior personnel of any member of the Wider UKCM
Group;
(ix) entered into or
varied or authorised, proposed or announced its intention to enter
into or vary any contract, transaction or commitment (whether in
respect of capital expenditure or otherwise) which is of a long
term, onerous or unusual nature or magnitude or which is or could
reasonably be expected to be restrictive on the businesses of any
member of the Wider UKCM Group or the Wider BBOX Group or which
involves or could involve an obligation of such a nature or
magnitude other than in the ordinary course of business and which
is material or would be reasonably likely to be material in the
context of the Wider UKCM Group taken as a whole or in the context
of the Combination;
(x) (other than
in respect of a member which is dormant and was solvent at the
relevant time) taken any corporate action or steps or had any legal
proceedings started or threatened against it in relation to the
suspension of payments, a moratorium of any indebtedness its
winding up, dissolution or reorganisation or for the appointment of
a receiver, administrative receiver, administrator, manager,
trustee or similar officer of all or any part of its assets or
revenues or any analogous proceedings in any jurisdiction or
appointed any analogous person in any jurisdiction or had any such
person appointed in each case, to the extent which is material in
the context of the Wider UKCM Group taken as a whole or in the
context of the Combination;
(xi) been unable, or
admitted in writing that it is unable, to pay its debts or
commenced negotiations with one or more of its creditors with a
view to rescheduling or restructuring any of its indebtedness, or
having stopped or suspended (or threatened to stop or suspend)
payment of its debts generally or ceased or threatened to cease
carrying on all or a substantial part of its business;
(xii) waived or
compromised any claim otherwise than in the ordinary course of
business and in any case which is material or would be reasonably
likely to be material in the context of the Wider UKCM Group taken
as a whole or in the context of the Combination;
(xiii) entered into any
contract, commitment, arrangement or agreement other than in the
ordinary course of business or passed any resolution or made any
offer (which remains open for acceptance) with respect to or
announced any intention to, or to propose to, effect any of the
transactions, matters or events referred to in this
Condition;
(xiv) undertaken:
(A) a conversion
under Part V of the Companies Law of Guernsey;
(B) an
amalgamation under Part VI of the Companies Law of
Guernsey;
(C) a migration
under Part VII of the Companies Law of Guernsey; or
(D) an arrangement
or reconstruction (other than the Scheme) under Part VIII of the
Companies Law of Guernsey;
(xv) having made any material
alteration to its articles of incorporation or other incorporation
documents (in each case, other than as required in connection with
the Combination or the Scheme);
(xvi) put in place any
pension schemes for any director of any member of the Wider UKCM
Group or their dependants;
(xvii) proposed or agreed to
provide any share option incentive scheme or other benefit relating
to the employment or termination of employment of any director of
any member of the Wider UKCM Group;
(xviii) entered into, implemented or
authorised the entry into, any joint venture, asset or profit
sharing arrangement, partnership or merger of business or corporate
entities; or
(xix) except with the consent
of BBOX, having taken (or agreed or proposed to take) any action
which requires, or would require, the consent of the Panel or the
approval of UKCM Shareholders in general meeting in accordance
with, or as contemplated by, Rule 21.1 of the Takeover
Code;
(g) No adverse change, litigation or regulatory
enquiry
Save as Disclosed, since 31 December
2023:
(i) no
adverse change or deterioration having occurred in the business,
assets, financial or trading position or profits or prospects or
operational performance of any member of the Wider UKCM Group or
the Wider BBOX Group which, in any such case, is material in the
context of the Wider UKCM Group or the Wider BBOX Group taken as a
whole or in the context of the Combination and no circumstances
have arisen which would or might reasonably be expected to result
in any such adverse change;
(ii) no
litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the Wider UKCM Group or the
Wider BBOX Group is or may become a party (whether as a plaintiff,
defendant or otherwise) and no enquiry, review or investigation by,
or complaint or reference to, any Third Party or other
investigative body against or in respect of any member of the Wider
UKCM Group or the Wider BBOX Group having been instituted,
announced, implemented or threatened by or against or remaining
outstanding in respect of any member of the Wider UKCM Group or the
Wider BBOX Group which in any such case, has had or might
reasonably be expected to have an adverse effect to an extent which
is material in the context of the Wider UKCM Group or the Wider
BBOX Group taken as a whole or in the context of the
Combination;
(iii) no member
of the Wider UKCM Group nor any member of the Wider BBOX Group
having conducted its business in breach of any applicable laws and
regulations and which is material in the context of the Wider UKCM
Group or the Wider BBOX Group taken as a whole or in the context of
the Combination; and
(iv) no contingent or
other liability having arisen or become apparent to BBOX or UKCM
(other than in the ordinary course of business) which will or might
be reasonably likely to adversely affect the business, assets,
financial or trading position or profits or prospects or
operational performance of any member of the Wider UKCM Group or
the Wider BBOX Group to an extent which is material in the context
of the Wider UKCM Group or the Wider BBOX Group taken as a whole or
in the context of the Combination;
(h) No withdrawal, cancellation, termination or
modification of licence
No steps having been taken which are likely to
result in the withdrawal, cancellation, termination or modification
of any licence or permit held by any member of the Wider UKCM Group
which is necessary for the proper carrying on of its business and
the withdrawal, cancellation, termination or modification of which
has had, or would be reasonably expected to have, an adverse effect
which is material in the context of the Wider UKCM Group taken as a
whole or in the context of the Combination;
(i)
No discovery of certain matters
regarding information, liabilities and environmental
issues
(i) Save as
Disclosed, BBOX not having discovered:
(A) that any
financial, business or other information concerning the Wider UKCM
Group publicly disclosed at any time by or on behalf of any member
of the Wider UKCM Group before or on the date of this Announcement
is materially misleading, contains a material misrepresentation of
fact or omits to state a fact necessary to make that information
not misleading, in each case, to the extent which is material in
the context of the Wider UKCM Group taken as a whole or in the
context of the Combination;
(B) that any
member of the Wider UKCM Group is subject to any liability
(contingent or otherwise), in each case, to the extent which is
material in the context of the Wider UKCM Group taken as a whole or
in the context of the Combination; or
(C) any
information which affects the import of any information disclosed
at any time by or on behalf of any member of the Wider UKCM Group
and which is material in the context of the Wider UKCM Group taken
as a whole or in the context of the Combination;
(ii) Save as
Disclosed, BBOX not having discovered:
(A) that any past
or present member of the Wider UKCM Group has failed to comply with
any and/or all applicable legislation or regulation of any
jurisdiction with regard to the use, treatment, handling, storage,
carriage, release, disposal, discharge, spillage, leak or emission
of any waste or hazardous substance or any substance likely to
impair the environment or harm human health or animal health, or
otherwise relating to environmental matters or the health and
safety of any person, or that there has otherwise been any such
use, treatment, handling, storage, transport, release, disposal,
discharge, spillage, leak or emission (whether or not this
constituted a non‑compliance by any person with any such
legislation or regulations and wherever the same may have taken
place) which non-compliance or use, treatment, handling, storage,
transport, release, disposal, discharge, spillage, leak or
emission, in any case, would be reasonably likely to give rise to
any liability (whether actual or contingent) or cost on the part of
any member of the Wider UKCM Group and which is material in the
context of the Wider UKCM Group taken as a whole or in the context
of the Combination; or
(B) that there is,
or is reasonably likely to be, for any reason whatsoever, any
liability, whether actual or contingent, of any past or present
member of the Wider UKCM Group to make good, remediate, repair,
reinstate or clean up any property or any controlled waters now or
previously owned, occupied, operated or made use of or controlled
by any such past or present member of the Wider UKCM Group or (or
on its behalf) or by any person for which a member of the Wider
UKCM Group is or has been responsible, or in which any such member
may have or previously have had or be deemed to have had an
interest, under any environmental legislation, regulation, notice,
circular, order or other lawful requirement of any relevant
authority or Third Party or otherwise which is in each case
material in the context of the Wider UKCM Group taken as a whole or
in the context of the Combination;
(j)
Anti-corruption, sanctions and
criminal property
Except as Disclosed, BBOX not having discovered
that:
(i) any
past or present member, director, officer or employee of the Wider
UKCM Group is or has at any time engaged in any activity, practice
or conduct which would constitute an offence under the Bribery Act
2010, the US Foreign Corrupt Practices Act of 1977, the Prevention
of Corruption (Bailiwick of Guernsey) Law, 2003 or any other
anti-corruption or anti-bribery law, rule or regulation applicable
to the Wider UKCM Group or any other law, rule, or regulation
concerning improper payments or kickbacks applicable to the Wider
UKCM Group; or (b) any person that performs or has performed
services for or on behalf of the Wider UKCM Group is or has at any
time engaged in any activity, practice or conduct in connection
with the performance of such services which would constitute an
offence under the Bribery Act 2010, the US Foreign Corrupt
Practices Act of 1977, the Prevention of Corruption (Bailiwick of
Guernsey) Law, 2003 or any other anti-corruption legislation or
anti-bribery law, rule or regulation or any other law, rule, or
regulation concerning improper payments or kickbacks that is, in
each case, applicable to the Wider UKCM Group; or
(ii) any asset of
any member of the Wider UKCM Group constitutes criminal property as
defined by section 340(3) of the Proceeds of Crime Act 2002 (but
disregarding paragraph (b) of that definition) or proceeds of crime
under any other applicable law, rule, or regulation concerning
money laundering or proceeds of crime or any member of the UKCM
Group is found to have engaged in activities constituting money
laundering under any applicable law, rule, or regulation concerning
money laundering; or
(iii) any past or
present member, director, officer or employee of the UKCM Group ,
or any other person for whom any such person may be liable or
responsible; or
(iv) is or has engaged in any
conduct which would violate applicable economic sanctions or dealt
with, made any investments in, made any funds or assets available
to or received any funds or assets from: (a) any government, entity
or individual in respect of which US, UK or European Union persons,
or persons operating in those territories, are prohibited from
engaging in activities or doing business, or from receiving or
making available funds or economic resources, by US, UK or European
Union laws or regulations, including the economic sanctions
administered by the United States Office of Foreign Assets Control,
or HMRC; or (b) any government, entity or individual targeted by
any of the economic sanctions of the United Nations, the United
States, the United Kingdom, the European Union or any of its member
states, save that this shall not apply if and to the extent that it
is or would be unenforceable by breach of any applicable Blocking
Law; or
(v) any past or
present member, director, officer or employee of the Wider UKCM
Group or any other person for whom any such person may be liable or
responsible:
(A) has engaged in
conduct which would violate any relevant anti-terrorism laws,
rules, or regulations, including but not limited to the U.S.
Anti-Terrorism Act;
(B) has engaged in
conduct which would violate any relevant anti-boycott law, rule, or
regulation or any applicable export controls, including but not
limited to the Export Administration Regulations administered and
enforced by the U.S. Department of Commerce or the International
Traffic in Arms Regulations administered and enforced by the U.S.
Department of State;
(C) has engaged in
conduct which would violate any relevant laws, rules, or
regulations concerning human rights, including but not limited to
any law, rule, or regulation concerning false imprisonment, torture
or other cruel and unusual punishment, or child labour;
or
(D) is debarred or
otherwise rendered ineligible to bid for or to perform contracts
for or with any government, governmental instrumentality, or
international organisation or found to have violated any applicable
law, rule, or regulation concerning government contracting or
public procurement; or
(vi) any member of the
Wider UKCM Group has engaged in any transaction which would cause
BBOX to be in breach of any applicable law or regulation upon its
acquisition of UKCM, including the economic sanctions of the United
States Office of Foreign Assets Control, or HMRC, or any
government, entity or individual targeted by any of the economic
sanctions of the United Nations, the United States, the United
Kingdom, the European Union or any of its member states.
Part B: Waiver and Invocation of the
Conditions
1. To
the extent permitted by law and subject to the requirements of the
Panel in accordance with the Takeover Code:
(a) BBOX reserves
the right, in its sole discretion, to waive:
(i) any of
the deadlines set out in paragraph 2 of Part A for the timing of the
Court Meeting, UKCM General Meeting and the Scheme Court Hearing.
If any such deadline is not met, BBOX shall make an announcement by
8.00 a.m. (London time) on the Business Day following such deadline
confirming whether it has invoked or waived the relevant Condition
or agreed with UKCM to extend the deadline in relation to the
relevant Condition; and
(ii) in whole or
in part, all or any of the Conditions set out in Part A, except for
Conditions 1, 2(a)(i), 2(b)(i), 2(c)(i)and 3(a) to (c) (inclusive)
which cannot be waived, and in respect of Condition 3 (g), so far
as it relates to the Wider UKCM Group, or any part thereof;
and
(b) UKCM reserves
the right, in its sole discretion, to waive, in whole or in part,
Condition 3 (g), so far as it relates to the Wider BBOX Group, or
any part thereof.
2.
Conditions 2(a), 2(b) and 3 (a) to (c) (inclusive) must be
fulfilled by, and Conditions 3 (d) to (j) (inclusive) must be
fulfilled or waived by, no later than 11.59 p.m. (London time) on
the date immediately preceding the date of the Scheme Court Hearing
(or such later date as BBOX, UKCM, the Panel and, if required, the
Court may allow), failing which the Scheme will lapse. Neither BBOX
nor UKCM shall be under any obligation to waive (if capable of
waiver), to determine to be or remain satisfied or fulfilled, or
treat as satisfied or fulfilled any of the Conditions capable of
waiver by a date earlier than the latest date specified for the
fulfilment or waiver thereof, notwithstanding that the other
Conditions of the Combination may, at such earlier date, have been
waived or fulfilled and that there are, at such earlier date, no
circumstances indicating that any of such Conditions may not be
capable of satisfaction or fulfilment.
3.
Under Rule 13.5(a) of the Takeover Code, BBOX may only invoke a
Condition so as to cause the Combination not to proceed, to lapse
or to be withdrawn with the consent of the Panel. The Panel will
normally only give its consent if the circumstances which give rise
to the right to invoke the Combination are of material significance
to BBOX in the context of the Combination. This will be judged by
reference to the facts of each case at the time that the relevant
circumstances arise. Any Condition that is subject to Rule 13.5(a)
of the Takeover Code may be waived by BBOX.
4.
Conditions 1, 2 and 3(a) to (c) (inclusive) and, if applicable, any
acceptance condition if the Combination is implemented by means of
a Takeover Offer, are not subject to Rule 13.5(a) of the Takeover
Code.
5.
Under Rule 13.6 of the Takeover Code, UKCM may only invoke a
Condition so as to cause the Combination not to proceed, to lapse
or to be withdrawn if the circumstances which give rise to the
right to invoke the Condition are of material significance to UKCM
Shareholders in the context of the Combination.
6. The
Combination will lapse if the Scheme does not become Effective by
no later than 11.59 p.m. (London time) on the Long Stop
Date.
Part C: Implementation by way of Takeover
Offer
1. If
BBOX is required by the Panel to make a Takeover Offer for UKCM
Shares under the provisions of Rule 9 of the Takeover Code, BBOX
may make such alterations to any of the above Conditions and terms
of the Combination as are necessary to comply with the provisions
of that Rule.
2. BBOX
reserves the right to elect (with the consent of the Panel), to
implement the Combination by way of a Takeover Offer as an
alternative to the Scheme. In such event, the Takeover Offer will
be implemented on the same terms and conditions (subject to
appropriate amendments, to reflect the change in method of
effecting the Combination, including (without limitation) an
acceptance condition set at 90 per cent. of the issued share
capital of UKCM (or such lower percentage (being more than 50 per
cent.) of the issued share capital of UKCM as BBOX may, subject to
the rules of the Takeover Code and with the consent of the Panel,
decide) as those which would apply to the Scheme. Further, if
sufficient acceptances of such Takeover Offer are received and/or
sufficient UKCM Shares are otherwise acquired, it is the intention
of BBOX to apply the provisions of Part XVIII of the Companies Law
of Guernsey to compulsorily acquire any outstanding UKCM Shares to
which such Takeover Offer relates.
Part D: Certain further terms of the
Combination
1. The
Combination and Scheme will be governed by the laws of Guernsey and
be subject to the jurisdiction of the Court and to the conditions
and further terms set out in this Appendix 1 and the full terms and
conditions to be set out in the Scheme Document to be published in
due course. The Combination will be subject to the applicable
requirements of the Companies Law of Guernsey, the Court, the GFSC,
the Takeover Code, the Panel, the London Stock Exchange and the
FCA.
2. Each
of the Conditions shall be regarded as a separate Condition and
shall not be limited by reference to any other
Condition.
3.
Fractions of New BBOX Shares will not be allotted or issued
pursuant to the Combination and entitlements of Scheme Shareholders
to New BBOX Shares will be rounded down to the nearest whole number
of New BBOX Shares. All fractional entitlements to New BBOX Shares
will be aggregated and sold in the market as soon as practicable
after the Effective Date. The net proceeds of such sale (after
deduction of all expenses and commissions incurred in connection
with the sale) will be distributed by BBOX in due proportions to
Scheme Shareholders who would otherwise have been entitled to such
fractions provided that individual entitlements to amounts of less
than £5 will not be paid to Scheme Shareholders but will be
retained for the benefit of the Combined Group.
4. The
Combination is not being made, directly or indirectly, in, into or
from, or by use of the mails of, or by any means or instrumentality
(including, but not limited to, facsimile e-mail or other
electronic transmission, telex or telephone) of interstate or
foreign commerce of, or of any facility of a national, state or
other securities exchange of, any Restricted Jurisdiction where to
do so would violate the laws of that jurisdiction.
5. The
availability of the Combination to UKCM Shareholders not resident
in the United Kingdom or Guernsey may be affected by the laws of
the relevant jurisdictions. Persons who are not resident in the
United Kingdom or Guernsey should inform themselves about and
observe any applicable requirements. Further details in relation to
overseas shareholders will be contained in the Scheme Document in
due course. The New BBOX Shares to be issued pursuant to the
Combination have not been and will not be registered under the US
Securities Act or under any laws or with any securities regulatory
authority of any State or other jurisdiction of the United States
or under any of the relevant securities laws of any other
Restricted Jurisdiction. Accordingly, the New BBOX Shares may not
be offered, sold or delivered, directly or indirectly, in or into
the United States or any other Restricted Jurisdiction, except
pursuant to exemptions from applicable securities law requirements
of any such jurisdiction, including, without limitation, the
exemption from the registration requirements of the US Securities
Act provided by Section 3(a)(10) thereof.
6. The
New BBOX Shares will be issued credited as fully paid-up and will
rank pari passu in all
respects with the BBOX Shares in issue at that time, including the
right to receive and retain dividends and other distributions (if
any) announced, declared, made or paid by reference to a record
date on or after the Effective Date (save, for the avoidance of
doubt, any BBOX Quarterly Permitted Dividends and any BBOX
Equalising Dividend). Applications will be made to the FCA for the
New BBOX Shares to be admitted to the Official List with a premium
listing and to the London Stock Exchange for the New BBOX Shares to
be admitted to trading on the Main Market.
7. The
UKCM Shares which will be acquired under the Combination will be
acquired fully paid and free from all liens, equities, charges,
encumbrances, options, rights of pre-emption and any other third
party rights and interests of any nature and together with all
rights now or hereafter attaching or accruing to them, including
voting rights and the right to receive and retain in full all
dividends and other distributions (if any) declared, made or paid,
or any other return of capital (whether by reduction of share
capital or share premium account or otherwise) made or paid on or
after the date of this Announcement, save for the UKCM Permitted
Dividends.
8. If,
on or after the date of this Announcement and on or prior to the
Effective Date, UKCM announces, declares, makes or pays: (i) a UKCM
Permitted Dividend, and the quantum of such dividend is in excess
of the amount which UKCM is entitled to pay to UKCM Shareholders in
accordance with this Announcement; or (ii) any other dividend,
distribution or form of capital return, BBOX shall be entitled to
either: (a) adjust the Exchange Ratio by an amount equivalent to
all or any part of such excess (in the case of a UKCM Permitted
Dividend) or by the amount of all or part of any such other
dividend, distribution or form of capital return; or (b) declare
and pay a BBOX Equalising Dividend to BBOX Shareholders without any
consequential change to the Exchange Ratio. BBOX also reserves the
right to adjust the Exchange Ratio in such circumstances as are,
and by such amount as is, permitted by the Panel. If BBOX exercises
its rights under this paragraph 8 to adjust the Exchange Ratio,
any reference in this Announcement to the Exchange Ratio will be
deemed to be a reference to the Exchange Ratio as so adjusted. To
the extent that a dividend or distribution has been declared but
not paid prior to the Effective Date, and such dividend or
distribution is cancelled, then the Exchange Ratio shall not be
subject to change in accordance with this paragraph
8. Any exercise by
BBOX of its rights referred to in this paragraph
8 will be the subject
of an announcement and, for the avoidance of doubt, will not be
regarded as constituting any revision or variation of the
Combination.
9. If,
on or after the date of this Announcement and on or prior to the
Effective Date, BBOX announces, declares, makes or pays: (i) a BBOX
Permitted Dividend, and the quantum of such dividend is in excess
of the amount which BBOX is entitled to pay to BBOX Shareholders in
accordance with this
Announcement; or (ii) any other dividend, distribution
or form of capital return, UKCM shall be entitled to either: (a)
adjust the Exchange Ratio by an amount equivalent to all or any
part of such excess (in the case of a BBOX Permitted Dividend) or
by the amount of all or part of any such other dividend,
distribution or form of capital return; or (b) declare and pay a
UKCM Equalising Dividend to UKCM Shareholders without any
consequential change to the Exchange Ratio. If UKCM exercises its
rights under this paragraph 9 to adjust the Exchange Ratio,
any reference in this Announcement to the Exchange Ratio will be
deemed to be a reference to the Exchange Ratio as so adjusted. To
the extent that a dividend or distribution has been declared but
not paid prior to the Effective Date, and such dividend or
distribution is cancelled, then the Exchange Ratio shall not be
subject to change in accordance with this paragraph
9. Any exercise by
UKCM of its rights referred to in this paragraph
9 will be the subject
of an announcement and, for the avoidance of doubt, will not be
regarded as constituting any revision or variation of the
Combination.
10.
appendix 2
SOURCES OF INFORMATION AND BASES OF
CALCULATION
Unless otherwise stated, the following
constitute the sources of information and bases of calculations in
this Announcement:
· All prices
quoted for BBOX Shares and UKCM Shares are closing middle market
quotations of a BBOX Share or UKCM Share (as applicable) derived
from the Daily Official List of the London Stock Exchange on the
relevant date(s).
· Issued share
capital of UKCM is 1,299,412,465 ordinary shares of 25 pence each.
UKCM has no shares held in treasury and no share
schemes.
· Issued share
capital of BBOX is 1,903,738,325 ordinary shares of 1 penny each.
BBOX has no shares held in treasury and no share
schemes.
· All
volume-weighted average UKCM share prices are derived from data
provided by Bloomberg for the relevant time periods.
· Property
portfolio and valuation information relating to BBOX is from the
property valuation reports produced by CBRE and Colliers as set out
in Parts B and C of Appendix 5 to this Announcement.
· Property
portfolio and valuation information relating to UKCM is from the
property valuation report produced by CBRE as set out in Part A of
Appendix 5 to this Announcement.
· The financial
information relating to BBOX is extracted from the audited results
for the full-year ended 31 December 2023, released on 1 March 2024,
adjusted for the acquisition of an asset on Castlewood Business
Park in January 2024.
· The financial
information relating to UKCM is extracted from the unaudited NAV
statement for the full-year ended 31 December 2023, released on 7
February 2024, adjusted for the disposal, in line with 31 December
2023 book value, of:
o Craven House,
as announced on 7 February 2024; and
o 2 Rivergate
in Temple Quay, as announced on 1 March 2024.
· The Combined
Groups' loan-to-value ratio of 29 per cent. is based on UKCM net
debt of £185 million (being the 31 December 2023 net debt adjusted
for the two disposals as described above) and BBOX's net debt of
£1,630 million (being the 31 December 2023 net debt adjusted for
the acquisition of the asset described above).
· EBITDA is
calculated as operating profit before changes in fair value and
other adjustments, adjusted for post period end acquisitions &
disposals.
· "total
accounting return" is the growth in NAV per ordinary share plus the
dividends paid per ordinary share, in the relevant
period.
· Reversion is
calculated on the difference between and asset's Estimated Rental
Value and current Contracted Rent.
· "total
shareholder return" is measured as the movement in share price over
a period of time plus any dividends paid during the same period.
This has been calculated as an internal rate of return, reflecting
a shareholder's annualised return over a given period of time based
on data provided by Bloomberg for the relevant time
periods.
· BBOX adjusted
earnings per share is calculated on the basis of earnings per share
excluding items considered to be exceptional and additional
development management agreement income.
· Combined
portfolio statistics are calculated by the addition of the relevant
figures for UKCM and BBOX on the basis outlined above.
· These returns as
outlined in the bullet "Value creation from capital recycling" at
paragraph 3(a)(i) of this Announcement are illustrative estimated
of this document only seek to highlight the impact of the
deployment of disposal proceeds of UKCM's non-logistics assets into
BBOX's development pipeline, assuming inter alia all properties are
developed and fully let, no further changes to capital structure
and without taking into account future ordinary course of business
items (including acquisitions, disposals, asset management and
additional debt). None of these estimates constitute a profit
forecast and there can be no assurance that these illustrative
returns (or any returns) will be achieved by the Combined Group.
Accordingly, they should not be taken as an indication of estimated
or actual future results and no reliance should be placed on these
illustrative figures. The Combined Group's actual results may
be positively or negatively affected by
factors beyond the control of the Combined Group and the actual
returns generated by the Combined Group may prove to be materially
lower than the illustrative returns set out above in this
announcement.
· UKCM weighted
average cost of debt and percentage of debt at a fixed cost is
based on gross borrowings of £205 million, representing the two
£100 million Barings term loans and £5 million drawn under the
Barclays RCF. This reflects repayments of the RCF following 31
December 2023 with proceeds from the property sales detailed
above.
appendix 3
Part 1: DETAILS OF IRREVOCABLE UNDERTAKINGS AND
LETTER OF INTENT IN RESPECT OF UKCM SHARES
UKCM
Recommending Directors' Irrevocable Undertakings
The following UKCM Recommending Directors who
control and/or hold beneficial interests in UKCM Shares have given
irrevocable undertakings to vote, or procure that the registered
holder votes, in favour of the Scheme at the Court Meeting and the
UKCM resolution(s) at the UKCM General Meeting in respect of their
own beneficial holdings of UKCM Shares (or those UKCM Shares over
which they have control):
Name of UKCM Director
|
Number of UKCM Shares
|
Percentage of UKCM's issued ordinary
share capital (per cent.)
|
Michael Ayre
|
192,000
|
0.01
|
Chris Fry
|
106,445
|
0.00
|
Fionnuala Hogan
|
69,221
|
0.00
|
Margaret Littlejohns
|
60,000
|
0.00
|
Total
|
427,666
|
0.03
|
Notes:
1.
The UKCM Shares referred to in the table above are held via
nominees. In each case, the UKCM Shareholder has undertaken to vote
himself/herself, or to procure the exercise of the votes attaching
to his/her UKCM Shares, in favour of the UKCM
resolution(s).
2.
The percentages in the table above have been truncated to two
decimal places.
The undertakings provided by the UKCM Directors
will cease to be binding if:
• BBOX announces,
with the consent of the Panel, that it does not intend to proceed
with the Combination in accordance with Rule 2.8 of the Takeover
Code;
• in the event that
the Combination proceeds by way of the Scheme, the Scheme or any
resolution to be proposed that is required to implement the Scheme
is not approved by the requisite majority of UKCM Shareholders at
the UKCM General Meeting or the Court Meeting;
• in the event that
the Combination proceeds by way of Takeover Offer, the Offer
Document is not posted to the UKCM Shareholders within the
permitted period under the Takeover Code or as otherwise agreed by
the Panel;
• if any resolution
to be proposed to approve and implement the Combination is not
approved by the requisite majority of BBOX Shareholders at the BBOX
General Meeting to be convened in connection with the Combination;
or
• on the earlier
of:
o the Long-Stop Date; and
o the date on which the Combination is
withdrawn or lapses in accordance with its terms (other than where
the Combination is withdrawn or lapses and a new, revised or
replacement Scheme or Takeover Offer has been announced in
accordance with Rule 2.7 of the Takeover Code at the same
time).
UKCM
Shareholder Irrevocable Undertaking
The following UKCM Shareholder has given an
irrevocable undertaking to vote in favour of the Scheme at the
Court Meeting and the UKCM resolution(s) at the UKCM General
Meeting in respect of the following holding of UKCM Shares (or
those UKCM Shares over which they have control):
Name of UKCM
Shareholder
|
Number of UKCM
Shares
|
Percentage of
UKCM's issued ordinary share capital (per cent.)
|
Phoenix Life Limited
|
563,773,465
|
43.4
|
The undertakings provided by the UKCM
Shareholder will cease to be binding if:
•
BBOX announces a possible offer or a firm offer to acquire all of
the issued and to be issued ordinary share capital of UKCM at an
exchange ratio below the Exchange Ratio, subject to any adjustment
permitted under the terms of the Combination set out in this
Announcement (including, without limitation, the exercise by BBOX
of the right to adjust the Exchange Ratio set out in
paragraph 8 of
Part D of Appendix 1 of this Announcement);
• the Scheme
Document or Offer Document (as applicable) is not published within
28 days of the date of release of this Announcement (or within such
longer period as the Panel may agree);
•
BBOX announces, with the consent of the Panel,
that it does not intend to proceed with the Combination and no new,
revised or replacement combination (to which the undertaking
applies) is announced in accordance with Rule 2.7 of the Takeover
Code at the same time;
•
the Takeover Offer or Scheme lapses or is
withdrawn and no new, revised or replacement combination (to which
the undertaking applies) is announced in accordance with Rule 2.7
of the Takeover Code at the same time;
• at
any time prior to the Scheme becoming effective or the Takeover
Offer becoming unconditional (as applicable):
o in accordance
with Rule 2.7 of the Takeover Code, a third party (the
"Competing Bidder")
announces a firm intention to acquire the entire issued and to be
issued share capital of UKCM not already owned by the Competing
Bidder on terms which represent not less than 78.24 pence per UKCM
Share as at the date on which the Competing Bidder announces its
firm intention (the "Higher
Competing Offer"); and
o BBOX does not
increase the consideration offered under the Combination to an
amount which represents an offer value equal to or higher than the
consideration offered pursuant to the Higher Competing Offer (in
the reasonable opinion of Phoenix) by 11:59 p.m. (UK time) on the
third business day after the date of the firm intention
announcement of the Higher Competing Offer; and
o in the event
that some or all of the consideration pursuant to the Higher
Competing Offer is in the form of securities of a class already
admitted to the Official List of the FCA and traded on the London
Stock Exchange or admitted to AIM or any other overseas investment
exchange recognised or designated by the FCA for the purposes of
FSMA (as amended from time to time), the implied value of the
securities exchange component of the Higher Competing Offer will be
calculated based upon the Competing Bidder's undisturbed share
price (being the closing share price on the business day prior to
the announcement of the Higher Competing Offer) multiplied by the
exchange ratio of the securities exchange component of the Higher
Competing Offer; or
•
the Combination has not completed prior to the
Long Stop Date.
UKCM
Shareholder Letter of Intent
Name of UKCM
Shareholder
|
Number of UKCM
Shares
|
Percentage of
UKCM's issued ordinary share capital (per cent.)
|
Investec Wealth and Investment
Limited
|
170,000,000
|
13.1
|
Part 2: DETAILS OF IRREVOCABLE UNDERTAKINGS IN
RESPECT OF BBOX SHARES
The following BBOX Directors who control and/or
hold beneficial interests in BBOX Shares have given irrevocable
undertakings to vote, or procure that the registered holder votes,
in favour of the BBOX Resolutions at the BBOX General Meeting in
respect of their own beneficial holdings of BBOX Shares (or those
BBOX Shares over which they have control):
Name of BBOX
Director
|
Number of BBOX
Shares
|
Percentage of
BBOX's issued ordinary share capital (per cent.)
|
Aubrey Adams
|
240,000
|
0.01
|
Elizabeth Brown
|
20,382
|
0.00
|
Wu Gang
|
2,600
|
0.00
|
Alastair Hughes
|
46,483
|
0.00
|
Richard Laing
|
50,000
|
0.00
|
Karen Whitworth
|
30,705
|
0.00
|
Total
|
390,170
|
0.02
|
Notes:
1.
The BBOX Shares referred to in the table above are held via
nominees. In each case, the BBOX Shareholder has undertaken to vote
himself/herself, or to procure the exercise of the votes attaching
to his/her BBOX Shares, in favour of the BBOX
Resolution.
2.
The percentages in the table above have been rounded to two decimal
places.
The undertakings provided by the BBOX Directors
will cease to be binding if:
• the Combination
has not completed prior to the Long Stop Date;
• BBOX announces,
with the consent of the Panel, that it does not intend to proceed
with the Combination and no new, revised or replacement combination
(to which the undertaking applies) is announced in accordance with
Rule 2.7 of the Takeover Code at the same time; or
• the Takeover
Offer or Scheme lapses or is withdrawn and no new, revised or
replacement combination (to which the undertaking applies) is
announced in accordance with Rule 2.7 of the Takeover Code at the
same time.
appendix 4
QUANTIFIED FINANCIAL BENEFITS
STATEMENT
Part A
Paragraph 4 of this Announcement contains
statements of estimated cost savings and synergies expected to
arise from the Combination (together, the "Quantified Financial Benefits
Statement").
A copy of the Quantified Financial Benefits
Statement is set out below:
The BBOX Directors, having reviewed and analysed
the potential cost savings of the Combined Group, as well as taking
into account factors they can influence, believe the Combined Group
can deliver shareholder value through the expected realisation of
approximately £4.0 million of pre-tax recurring cost synergies. The
cost synergies are expected to be realised principally
from:
a)
Investment management fees: unification of investment management
services under the BBOX Manager, delivering an expected £2.6
million of cost synergies per annum derived from lower investment
management fees charged on the UKCM EPRA NTA ; and
b)
Corporate and administrative costs: de-duplication and
rationalisation of duplicated listing, administration and
operational expenses delivering an estimated £1.4 million of cost
synergies per annum.
The identified cost savings are contingent on
the Combination and would not be achieved independently. The
estimated cost synergies referred to above reflect both the
beneficial elements and the relevant costs.
The UKCM Manager has agreed to waive the early
termination payment of £6.7 million which would be contractually
payable by UKCM on completion of the Combination as a result of the
UKCM IMA being agreed to be terminated at such time under the UKCM
IMA Termination Agreement. The BBOX Directors have considered other
recurring or one-off costs in connection with realising the
expected cost synergies and have reflected these in the expected
recurring cost synergy figure.
Potential areas of dis-synergy have been
considered by the BBOX Directors and are reflected in the
analysis.
These statements relating to estimated
investment management fee savings and other identified cost savings
relate to future actions or circumstances which by their nature
involve risks, uncertainties and contingencies. As a consequence,
the identified synergies and estimated savings referred to may not
be achieved, may be achieved later or sooner than estimated, or
those achieved could be materially different from those
estimated.
Further information on the bases of belief
supporting the Quantified Financial Benefits Statement, including
the principal assumptions and sources of information, is set out
below.
Bases of Belief and Principal
Assumptions
Following initial discussion
regarding the Combination, senior BBOX personnel, have worked to
identify, challenge, and quantify potential synergies as well as
the potential costs to achieve and timing of such synergies. The
assessment and quantification of potential synergies have been
informed by BBOX management's industry expertise and
knowledge.
In preparing the Quantified
Financial Benefits Statement, UKCM has shared certain operational
and financial information to facilitate a detailed analysis in
support of evaluating the potential synergies available from the
creation of the Combined Group.
The BBOX team has performed a bottom-up analysis
of the costs included in the UKCM financial information and has
sought to include in the synergy analysis those costs which it
believes will be either reduced or eliminated as part of the
Combined Group.
The investment management fee savings are based
on applying BBOX management fee bands and assumptions regarding the
Combined Group's EPRA NTA as at 31 December 2023, being the basis
on which the BBOX management fee is calculated, compared to the
aggregate of the management fees incurred by BBOX and UKCM which
are calculated on different bases. Management's estimate of one-off costs assumes no
termination fees in respect of the UKCM IMA will be payable by UKCM
or BBOX, given under the UKCM IMA Termination Agreement, it has
been agreed by the UKCM Manager to waive the early termination
payment.
The cost bases used as the basis for the
quantified financial benefits exercise are the BBOX full year
expenses for the financial year ended 31 December 2023, the UKCM
full year expenses for the year ended 31 December 2023, adjusted
for known changes to certain costs implemented during the year
ended 31 December 2023, and the external BBOX and UKCM property
valuations as at 31 December 2023.
The BBOX Directors have, in addition, made the
following assumptions:
· The value of the
Combined Group's property portfolio remaining at the 31 December
2023 external valuation of £4.4 billion, noting that the latest
Combined Group property portfolio valuation, as referenced in this
Statement is £6.3 billion.
· Estimated
transaction costs associated with the Combination are deducted from
the EPRA NTA used for the calculation of the Combined Group's
investment management fee.
· BBOX retains its
status as a UK REIT.
· There will be no
material impact on the underlying operations of the Combined Group
or its ability to continue to conduct its business.
· There will be no
material change to the make-up of the Combined portfolio for the
purposes of this analysis.
· There will be no
material change to macroeconomic, political, regulatory, or legal
conditions in the markets or regions in which BBOX or UKCM operate
that will materially impact on the implementation or costs to
achieve the proposed cost savings.
· There will be no
change in tax legislation or tax rates or other legislation in the
UK that could materially impact the ability to achieve any
benefits.
Reports
As required by Rule 28.1(a) of the
Takeover Code, BDO, as reporting accountant to BBOX, and Jefferies,
as lead financial adviser to BBOX, have provided the opinions
required under that Rule. Copies of these reports are included at
Parts B and C of this Appendix 4.
Each of BDO and Jefferies has
given and not withdrawn its consent to the inclusion of its report
in this Announcement in the form and context in which it is
included.
These statements are not intended
as a profit forecast and should not be interpreted as such. These
statements of estimated synergies relate to future actions and
circumstances which, by their nature, involve risks, uncertainties
and contingencies. As a result, the estimated synergies referred to
may not be achieved, or may be achieved later or sooner than
estimated, or those achieved could be materially different from
those estimated. Neither the Quantified Financial Benefits
Statement nor any other statement in this Announcement should be
construed as a profit forecast or interpreted to mean that
BBOX's earnings
in the first full year following the Effective Date, or in any
subsequent period, will necessarily match or be greater than or be
less than those of BBOX or UKCM for the relevant preceding
financial period or any other period.
Due to the scale of the Combined
Group, there may be additional changes to the Combined Group's
operations. As a result, and given the fact that the changes relate
to the future, the resulting synergies may be materially greater or
less than those estimated.
Part B - Report from BDO LLP
|
BDO LLP
55 Baker Street
London
W1U 7EU
|
The Directors
Tritax Big Box REIT plc
72 Broadwick Street
London
W1F 9QZ
|
21 March
2024
|
Jefferies International
Limited
100 Bishopsgate
London
EC2N 4JL
Dear Sir or Madam
Tritax Big Box REIT plc (the "Company")
Proposed acquisition by the Company of the entire issued and
to be issued share capital of UK Commercial Property REIT
Limited
We report on the quantified
financial benefits statement (the "Statement") by the directors of
the Company (the "Directors") included in Part A of Appendix 4 of
the Rule 2.7 Announcement (the "Announcement") dated 21 March 2024
to the effect that:
"The BBOX Directors, having reviewed and analysed the
potential cost savings of the Combined Group, as well as taking
into account factors they can influence, believe the Combined Group
can deliver shareholder value through the expected realisation of
approximately £4.0 million of pre-tax recurring cost synergies. The
cost synergies are expected to be realised principally
from:
a) Investment management fees:
unification of investment management services under the BBOX
Manager, delivering an expected £2.6 million of cost synergies per
annum derived from lower investment management fees charged on the
UKCM EPRA NTA ; and
b) Corporate and
administrative costs: de-duplication and rationalisation of
duplicated listing, administration and operational expenses
delivering an estimated £1.4 million of cost synergies per
annum.
The identified cost savings are contingent on the Combination
and would not be achieved independently. The estimated cost
synergies referred to above reflect both the beneficial elements
and the relevant costs.
The UKCM Manager has agreed to waive the early termination
payment of £6.7 million which would be contractually payable by
UKCM on completion of the Combination as a result of the UKCM IMA
being agreed to be terminated at such time under the IMA
Termination Agreement. The BBOX Directors have considered other
recurring or one-off costs in connection with realising the
expected cost synergies and have reflected these in the expected
recurring cost synergy figure.
Potential areas of dis-synergy have been considered by the
BBOX Directors and are reflected in the analysis.
Opinion
In our opinion, the Statement has
been properly compiled on the basis stated.
The Statement has been made in the
context of the disclosures in Part A of Appendix 4 of the
Announcement setting out the basis of the Directors' belief
(including the principal assumptions and sources of information
supporting the Statement and their analysis and explanation of the
underlying constituent elements).
This report is required by Rule
28.1(a) of the City Code on Takeovers and Mergers (the "Takeover
Code") and is given for the purpose of complying with that
requirement and for no other purpose.
Responsibilities
It is the responsibility of the
Directors to prepare the Statement in accordance with the
requirements of Rule 28 of the Takeover Code.
It is our responsibility to form
our opinion, as required by Rule 28.1(a) of the Takeover Code, as
to whether the Statement has been properly compiled on the basis
stated and to report that opinion to you.
Save for any responsibility which
we may have to those persons to whom this report is expressly
addressed, to the fullest extent permitted by law we do not assume
any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result
of, arising out of, or in connection with this report or our
statement, required by and given solely for the purposes of
complying with Rule 23.2 of the City Code, consenting to its
inclusion in the Announcement.
Basis of preparation of the Statement
The Statement has been prepared on
the basis stated in Part A of Appendix 4 of the
Announcement.
Basis of opinion
We conducted our work in
accordance with the Standards for Investment Reporting issued by
the Financial Reporting Council ("FRC") in the United Kingdom. We
are independent in accordance with the FRC's Ethical Standard as
applied to Investment Circular Reporting Engagements, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements.
We have discussed the Statement,
together with the basis of the Directors' belief, with the
Directors and Jefferies International Limited. Our work did not
involve any independent examination of any of the financial or
other information underlying the Statement.
We planned and performed our work
so as to obtain the information and explanations we considered
necessary in order to provide us with reasonable assurance that the
Statement has been properly compiled on the basis
stated.
Our work has not been carried out
in accordance with auditing or other standards and practices
generally accepted in the United States of America or other
jurisdictions outside the United Kingdom and accordingly should not
be relied upon as if it had been carried out in accordance with
those standards and practices.
We do not express any opinion as
to the achievability of the benefits identified by the Directors in
the Statement.
Since the Statement and the
assumptions on which it is based relate to the future and may
therefore be affected by unforeseen events, we express no opinion
as to whether the actual benefits achieved will correspond to those
anticipated in the Statement and the differences may be
material.
Yours faithfully
BDO LLP
Chartered Accountants
BDO LLP is a limited liability
partnership registered in England and Wales (with registered number
OC305127)
Part C - Report from Jefferies International
Limited
REPORT FROM JEFFERIES ON BBOX QUANTIFIED
FINANCIAL BENEFITS STATEMENT
The Board of Directors
Tritax Big Box Plc
72 Broadwick Street
London
W1F 9QZ
21 March 2024
Dear Sirs / Madams
Recommended All-Share Combination
of Tritax Big Box Plc ("BBOX") and UK Commercial Property REIT
Limited - Quantified Financial Benefits Statement of
BBOX
We refer to the Quantified Financial Benefits
Statement, the bases of belief thereof and the notes thereto
(together, the "Statement")
made by BBOX, as set out in Part A of Appendix 4 of the Rule 2.7
announcement dated 21 March 2024 of which this letter forms part
(the "Announcement"), for
which the board of directors of BBOX (the "Directors") are solely responsible
under Rule 28.3 of the UK City Code on Takeovers and Mergers (the
"Code").
We have discussed the Statement (including the
assumptions, bases of calculation and sources of information
referred to therein) with the Directors and those officers and
employees of BBOX who developed the underlying plans as well as
with BDO LLP ("BDO"). The
Statement is subject to uncertainty as described in the
Announcement and our work did not involve an independent
examination of any of the financial or other information underlying
the Statement.
We have relied upon the accuracy and
completeness of all the financial and other information provided to
us by or on behalf of BBOX, or otherwise discussed with or reviewed
by us, and we have assumed such accuracy and completeness for the
purposes of providing this letter.
We do not express any view as to the
achievability of the quantified financial benefits identified by
the Directors in the Statement or otherwise.
We have also reviewed the work carried out by
BDO and have discussed with them the opinion set out in Part [B] of
Appendix 4 of the Announcement addressed to yourselves and
ourselves on this matter, and the bases of calculation for the
Statement.
This letter is provided pursuant to our
engagement letter with BBOX to the Directors solely in connection
with Rule 28.1(a)(ii) of the Code and for no other purpose. We
accept no responsibility to BBOX or its shareholders or any person
other than the Directors in respect of the contents of this letter.
We are acting exclusively as financial adviser to BBOX and no one
else in connection with the offer by BBOX for UKCM referred to in
the Announcement and it was for the purpose of complying with Rule
28.1(a)(ii) of the Code that BBOX requested Jefferies International
Limited to prepare this report on the Statement. No person other
than the Directors can rely on the contents of this letter, and to
the fullest extent permitted by law, we exclude all liability
(whether in contract, tort or otherwise) to any other person, in
respect of this letter, its contents or the work undertaken in
connection with this letter or any of the results that can be
derived from this letter or any written or oral information
provided in connection with this letter, and any such liability is
expressly disclaimed except to the extent that such liability
cannot be excluded by law.
On the basis of the foregoing, we consider that
the Statement, for which you as the Directors are solely
responsible for purposes of the Code, has been prepared with due
care and consideration.
Yours faithfully,
Jefferies
International Limited
appendix 5
Property Valuation Reports
Part A - CBRE Valuation Report in respect of
UKCM
In respect of:
Portfolio of 39 properties
held by UK Commercial REIT Limited
On behalf of:
the Addressees as set out
below
Date of valuation:
31 December 2023