NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN
WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF
THAT JURISDICTION
26 March
2024
Melrose Industries
PLC
Regulatory filing: Standard
annual confirmation of post-offer undertakings in relation to the
acquisition of GKN plc ("GKN") by Melrose Industries PLC
("Melrose") in compliance with Rule 19.5(h) of the Takeover
Code
BACKGROUND
In relation to the acquisition of
GKN by Melrose on 19 April 2018 (the "Effective Date"), Melrose has given
post-offer undertakings under Rule 19.5 of the Takeover Code (each
a "Post- Offer Undertaking"
and together the "Post-Offer
Undertakings"), full details of which were set out in an RIS
announcement dated 28 March 2018, a copy of which is attached to
this report as Appendix A.
Pursuant to Rule 19.5(e) of the
Takeover Code, Melrose must comply with the terms of the Post-Offer
Undertakings for the periods of time specified in the Post-Offer
Undertakings and must complete any course of action committed to by
the dates specified in the Post-Offer Undertakings.
Save in respect of Post-Offer
Undertaking 2 (GKN Group expensed
research and development), each of the Post-Offer
Undertakings expired on 19 April 2023, and Melrose had confirmed
its compliance with such undertakings in its announcement dated 21
April 2023.
This report is provided in
accordance with Rule 19.5(h) of the Takeover Code, pursuant to
which Melrose must submit written reports to the Panel at such
intervals (of not more than 12 months) as the Panel may require in
relation to its compliance with the outstanding Post-Offer
Undertaking.
Post-Offer Undertaking 2
(GKN Group expensed research and
development), has now expired and Melrose confirms that it
has met the obligation set out in this undertaking.
Unless otherwise defined in this
report, capitalised terms in this report shall have the same
meanings given to them in the Post-Offer Undertakings.
SUBMISSION
1.
During the period from 1 January 2019 to 31
December 2023, the expensed research and development spend of the
GKN Group was at least 2.2% of the aggregate of GKN Group
sales.
2.
This report has been submitted to the Panel in
accordance with Rule 19.5(h) of the Takeover Code and has been
approved by the board of directors of Melrose.
APPENDIX A - POST-OFFER UNDERTAKINGS
LEI: 213800RGNXXZY2M7TR85
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN
WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES OR ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR IMMEDIATE
RELEASE
28 March 2018
Melrose Industries PLC ("Melrose")
Final Offer for GKN plc
("GKN") - Adoption of Post-Offer Undertakings
Further to the announcement made by Melrose on 27
March 2018 confirming that it had reached agreement with the Panel
in respect of the form of certain legally binding post-offer
undertakings in connection with its Final Offer for GKN, Melrose is
today pleased to announce the full terms and detailed mechanics of
the post-offer undertakings agreed with the Panel.
Post-Offer Undertakings
Melrose makes the following post-offer undertakings
pursuant to Rule 19.5 of the City Code, subject to the
qualifications and conditions set out below (each of the post-offer
undertakings in paragraphs 1(a), 1(b), 1(c), 1(d), 2(a), 2(b), 3(a)
and 3(b) being a "Post-Offer
Undertaking" and, together, the "Post- Offer Undertakings").
1. Melrose undertakes that throughout the period of five years
from the Effective Date (the "Undertaking Period"):
(a) Melrose will maintain the Melrose Group headquarters in the UK
by Melrose occupying a designated area in one or more buildings in
the UK, one of which buildings is publicly designated as the
Melrose Group headquarters and is the registered office of
Melrose;
(b) the
Melrose Shares will remain listed on the Official List maintained
by the UKLA and admitted to trading on the London Stock Exchange's
main market for listed securities;
(c) no
director will be appointed or reappointed, or recommended to be
appointed or reappointed, to the Melrose Board if following such
appointment or reappointment a majority of the Melrose Directors
would not be resident in the UK; and
(d) the
GKN Aerospace businesses and the GKN Driveline businesses will
retain the same rights (if any) which they have as at 26 March 2018
(and which they continue to have as at the Effective Date) to use
the GKN Trade Marks.
2. Melrose undertakes that:
(a) subject to paragraph 2(b) below, it will procure that the
expensed research and development spend of the GKN Group during the
period from 1 January 2019 to 31 December 2023 will be at least 2.2
per cent. of the aggregate of GKN Group
sales(1) for the financial years ending 31 December 2019, 31 December
2020, 31 December 2021, 31 December 2022 and 31 December 2023;
and
(b) in
the event that the expensed research and development spend of the
GKN Group during the period from 1 January 2019 to 31 December 2023
is not at least 2.2 per cent. of the aggregate of GKN Group sales
for the financial years ending 31 December 2019, 31 December 2020,
31 December 2021, 31 December 2022 and 31 December 2023,
Melrose will procure that the amount of any shortfall shall be
spent by the GKN Group as expensed research and development spend
by 30 June 2024.
(1)
Note that GKN Group sales are calculated by
reference to the GKN Group from time to time. Accordingly,
since the Post-Offer Undertakings contain no restrictions on
acquiring businesses into or selling businesses out of the
GKN Group during the period of the Post-Offer Undertakings, GKN Group sales may go up or
down as a result.
3. Melrose undertakes that during the Undertaking Period it will
not:
(a) undertake a reorganisation of the Melrose Group the effect of
which is for Melrose to be absorbed into another entity or
otherwise cease to exist as a legal entity; or
(b) insert an entity ("Newco") above Melrose as a holding
company of the Melrose Group unless:
(i) Newco is a company incorporated and registered in England and
Wales;
(ii) the
nature of the arrangements for the insertion of Newco are such as
to permit the giving of undertakings pursuant to Rule 19.5 of the
City Code;
(iii) Melrose
has procured that Newco has given post-offer undertakings pursuant
to Rule 19.5 of the City Code (the "Newco Undertakings") in the same terms
as, and for the remainder of the respective periods of, the
Post-Offer Undertakings at paragraphs 1(a), 1(b), 1(c), 1(d), 2(a),
2(b) and this paragraph 3 (in its entirety) but with references
throughout to Melrose replaced by references to Newco (and with any
other consequential changes to which the Panel has given prior
written consent); and
(iv) Newco has
entered into reporting and monitoring arrangements relating to the
Newco Undertakings in a form satisfactory to the Panel.
For the avoidance of doubt, in the event that a Newco
is inserted in compliance with the Post- Offer Undertaking in
paragraph 3(b), Melrose will continue to be bound by the Post-Offer
Undertakings in paragraphs 1(a), 1(c), 1(d), 2(a), 2(b) and this
paragraph 3 (in its entirety).
Qualifications and Conditions All Post-Offer
Undertakings
Subject to consulting the Panel in advance and
obtaining the Panel's consent to rely on such qualifications or
conditions pursuant to Rule 19.5(f) of the City Code, each of the
Post-Offer Undertakings will no longer apply where the Panel
determines that Melrose is unable to comply with the relevant
Post-Offer Undertaking as a result of an event, act or circumstance
beyond Melrose's control.
Post-Offer Undertaking 1(b): Melrose Listing
Subject to consulting the Panel in advance and
obtaining the Panel's consent to rely on such qualifications or
conditions pursuant to Rule 19.5(f) of the City Code, Melrose will
not be in breach of the Post-Offer Undertaking in paragraph 1(b)
above if the Melrose Shares cease to remain listed on the Official
List and/or admitted to trading on the London Stock Exchange's main
market for listed securities as a result of:
(i) the approval by Melrose Shareholders of a resolution to delist
the Melrose Shares, which resolution has not been proposed or
recommended by the Melrose Board or any Melrose
Director;
(ii) the
UKLA otherwise delists the Melrose Shares, save where the delisting
results from the acts or omissions of Melrose, any Melrose Director
or any officer of Melrose;
(iii) an offer
by a Third Party Offeror for the entire issued and to be issued
share capital of Melrose becomes wholly unconditional or a scheme
of arrangement to effect the acquisition of the entire issued and
to be issued share capital of Melrose by a Third Party Offeror
becomes effective; or
(iv) the
insertion of a Newco above Melrose in compliance with the
Post-Offer Undertaking in paragraph 3(b) above.
Post-Offer Undertaking 1(c): Melrose Board
Subject to consulting the Panel in advance and
obtaining the Panel's consent to rely on such qualifications or
conditions pursuant to Rule 19.5(f) of the City Code, Melrose will
not be in breach of the Post-Offer Undertaking in paragraph 1(c)
above if an appointment or reappointment to the Melrose Board of
one or more directors who are not resident in the UK is made as a
result of a resolution proposed by one or more Melrose Shareholders
(other than Melrose Directors) to appoint or reappoint directors to
the Melrose Board, provided such appointments are not recommended
by, proposed by, or at the request of the Melrose Board or any
Melrose Director.
Definitions
The following definitions apply for the purposes of
the Post-Offer Undertakings. Words and expressions not defined in
this announcement shall have the meaning given to them in the offer
document published by Melrose on 1 February 2018, as amended by the
final offer document published by Melrose on 13 March 2018.
expensed
research and development spend means expenditure on Research
and Development (as each term is defined pursuant to IAS 38:
Intangible Assets as at 31 December 2017) which is charged to the
income statement in accordance with GKN's IAS accounting policies
and accounting practices in force as at 31 December 2017;
GKN
Aerospace businesses means each of the businesses and
companies comprising the GKN Aerospace business including, as
announced by GKN on 14 February 2018 in its 'Project Boost'
announcement, all of the businesses and companies comprising
Speciality Aerostructures, Aero Aftermarket, Aero Specialist
Positions, Aero Engines, Aero Additive Manufacturing, US Standard
Aerostructures, Fuel and Flotation Tanks and Engine and Aircraft
Servicing, together with GKN Group's interest in SABCA, in each
case as at the Effective Date;
GKN
Driveline businesses means each of the businesses and
companies comprising the GKN Driveline business including, as
announced by GKN on 14 February 2018 in its 'Project Boost'
announcement, all of the businesses and companies comprising the
Driveshafts, All-Wheel Drive, Driveline China and eDrive Systems,
Wheels, Cylinder Liners and Off-Highway Powertrain divisions of GKN
Driveline, in each case as at the Effective Date;
GKN
Group means (i) GKN and its subsidiaries and subsidiary
undertakings and each of their businesses from time to time,
together with (ii) each of GKN and its subsidiaries and subsidiary
undertakings and each of their businesses as at the Effective Date,
which, from time to time, are in the Melrose Group;
GKN Group
sales means revenues generated by the GKN Group as
recognised in accordance with IFRS and as determined in accordance
with GKN's IAS accounting policies and accounting practices in
force as at 31 December 2017;
GKN Trade
Marks means all trade marks, registered and unregistered, in
the term "GKN";
Melrose
Shares means the ordinary shares of 48/7 pence each in the
capital of Melrose or such ordinary shares as Melrose may have in
issue from time to time;
SABCA means Société Anonyme Belge de Constructions
Aéronautiques;
resident means, in respect of an
individual, that their principal private residence is in the UK,
and that they perform the majority of their role and duties as a
director whilst located in the UK; and
Third
Party Offeror means any person other than (i) a member of
the Melrose Group and (ii) any person acting in concert with
Melrose or a Melrose Director.
Further Information regarding the Post-Offer Undertakings
The Post-Offer Undertakings set out in this
announcement are in a form acceptable to the Panel, are legally
binding commitments and, should the Final Offer become wholly
unconditional, Melrose must comply with the terms of each
Post-Offer Undertaking and complete any courses of action committed
to within the relevant time periods set out.
Melrose has appointed RSM Corporate Finance LLP (the
"Supervisor") to monitor
its compliance with the Post-Offer Undertakings. In respect of its
appointment, the Supervisor has agreed a work-plan with the Panel
in order to monitor the compliance of Melrose with the Post-Offer
Undertakings.
Melrose and the Supervisor will be required to submit
periodic reports to the Panel, in accordance with the provisions of
Rule 19.5(h) and (i) of the City Code, in respect of the Post-Offer
Undertakings.