September 22, 2017
RECOMMENDED CASH ACQUISITION of Imagination Technologies Group PLC by CBFI Investment Limited a wholly-owned subsidiary of funds managed by Canyon Bridge Capital Partners, LLC
Summary
“The proposed acquisition is a very good outcome for Imagination’s Shareholders which the Imagination directors are intending to recommend unanimously. Imagination has made excellent progress both operationally and financially over the last 18 months until Apple’s unsubstantiated assertions and the subsequent dispute forced us to change course.
The acquisition will ensure that Imagination – with its strong growth prospects – remains an independent IP licensing business, based in the UK, but operating around the world.
Imagination employs a large number of hugely talented individuals who have developed our market leading technology. They and the business as a whole will benefit from Canyon Bridge’s investment in Imagination as it moves to the next stage of its development.”
This summary should be read in conjunction with, and is subject to, the full text of the following announcement (including its Appendices). The Acquisition will be subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions to be set out in the Scheme Document. Appendix 2 contains the sources and bases of certain information contained in this summary and the following announcement. Appendix 3 contains details of the irrevocable undertakings received by CBFI. Appendix
4 contains the definitions of certain terms used in this summary and the following announcement.
Important notices
Citigroup Global Markets Limited (“Citi“), which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for CBFI and Canyon Bridge in connection with the matters set out in this Announcement and for no one else and will not be responsible to anyone other than CBFI and Canyon Bridge for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this Announcement.
N. M. Rothschild & Sons Limited (“Rothschild“), which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Imagination and no one else in connection with the Acquisition and will not be responsible to anyone other than Imagination for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this Announcement.
Jefferies International Limited (“Jefferies“), which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Imagination and no one else in connection with the Acquisition and will not be responsible to anyone other than Imagination for providing the
protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this.
Further information
This Announcement is for information purposes only and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, 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 Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of Imagination in any jurisdiction in contravention of applicable law. The Acquisition will be made solely by means of the Scheme Document or any document by which the Acquisition is made, which will contain the full terms and conditions of the Acquisition including details of how to vote in respect of the Acquisition. Any vote in respect of the Scheme or other response in relation to the Acquisition should be made only on the basis of the information contained in the Scheme Document. Imagination urges each Imagination Shareholder to read the Scheme Document when it becomes available because it will contain important information relating to the Acquisition.
Please be aware that addresses, electronic addresses and certain other information provided by Imagination Shareholders, persons with information rights and other relevant persons for the receipt of communications from Imagination may be provided to CBFI during the Offer Period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.
This Announcement does not constitute a prospectus or prospectus equivalent document.
Overseas Shareholders
The release, publication or distribution of this Announcement in certain jurisdictions may be restricted by law and or regulation. Persons who are not resident in the United Kingdom or who are subject to the laws and regulations of other jurisdictions should inform themselves of, and observe, any applicable requirements. In particular, the ability of persons who are not resident in the United Kingdom to vote their Imagination Shares with respect to the Scheme at the Court Meeting, or to appoint another person as proxy 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 and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This Announcement has been prepared for the purposes of complying with English law and the 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 of England.
Unless otherwise determined by CBFI or required by the Code, and permitted by applicable law and regulation, the Acquisition 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 Scheme 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 all documents relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this Announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.
The availability of the Acquisition to Imagination Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.
Further details in relation to Overseas Shareholders will be contained in the Scheme Document.
The Acquisition shall be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange and the FCA.
Additional Information for US Investors
The Acquisition relates to the shares of an English company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. Neither the proxy solicitation rules nor the tender offer rules under the US Securities Exchange Act of 1934, as amended, will apply to the Acquisition. Moreover, the Acquisition is subject to the disclosure requirements and practices applicable in the United Kingdom and under the Code to schemes of arrangement, which differ from the disclosure requirements of the US proxy solicitation rules and tender offer rules. Financial information included in this Announcement has been prepared, unless specifically stated otherwise, in accordance with accounting standards applicable in the UK and thus may not be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US.
The information contained in this document has neither been approved or disapproved by the US Securities and Exchange Commission or any US state securities commission. Neither the US Securities and Exchange Commission, nor any state securities commission, has passed upon the fairness or merits of the proposal described in, nor upon the accuracy or adequacy of the information contained in, this Announcement.
It may be difficult for US holders of Imagination Shares to enforce their rights and claims arising out of the US federal securities laws, since CBFI and Imagination are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. US holders of Imagination Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the 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 judgement.
The receipt of cash pursuant to the Acquisition by a US holder as consideration for the transfer of its Scheme Shares pursuant to the Scheme will likely be a taxable transaction for United States federal income tax purposes and under applicable United States state and local, as well as foreign and other, tax laws. Each Imagination Shareholder is urged to consult his or her independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him or her.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, CBFI or its nominees, or its brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, Imagination Shares outside of the US, other than pursuant to the Acquisition, until the date on which the Acquisition becomes Effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing
prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.
Forward looking statements
This Announcement (including information incorporated by reference in this Announcement), oral statements made regarding the Acquisition, and other information published by CBFI and Imagination contain statements which are, or may be deemed to be, “forward-looking statements”. 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 CBFI and Imagination 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 Acquisition on CBFI and Imagination, the expected timing and scope of the Acquisition and other statements other than historical facts. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words “targets”, “plans”, “believes”, “expects”, “aims”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “estimates”, “cost-saving”, “projects”, “goal”, “strategy”, “budget”, “forecast” or “might” or, words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of CBFI’s or Imagination’s operations resulting from the Acquisition; and (iii) the effects of government regulation on CBFI’s or Imagination’s business.
These forward looking statements are not guarantees of future financial performance. Except as expressly provided in this Announcement, they have not been reviewed by the auditors of CBFI or Imagination or their respective financial advisers. Such forward looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. These factors include the satisfaction of the Conditions, as well as additional factors, such as: fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen disasters or catastrophes; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Such forward-looking statements should therefore be construed in the light of such factors. Neither CBFI nor Imagination, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements. All subsequent oral or written forward looking statements attributable to CBFI or Imagination or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. CBFI and Imagination disclaim any obligation to update or revise any forward looking or other statements
contained herein, whether as a result of new information, future events, or otherwise, other than in accordance with their legal and regulatory obligations.
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.
No profit forecasts or estimates
No statement in this Announcement 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 for Imagination for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Imagination.
Dealing disclosure requirements
Under Rule 8.3(a) of the 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) of the Code applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day 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 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 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3.30 pm (London time) on the business day 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 of the Code.
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 of the Code).
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 (0)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.
Publication on website and hard copies
A copy of this Announcement and the documents required to be published by Rule 26 of the Code will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Canyon Bridge’s website at www.canyonbridge.com/#in-the-news and Imagination’s website at https://www.imgtec.com/sales-process/. For the avoidance of doubt, the contents of those websites are not incorporated into and do not form part of this Announcement.
You may request a hard copy of this Announcement by contacting Citigroup Global Markets Limited on +44 (0)207 986 4000. You may also request that all future documents, announcements and information to be sent to you in relation to the Acquisition should be in hard copy form.
Market Abuse regulation
This Announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (“MAR“). Market soundings (as defined in MAR) were taken in respect of a potential offer with the result that certain persons became aware of inside information (as defined in MAR) as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to Imagination and its securities.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
22 September 2017
RECOMMENDED CASH ACQUISITION of Imagination Technologies Group PLC by CBFI Investment Limited
a wholly-owned subsidiary of funds managed by Canyon Bridge Capital Partners, LLC
to be effected
by means of a Scheme of Arrangement under Part 26 of the Companies Act 2006
Introduction
The boards of directors of CBFI and Imagination are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition by which the entire issued and to be issued ordinary share capital of Imagination will be acquired by CBFI, a newly incorporated company indirectly owned by Canyon Bridge, a fund managed by
U.S. headquartered Canyon Bridge Capital Partners, LLC. It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.
The Acquisition
Under the terms of the Acquisition, which will be subject to the Conditions and further terms set out in Appendix 1 to this Announcement and the full terms and conditions to be set out in the Scheme Document, Imagination Shareholders who are on the register of members of Imagination at the Scheme Record Time will be entitled to receive:
for each Imagination Share 182 pence in cash
The Acquisition values Imagination’s entire issued and to be issued share capital at approximately £550 million, calculated on the basis described in paragraph (a) of Appendix 2.
The price of 182 pence per Imagination Share represents a premium of approximately:
Background to, and reasons for, the Acquisition
On 22 June 2017, Imagination announced that it had received interest from a number of parties for a potential acquisition of the whole Imagination Group and that, as a result, the Imagination Directors had decided to initiate a formal sale process for the Imagination Group. In that announcement, the Imagination Directors noted that they were engaged in preliminary discussions with potential bidders for the Imagination Group. The Imagination Directors also confirmed that the sales process for the MIPS and Ensigma operations were progressing well and that indicative proposals had been received for both businesses.
Canyon Bridge’s strategy is focused on providing equity and strategic capital to enable technology companies to reach their full growth potential.
Canyon Bridge has followed the development of Imagination for some time and believes that it is fundamentally a strong and stable business.
In particular, the board of CBFI intends to invest in Imagination’s research and development capabilities in the United Kingdom and believes that the Acquisition will deliver Imagination with the following benefits:
Ongoing Investment Capital into the Company
Provide a significant potential source of investment capital as Imagination seeks to maintain and advance its position in the semi-conductor industry and penetrate new end- markets, including opportunities in overseas markets.
Expand PowerVR and Ensigma Leadership
Enable PowerVR to develop its existing high quality technology with a view to increasing its market share in the existing markets of smartphone and tablet, set-top box, digital TV and automotive, and secondly, to generate further growth by driving artificial intelligence technologies into new opportunities in augmented and virtual reality and machine autonomy.
Enable Ensigma to seek to accelerate the adoption of its efficient, scalable, and flexible integrated communications IP across a range of growth markets including mobile and tablets, PC and peripherals, entertainment centres, consumer devices and wearables.
Supporting Growth through Partnership
Allow Imagination to leverage Canyon Bridge’s international network and experience in the semi-conductor industry and to seek to increase Imagination’s international reputation for technology leadership.
Background to and reasons for the recommendation
Fiscal year 2017 was a challenging year for Imagination, characterised by significant restructuring, the implementation of a refreshed strategy and a dispute with Imagination’s largest customer, Apple. During the year, Imagination executed the planned restructuring programme announced in February 2016, to return the business to profitability and positive cashflow.
Imagination announced and started implementation of the revised strategy focused on building IP solutions of real scale with customers across a wide range of markets, where Imagination can provide leading, differentiated offerings and build defendable positions. Imagination has made good progress on this strategy, by focusing investment in its core IP businesses: PowerVR, MIPS and Ensigma.
The strategy resonated well with customers and investors alike with progress demonstrated by strong results announced on 4 July 2017. Adjusted operating profit for continuing operations was up by approximately three times to £29.2 million (2016: £10.5 million) with cash generated by operations of £11.0 million despite the £13.7 million outflow from the loss making discontinued businesses.
The substantial progress made, however, has been overtaken by other external events. As announced on 3 April 2017, Apple informed Imagination that it expected that the chips in Apple products launched at some point in 2018 or early 2019 would not require Apple to pay Imagination royalties. To date, Apple has not shared any information to enable Imagination to verify its statement. Imagination invoked a contractual dispute resolution procedure under the licence agreement. Imagination does not accept Apple’s position and has reserved all of its rights.
However, the potential impact if Apple does not pay royalties on its new products led the Imagination Board to consider its options regarding the long-term financial future of the company. On 4 May 2017, Imagination announced its decision to explore a sale of the MIPS and Ensigma businesses to strengthen the balance sheet and concentrate resources on PowerVR. The sale process progressed well and indicative proposals were received for both businesses. The sale of MIPS to Tallwood has been announced separately today.
Against this background, Imagination also received interest from a number of parties for a potential acquisition of the whole of Imagination. Imagination therefore decided to initiate a Formal Sale Process for the Group, as announced on 22 June 2017, and conducted discussions with potential bidders.
Following negotiations with several parties as a part of the Formal Sale Process, Canyon Bridge emerged as the leading bidder for Imagination both in terms of the value and execution certainty, and the Imagination Board believes this option is the most attractive
for Imagination Shareholders compared to the alternative options available to the company.
Accordingly, the Imagination Board intends to recommend unanimously the Acquisition to Imagination Shareholders as set out in paragraph 5 below.
Recommendation
The Imagination Directors, who have been so advised by Rothschild as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable.
Accordingly, the Imagination Directors intend to recommend unanimously Imagination Shareholders to vote in favour of the Scheme at the Court Meeting and the resolution(s) to be proposed at the General Meeting and, if required, the MIPS General Meeting as those Imagination Directors who are beneficially entitled to Imagination Shares have each irrevocably undertaken to do in respect of their own Imagination Shares (representing approximately 0.02 per cent. of the issued ordinary share capital of Imagination). In providing advice to the Imagination Directors, Rothschild has taken into account the commercial assessments of the Imagination Directors.
Irrevocable Undertakings
CBFI has received irrevocable undertakings from each of the Imagination Directors who are beneficially entitled to Imagination Shares to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting in respect of a total of 68,387 Imagination Shares, representing approximately 0.02 per cent. of the existing issued ordinary share capital of Imagination on 21 September 2017 (being the last practicable date prior to publication of this Announcement). The irrevocable undertakings given by those Imagination Directors will cease to be binding if, among other things, the Scheme lapses or is withdrawn.
These irrevocable undertakings also include an undertaking to vote in favour of the MIPS Disposal at the MIPS General Meeting (to the extent required under Rule 21.1 of the Code).
In total, therefore, CBFI has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting in respect of 68,387 Imagination Shares representing approximately 0.02 per cent. of Imagination’s issued ordinary share capital.
Further details of these irrevocable undertakings are set out in Appendix 3 to this Announcement.
Information relating to CBFI and Canyon Bridge
CBFI
CBFI is a newly incorporated company under the laws of England and Wales for the purposes of the Acquisition and is owned indirectly by Canyon Bridge, whose general partner is U.S. headquartered Canyon Bridge Capital Partners, LLC and whose manager is Canyon Bridge Management Corp. CBFI has not traded since its date of incorporation,
and CBFI has not entered into any obligations, other than in connection with the Acquisition.
Canyon Bridge
Canyon Bridge is a global private equity investment fund which is headquartered in Palo Alto, California. It is focused on providing equity and strategic capital to enable technology companies, including those with a particular focus on the semi-conductor industry, to reach their full growth potential. Canyon Bridge combines a deep knowledge of the global technology industry with experience in financial markets to provide high quality investment expertise in creating and maximising value. Transactions undertaken by Canyon Bridge comprise the proposed, but subsequently terminated, acquisition of Lattice Semiconductor Corporation, and a minority investment of approximately $10 million in a US-based technology company.
Canyon Bridge seeks to invest in growth companies with strong platforms led by experienced management where Canyon Bridge can provide the capital and expertise to expand into growth markets globally, including through additional investments and accretive acquisitions.
Canyon Bridge currently has approximately US$1.5 billion of funds under management which has been committed by Canyon Bridge’s initial anchor limited partner, Yitai Capital Limited, a Chinese state-owned enterprise.
Information relating to Imagination
Imagination creates and licenses semiconductor processor IP (intellectual property) for graphics, video and vision processing, general purpose and embedded processing (CPU & MCU). Imagination’s customers use Imagination’s silicon IP to create the Systems on Chips (SoC) that power electronic devices. Imagination has built three strong brands around these processing blocks: PowerVR in graphics and multimedia; MIPS in processors; and Ensigma in connectivity.
PowerVR develops and licenses a range of multimedia IP, from graphics processing units (GPUs) to GPU compute for imaging and vision processing. Imagination’s PowerVR graphics technologies are licensed for use in various applications including smartphones, tablets, TV and console apps.
The MIPS family of CPU IP is a portfolio of low-power, high-performance 32/64-bit processor architectures and cores, ranging from the high-performance cores for high-end applications processors down to extremely small cores for deeply embedded microcontrollers.
Ensigma develops and licenses programmable and fixed function blocks to deliver a family of multi-standard connectivity platforms, offering performance as well as silicon efficiency.
For the financial year ended 30 April 2017, Imagination generated sales of £145.2 million from continuing operations and adjusted operating profit of £29.2 million.
Financing
The cash consideration payable by CBFI under the terms of the Acquisition will be funded by equity commitments. Canyon Bridge has obtained an irrevocable guarantee from Industrial and Commercial Bank of China (Asia) Limited to fund the Acquisition consideration, which it will call on as an alternative to drawing down equity commitments (the “Guarantee“).
Citigroup Global Markets Limited, lead financial adviser to CBFI, is satisfied that the resources available to CBFI are sufficient to satisfy in full the cash consideration payable to Imagination Shareholders under the terms of the Acquisition.
Management, employees and locations
CBFI recognises the quality of Imagination’s management team and employees generally and their importance to the future success of Imagination.
Imagination and CBFI have had preliminary discussions on future incentivisation arrangements for the management and employees of Imagination, excluding executive directors. Whilst the details of the arrangements will only be agreed after completion of the Acquisition, CBFI intends to offer incentive arrangements that are comparable to current arrangements.
CBFI has no plans to make any changes as regards the continuing employment of employees and management. CBFI has confirmed to the Imagination Board that, following the Scheme becoming Effective, the existing contractual and statutory employment rights of all the employees of the Imagination Group will continue to be safeguarded and their accrued rights to pensions benefits protected. CBFI’s plans do not involve any change to the conditions of employment of Imagination’s employees, management and those of its subsidiaries.
CBFI does not intend to change the principal locations of Imagination’s places of business, or redeploy any fixed assets of Imagination. CBFI intends to maintain Imagination’s current UK headquarters. CBFI intends to continue operating Imagination by leveraging Canyon Bridge’s investment, technology and business expertise and by working with Imagination’s management to further enhance Imagination’s position in the computer chip manufacturing industry and related services.
The Imagination Board welcomes CBFI’s intentions with respect to the future operations of the business, in particular, the intentions to safeguard the existing employment rights of Imagination employees on the Scheme becoming Effective and to work with Imagination’s management going forward with no change to Imagination’s principal locations.
Imagination and CBFI are supportive of the proposed sale of MIPS to Tallwood, announced today, and the Acquisition is conditional on completion of the MIPS Disposal.
Imagination Share Plans
The Acquisition will extend to any Imagination Shares which are unconditionally allotted, issued or transferred to satisfy the exercise of existing options or vesting of awards under the Imagination Share Plans prior to the Scheme Record Time (or such earlier date as CBFI may, subject to the Code or with the consent of the Panel, decide). The
Acquisition will not extend to Imagination Shares issued after the Scheme Record Time and, instead, any Imagination Shares issued after that time shall be automatically transferred to CBFI, or as it directs, on the basis set out in paragraph 13, on the same terms as the Acquisition.
CBFI will make appropriate proposals to the holders of options and awards to acquire Imagination Shares granted under the Imagination Share Plans in accordance with Rule
15 of the Code. Further details of these proposals will be set out in the Scheme Document. Full details of the effect of the Acquisition on participants’ rights under the Imagination Share Plans, and the actions they may take in respect of their options and awards, will be communicated to participants in separate letters to be sent to them following publication of the Scheme Document.
Offer-related Arrangements
Confidentiality Agreement
Canyon Bridge Capital Partners, LLC and Imagination have entered into a confidentiality agreement dated 30 May 2017 (the “Confidentiality Agreement“) pursuant to which each party has undertaken, amongst other things, to: (a) keep confidential information relating to the Acquisition and the other party and not to disclose it to third parties unless permitted by the terms of the Confidentiality Agreement; and (b) use the confidential information for the sole purpose of the potential Acquisition. With certain exceptions, the confidentiality obligations will expire two years from the date of the Confidentiality Agreement.
The Confidentiality Agreement also contains undertakings from Canyon Bridge Capital Partners, LLC that for a period of 12 months, subject to certain exceptions, Canyon Bridge Capital Partners, LLC or any of its group undertakings and certain other associated persons shall not, without the prior written consent of Imagination, acquire or offer to acquire any interest in shares or other securities of Imagination (which undertaking ceases as at the date of this Announcement) and that, for a period of 12 months from the date of the Confidentiality Agreement, Canyon Bridge Capital Partners, LLC shall not, without Imagination’s prior written consent, solicit certain employees, officers, or customers of Imagination, subject to customary carve-outs.
Cooperation Agreement
CBFI, Canyon Bridge and Imagination have entered into a cooperation agreement dated
22 September 2017 (the “Cooperation Agreement”), the key terms of which are summarised below.
The Cooperation Agreement sets out (among other things):
Apple Settlement
As noted in paragraph 4 above, Imagination remains in dispute with Apple.
If, before the expiry of the period described below, Imagination reaches a full and final financial settlement with Apple under certain parameters (a “Settlement“) with respect to the Apple Dispute, Imagination and CBFI have agreed that, subject to certain other conditions, Imagination would be entitled to announce and pay an interim dividend or other distribution or return of capital of up to 50% of any Excess Amount less any costs incurred by Imagination in effecting such payment (a “Settlement Return“) without there
being an adjustment to the terms of the Offer. For these purposes, the Excess Amount is the amount of any Settlement which exceeds the value in respect of Apple taken into account by Canyon Bridge and CBFI in determining the amount of the cash consideration to be payable under the Acquisition. The value of the Apple royalties taken into account by CBFI in determining the terms of the Offer and certain contractual parameters with respect to any settlement have been agreed between Imagination and CBFI, but are not being publicly disclosed in order to maintain confidentiality.
Any Settlement Return would be conditional upon (i) the Settlement being reached by the earlier of 60 days following publication of this Announcement and the date the Acquisition becomes Effective and (ii) receipt of the Settlement proceeds by Imagination within 90 days of such settlement being reached.
If the Settlement occurs on the terms set out in the preceding paragraph, but Imagination is unable to fully implement the Settlement Return prior to the Acquisition becoming Effective, CBFI and Canyon Bridge have agreed to use all reasonable endeavours from the Acquisition becoming Effective to ensure that Imagination takes such steps as may be reasonably necessary (if any) to implement or complete the implementation of the Settlement Return (subject to Imagination having sufficient distributable profits and subject to all applicable law).
Any Settlement Return would be made to those Imagination Shareholders on the register of members of Imagination at the Scheme Record Date.
The above paragraphs are a summary only and the full terms are set out in the Co- operation Agreement. Further details will be set out in the Scheme Document (when published).
Imagination Shareholders should note that there is no certainty that any settlement will be reached with Apple within such relevant period (as described above), or, if reached, as to the amount of other terms of any such settlement. Accordingly, there is no certainty that any Settlement Return will be implemented.
If a Settlement Return is made, CBFI has agreed to waive its right under the terms of the Acquisition to reduce the consideration payable under the Acquisition by an equivalent amount.
Structure of the Acquisition
It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement between Imagination and the Scheme Shareholders, under Part 26 of the Companies Act. The Scheme is an arrangement between Imagination and the Scheme Shareholders. The procedure involves, among other things, an application by Imagination to the Court to sanction the Scheme, in consideration for which Scheme Shareholders will receive cash on the basis described in paragraph 2 above. The purpose of the Scheme is to provide for CBFI to become the owner of the entire issued and to be issued share capital of Imagination.
The Scheme is subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement and to the full terms and conditions to be set out in the Scheme
Document, and will only become Effective if, among other things, the following events occur on or before the Longstop Date:
If the Acquisition is effected by way of a Takeover Offer, there can be no certainty as to the level of the acceptance condition, or of CBFI’s willingness to waive or lower such acceptance condition. If such Takeover Offer becomes or is declared unconditional in all respects, where:
The Scheme Court Hearing and the General Meeting
The Acquisition (including the Scheme) will be put to Imagination Shareholders at the Scheme Court Hearing and the General Meeting, which are expected to be held in October. Notices to convene the Scheme Court Hearing (subject to the consent of the Court) and the General Meeting will be included in the Scheme Document.
The purpose of the Scheme Court Hearing is to seek the approval of the Imagination Shareholders for the Scheme and certain related matters.
The purpose of the General Meeting is to consider and, if thought fit, pass the Special Resolution which will, among other matters, provide that the Articles be amended to incorporate provisions requiring any Imagination Shares issued after the Scheme Record Time (other than to CBFI and/or its nominees) to be automatically transferred to CBFI, or
as it shall direct, on the same terms as the Acquisition (other than terms as to timings and formalities). The provisions of the Articles (as amended) will avoid any person other than CBFI and its nominees holding shares in the capital of Imagination after the Effective Date.
MIPS Disposal
Imagination has today separately announced that it has entered into an agreement with Tallwood, a company indirectly owned by Tallwood Venture Capital, with respect to the disposal of MIPS for $65 million, subject to customary adjustments. $40 million is payable in cash on Completion, with a deferred consideration of $25 million payable six months after Completion. Completion of the MIPS Disposal is subject to (i) the approval of Imagination Shareholders by way of an ordinary resolution at the MIPS General Meeting (to the extent required under Rule 21.1 of the Code) and (ii) the completion of the Reorganisation. The MIPS Disposal is not conditional on the Acquisition becoming Effective. However, the Acquisition is conditional on completion of the MIPS Disposal occurring. The MIPS Disposal is expected to be complete in October 2017. Imagination and CBFI have agreed that completion of the MIPS Disposal is a condition to the Acquisition.
Anti-trust approvals and notifications
The Acquisition is conditional on all notifications and filings under the HSR Act having been made in connection with the Acquisition on any aspect of the Acquisition and all waiting periods (including extension thereof) having expired or been terminated.
Delisting and re-registration
It is intended that dealings in Imagination Shares will be suspended at 5.00 p.m. London time on the Business Day prior to the Effective Date. It is further intended that an application will be made to the UK Listing Authority for the cancellation of the listing of the Imagination Shares on the Official List and to the London Stock Exchange for the cancellation of trading in Imagination Shares on the London Stock Exchange’s main market for listed securities, with effect as of or shortly following the Effective Date.
It is also intended that, following the Scheme becoming Effective, Imagination will be re- registered as a private company under the relevant provisions of the Companies Act.
Disclosure of interests in Imagination relevant securities
Except for the irrevocable undertakings referred to in paragraph 6 above, as at close of business on 21 September 2017 (being the latest practicable date prior to the date of this Announcement), neither CBFI, nor any of the directors of CBFI or any member of the CBFI Group, nor, so far as the directors of CBFI are aware, any person acting in concert with CBFI for the purposes of the Acquisition had any interest in, right to subscribe for, or had borrowed or lent any Imagination Shares or securities convertible or exchangeable into Imagination Shares, nor did any such person have any short position (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 take delivery, or any dealing arrangement of the kind referred to in Note 11 of the definition of acting in concert in the Code, in relation to Imagination
Shares or in relation to any securities convertible or exchangeable into Imagination Shares.
In the interests of secrecy prior to this Announcement, CBFI has not made any enquiries in respect of the matters referred to in this paragraph of certain parties who may be deemed under the Code to be acting in concert with CBFI for the purposes of the Scheme. Enquiries of such parties will be made as soon as practicable following the date of this Announcement and CBFI confirms that further disclosure in accordance with Rule 8.1(a) and Note 2(a)(i) on Rule 8 of the Code will be made as soon as possible, if required.
Overseas Shareholders
The availability of the Acquisition and the distribution of this Announcement to Imagination Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. Imagination Shareholders who are in any doubt regarding such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.
This Announcement does not constitute an offer for sale for any securities or an offer or an invitation to purchase any securities. Imagination Shareholders are advised to read carefully the Scheme Document and related Forms of Proxy once these have been dispatched.
Documents published on website
Copies of the following documents will, by no later than 12 noon (London time) on 25 September 2017, be published on Imagination’s website at https://www.imgtec.com/sales-process/ and the Canyon Bridge’s website at www.canyonbridge.com/#in-the-news until the end of the Offer Period relating to the Acquisition:
General
The Acquisition will be subject to the Conditions and certain further terms set out in Appendix 1 and the further terms and conditions set out in the Scheme Document when issued.
The Scheme will be governed by English law and will be subject to the jurisdiction of the courts of England and Wales. The Scheme will be subject to the applicable requirements of the Code, the Panel, the Listing Rules, the London Stock Exchange and the FCA.
The bases and sources of certain financial information contained in this Announcement are set out in Appendix 2. Certain terms used in this Announcement are defined in Appendix 4.
Rothschild has given and has not withdrawn its written consent to the issue of this Announcement with the inclusion of references to its name in the form and context in which they appear herein.
Citigroup Global Markets Limited has given and has not withdrawn its written consent to the issue of this Announcement with the inclusion of references to its name in the form and context in which they appear herein.
Enquiries
Imagination Technologies Group PLC +44 (0) 1923 260 511 Andrew Heath, Chief Executive Officer
Guy Millward, Chief Financial Officer
Citigroup Global Markets Limited +44 (0) 20 7986 4000
(Financial adviser and broker to CBFI and Canyon Bridge)
David Locala Jan Skarbek Luke Spells
Robert Redshaw (Corporate Broking) David Locala
Newgate Communications +44 (0) 20 7680 6550
(PR adviser to CBFI and Canyon Bridge)
Simon Gentry Alistair Kellie Zoë Pocock
Rothschild +44 (0) 20 7280 5000
(Lead financial adviser and sole Rule 3 adviser to Imagination)
Ravi Gupta Warner Mandel Yuri Shakhmin Pietro Franchi
Jefferies International +44 (0) 20 7029 8000
(Financial adviser and corporate broker to Imagination)
Nick Adams Daniel Aharoni David Watkins
Instinctif Partners +44 (0) 20 7457 2020
(PR adviser to Imagination PLC)
Adrian Duffield Kay Larsen Chantal Woolcock
Important notices
Citigroup Global Markets Limited (“Citi“), which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for CBFI and Canyon Bridge in connection with the matters set out in this Announcement and for no one else and will not be responsible to anyone other than CBFI and Canyon Bridge for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this Announcement.
N. M. Rothschild & Sons Limited (“Rothschild“), which is authorised by the FCA in the United Kingdom, is acting exclusively for Imagination and no one else in connection with the Acquisition and will not be responsible to anyone other than Imagination for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this.
Jefferies International Limited (“Jefferies“), which is authorised by the FCA in the United Kingdom, is acting exclusively for Imagination and no one else in connection with the Acquisition and will not be responsible to anyone other than Imagination for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this.
Further information
This Announcement is for information purposes only and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, 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 Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of Imagination in any jurisdiction in contravention of applicable law. The Acquisition will be made solely by means of the Scheme Document or any document by which the Acquisition is made, which will contain the full terms and conditions of the Acquisition including details of how to vote in respect of the Acquisition. Any vote in respect of the Scheme or other response in relation to the Acquisition should be made only on the basis on the information contained in the Scheme Document. Imagination urges each Imagination Shareholder to read the Scheme Document when it becomes available because it will contain important information relating to the Acquisition.
Please be aware that addresses, electronic addresses and certain other information provided by Imagination Shareholders, persons with information rights and other relevant persons for the receipt of communications from Imagination may be provided to CBFI during the Offer Period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.
This Announcement does not constitute a prospectus or prospectus equivalent document.
Overseas Shareholders
The release, publication or distribution of this Announcement in certain jurisdictions may be restricted by law and/or regulation. Persons who are not resident in the United Kingdom or who are subject to the laws and regulations of other jurisdictions should inform themselves of, and observe, any applicable requirements. In particular, the ability of persons who are not resident in the United Kingdom to vote their Imagination Shares with respect to the Scheme at the Court Meeting, or to appoint another person as proxy 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 and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This Announcement has been prepared for the purposes of complying with English law and the 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 of England.
Unless otherwise determined by CBFI or required by the Code, and permitted by applicable law and regulation, the Acquisition 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 Scheme 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 all documents relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this Announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.
The availability of the Acquisition to Imagination Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.
Further details in relation to Overseas Shareholders will be contained in the Scheme Document.
The Acquisition shall be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange and the FCA.
Additional Information for US Investors
The Acquisition relates to the shares of an English company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. Neither the proxy solicitation rules nor Acquisition) the tender offer rules under the US Securities Exchange Act of 1934, as amended, will apply to the Acquisition. Moreover,
the Acquisition is subject to the disclosure requirements and practices applicable in the United Kingdom and under the Code to schemes of arrangement, which differ from the disclosure requirements of the US proxy solicitation rules and tender offer rules. Financial information included in this Announcement has been prepared, unless specifically stated otherwise, in accordance with accounting standards applicable in the UK and thus may not be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US.
The information contained in this document has neither been approved or disapproved by the US Securities and Exchange Commission or any US state securities commission. Neither the US Securities and Exchange Commission, nor any state securities commission, has passed upon the fairness or merits of the proposal described in, nor upon the accuracy or adequacy of the information contained in, this Announcement.
It may be difficult for US holders of Imagination Shares to enforce their rights and claims arising out of the US federal securities laws, since CBFI and Imagination are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. US holders of Imagination Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the 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 judgement.
The receipt of cash pursuant to the Acquisition by a US holder as consideration for the transfer of its Scheme Shares pursuant to the Scheme will likely be a taxable transaction for United States federal income tax purposes and under applicable United States state and local, as well as foreign and other, tax laws. Each Imagination Shareholder is urged to consult his or her independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him or her.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, CBFI or its nominees, or its brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, Imagination Shares outside of the US, other than pursuant to the Acquisition, until the date on which the Acquisition becomes Effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.
Forward looking statements
This Announcement (including information incorporated by reference in this Announcement), oral statements made regarding the Acquisition, and other information published by CBFI and Imagination contain statements which are, or may be deemed to be, “forward-looking statements”. 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 CBFI and Imagination 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 Acquisition on CBFI and Imagination, the expected timing and scope of the Acquisition and other statements other than historical facts. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words “targets”, “plans”, “believes”, “expects”, “aims”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “estimates”, “cost-saving”, “projects”, “goal”, “strategy”, “budget”, “forecast” or “might” or, words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of CBFI’s or Imagination’s operations resulting from the Acquisition; and (iii) the effects of government regulation on CBFI’s or Imagination’s business.
These forward looking statements are not guarantees of future financial performance. Except as expressly provided in this Announcement, they have not been reviewed by the auditors of CBFI or Imagination or their respective financial advisers. Such forward looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. These factors include the satisfaction of the Conditions, as well as additional factors, such as: fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen disasters or catastrophes; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Such forward-looking statements should therefore be construed in the light of such factors. Neither CBFI nor Imagination, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements. All subsequent oral or written forward looking statements attributable to CBFI or Imagination or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. CBFI and Imagination disclaim any obligation to update or revise any forward looking or other statements contained herein, whether as a result of new information, future events, or otherwise, other than in accordance with their legal and regulatory obligations.
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.
No profit forecasts or estimates
No statement in this Announcement 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 for Imagination for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Imagination.
Dealing disclosure requirements
Under Rule 8.3(a) of the 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) of the Code applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day 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 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 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3.30 pm (London time) on the business day 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 of the Code.
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 of the Code).
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 (0)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.
Publication on website and hard copies
A copy of this Announcement and the documents required to be published by Rule 26 of the Code will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Canyon Bridge’s website at www.canyonbridge.com/#in-the-news and Imagination’s website at https://www.imgtec.com/sales-process/. For the avoidance of doubt, the contents of those websites are not incorporated into and do not form part of this Announcement.
You may request a hard copy of this Announcement by contacting Citigroup Global Markets Limited on +44 (0)207 986 4000. You may also request that all future documents, announcements and information to be sent to you in relation to the Acquisition should be in hard copy form.
Market Abuse regulation
This Announcement contains inside information for the purposes of Article 7 of MAR. Market soundings (as defined in MAR) were taken in respect of a potential offer with the result that certain persons became aware of inside information (as defined in MAR) as permitted by MAR. this inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to Imagination and its securities.
Appendix 1
Conditions and Certain Further Terms of the Scheme and the Acquisition
Conditions to the Scheme and Acquisition
Scheme approval
Antitrust approvals and clearances
MIPS Disposal
Other notifications, waiting periods and Authorisations
General regulatory
Certain matters arising as a result of any arrangement, agreement, etc.
Certain events occurring since 30 April 2017
No adverse change, litigation, regulatory enquiry or similar
No discovery of certain matters regarding information, liabilities and environmental issues
Anti-corruption and criminal property
Waiver and invocation of the Conditions
Certain further terms of the Acquisition
Appendix 2 Bases and Sources
Appendix 3
Details of Irrevocable Undertakings
The following holders of Imagination Shares have given irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting in relation to the following Imagination Shares and in favour of any shareholders’ resolution to approve the MIPS Disposal:
Name Number of Imagination Shares
Percentage of issued ordinary share capital of Imagination
Andrew Heath 58,387 (1) 0.02%
Guy Millward 0 (2) 0.00%
Kate Rock 10,000 0.00%
The irrevocable undertakings given by the above listed Imagination Directors will cease to be binding if:
Appendix 4 Definitions
The following definitions apply throughout this Announcement unless the context requires otherwise.
“£”, “Sterling”, “pence” or “p” the lawful currency of the UK
“Acquisition” the direct or indirect acquisition of the entire issued and to be issued share capital of Imagination by CBFI (other than Imagination Shares already held by CBFI, if any) to be implemented by way of the Scheme (or, if CBFI so elects and with, if required, the consent of the Panel, a Takeover Offer) and, where the context requires, any subsequent revisions, variation, extension or renewal thereof
“Announcement” this announcement made pursuant to Rule 2.7 of the Code
“Apple” means Apple Inc.
“Apple Dispute” means the assertion by Apple to Imagination that no royalties will be payable by Apple to Imagination in relation to New Licensed Chip Products pursuant to the current licence and royalty agreement between Apple and Imagination
“Articles” articles of association of Imagination from time to time
“Authorisations” regulatory authorisations, orders, recognitions, grants, consents, clearances, confirmations, certificates, licences, permissions or approvals, in each case, of a Third Party
“Business Day” a day (other than Saturdays, Sundays and public holidays) on which banks are open for business in London, United Kingdom
“Canyon Bridge” Canyon Bridge Fund I, LP
“CBFI” CBFI Investment Limited, a company incorporated in England and Wales with company number 10968614
“CBFI Directors” the directors of Imagination as at the date of this Announcement
“CBFI Group” CBFI and its subsidiary undertakings, and where the context permits, each of them
“CMA Phase 2 Reference” a reference, pursuant to sections 22 or 33 of the
Enterprise Act 2002, of the Acquisition or any part of it to the Chair of the Competition and Markets Authority for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013
“Code” the City Code on Takeovers and Mergers
“Companies Act” the Companies Act 2006, as amended from time to time
“Completion” completion of the MIPS Disposal
“Conditions” the conditions to the implementation of the Acquisition (including the Scheme) as set out in Appendix 1 to this Announcement and to be set out in the Scheme Document
“Confidentiality Agreement” the confidentiality agreement entered into by
Imagination and CBFI on 30 May 2017
“Cooperation Agreement” the cooperation agreement entered into by
Imagination, CBFI and Canyon Bridge on 22 September 2017
“Court” the High Court of Justice of England and Wales
“Court Meeting” the meeting(s) of the Scheme Shareholders to be convened by order of the Court pursuant to section 896 of the Companies Act, notice of which will be set out in the Scheme Document, for the purpose of approving the Scheme (with or without amendment), including any adjournment thereof
“CREST” the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755)) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in such Regulations) in accordance with which securities may be held and transferred in uncertificated form
“Daily Official List” the daily official list of the UK Listing Authority “Dealing Disclosure” an announcement pursuant to Rule 8 of the Code
containing details of dealings in interests in relevant securities of a party to an offer
“Disclosed” the information fairly disclosed by, or on behalf of Imagination, (i) in the annual report and accounts of Imagination for the financial year ended 30 April 2017; (ii) in this Announcement, or in any other announcement to a Regulatory Information Service by, or on behalf of Imagination prior to the
publication of this Announcement; (iii) in any of the documents, papers or written information made available in the data rooms maintained by Merrill entitled “Hydrogen VDR” relating to the Acquisition on or before the Business Day which is two Business Days before the date of this Announcement; or (iv) to Canyon Bridge and/or its professional advisers during diligence meetings and calls with Imagination’s management in relation to the Acquisition and reduced in writing and delivered to Canyon Bridge prior to the date of this Announcement by being placed in the Project Hydrogen data room; and (v) in the MIPS SPA
“Effective” in the context of the Acquisition: (i) if the Acquisition is implemented by way of a Scheme, the Scheme having become effective in accordance with its terms; or (ii) if the Acquisition is implemented by way of a Takeover Offer, the Takeover Offer has become or been declared unconditional in all respects in accordance with the requirements of the Code
“Effective Date” the date upon which the Scheme becomes effective in accordance with its terms
“Employees” the employees (including the executive directors) of the Imagination Group
“Excluded Shares” any Scheme Shares beneficially owned by CBFI
or any parent or subsidiary undertaking (as defined in the Companies Act) of CBFI
“FCA” the United Kingdom Financial Conduct Authority “Formal Sale Process” means the formal sale process announced by
Imagination on 22 June 2017
“Forms of Proxy” the form of proxy in connection with each of the Court Meeting and the General Meeting, which shall accompany the Scheme Document
“General Meeting” the general meeting of Imagination to be
convened in connection with the Scheme, notice of which will be set out in the Scheme Document, including any adjournment thereof
“Guarantee” has the meaning given to it in paragraph 9 of this Announcement
“HSR Act” the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended and the regulations
promulgated thereunder
“Imagination” Imagination Technologies Group PLC
“Imagination Board” the board of directors of Imagination
“Imagination Directors” the directors of Imagination as at the date of this Announcement
“Imagination Group” Imagination and its subsidiary undertakings, and
where the context permits, each of them
“Imagination Shareholders” the registered holders of Imagination Shares from
time to time
“Imagination Share Plans” the (i) Imagination Employee Share Plan and the
Imagination 2016 Employee Share Plan (ii) the Imagination 2013 Long Term Incentive Plan and
(iii) the Imagination Share Incentive Plan, in each case as amended from time to time
“Imagination Shares” ordinary shares of £1.00 each in the capital of
Imagination
“Joint Defence Agreement” the Joint Defence Agreement entered into by
Imagination and Canyon Bridge on 31 July 2017
“Listing Rules” the rules and regulations made by the FCA in its capacity as the UK Listing Authority under the Financial Services and Markets Act 2000, and contained in the UK Listing Authority’s publication of the same name
“Longstop Date” 5.00pm London time on 22 July 2018, or such later date (if any) as CBFI and Imagination may agree and (if required) the Panel and the Court may allow
“London Stock Exchange” London Stock Exchange plc
“MAR” Article 7 of EU Regulation 596/2014
“MIPS Disposal” the disposal by Imagination of the MIPS division of its business pursuant to the terms and conditions contained in the MIPS SPA, to Tallwood, and any other transactions contemplated by the MIPS SPA, including the Reorganisation
“MIPS General Meeting” the general meeting of Imagination to be
convened if required pursuant to Rule 21.1 of the Code in connection with the MIPS Disposal, including any adjournment therof
“MIPS SPA” the stock purchase agreement dated 22 September 2017 between Imagination and
Tallwood
“Offer Period” has the meaning given to it in the Code
“Official List” the official list of the London Stock Exchange “Opening Position Disclosure” an announcement containing details of interests or
short position in, or rights to subscribe for, any relevant securities of a party to the offer if the person concerned has such a position
“Overseas Shareholders” Imagination Shareholders who are resident in,
ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom
“Panel” the Panel on Takeovers and Mergers
“Registrar of Companies” the Registrar of Companies in England and Wales
“Regulatory Information Service”
any information service authorised from time to time by the FCA for the purpose of disseminating regulatory announcements
“Reorganisation” the transfer of certain entities, assets and Employees among Imagination’s subsidiaries, on the terms and conditions set out in the MIPS SPA, with the express purpose of separating all assets, liabilities and Employees belonging to the MIPS division from the remaining assets of Imagination so that the worldwide MIPS business will be transferred to Tallwood upon completion of the MIPS Disposal;
“Restricted Jurisdiction” any jurisdiction where the relevant action would
constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which CBFI or Imagination regards as unduly onerous
“Rothschild” N. M. Rothschild & Sons Limited
“Scheme” the scheme of arrangement proposed to be made under Part 26 of the Companies Act between Imagination and the Scheme Shareholders, with or subject to any modification, addition or condition approved or imposed by the Court and agreed to by Imagination and CBFI
“Scheme Court Hearing” the hearing of the Court to sanction the Scheme “Scheme Court Order” the order of the Court sanctioning the Scheme
under Part 26 of the Companies Act
“Scheme Document” the document to be sent to (among others)
Imagination Shareholders containing and setting out, among other things, the full terms and conditions of the Scheme and containing the notices convening the Court Meeting and General Meeting
“Scheme Record Time” the time and date specified in the Scheme
Document, expected to be 6.00 p.m. on the Business Day immediately after the Scheme Court Hearing
“Scheme Shareholders” holders of Scheme Shares “Scheme Shares” Imagination Shares:
but in each case other than the Excluded Shares “Scheme Voting Record Time” the time and date specified in the Scheme
Document by reference to which entitlement to vote on the Scheme will be determined
“Settlement” has the meaning given to it in paragraph 13Appendix 1A.13
“Settlement Return” has the meaning given to it in paragraph 13 “Significant Interest” in relation to an undertaking, a direct or indirect
interest of 10 per cent. or more of the total voting rights conferred by the equity share capital (as defined in section 548 of the Companies Act) of such undertaking
“Special Resolution” the special resolution to be proposed by
Imagination at the General Meeting in connection with, among other things, the approval of the
Scheme, the alteration of Imagination’s articles of association, the registration of Imagination as a private company following the Scheme becoming Effective, and such other matters as may be necessary to implement the Scheme and the delisting of the Imagination Shares
“Takeover Offer” a takeover offer within the meaning of Part 28 of the Companies Act
“Tallwood” Tallwood MIPS, Inc., a company indirectly owned by Tallwood Venture Capital
“Third Party” any central bank, ministry, government or governmental, quasi-governmental (including the European Union), national, state, municipal or local government (including any subdivisoin, court, administrative agency or commission or other authority thereof), supranational, statutory, regulatory, environmental, administrative, fiscal or investigative body, authority, court, trade agency, association, institution, professional or environmental body, employee representative body or bodies responsible for the review and/or approval of mergers, acquisitions, concentrations, joint ventures or any other similar matter or any other body or person whatsoever (including any national or supranational anti-trust or merger control authority, any sectoral ministry or regulator and any foreign investment review body), in any relevant jurisdiction
“UK” or “United Kingdom” the United Kingdom of Great Britain and Northern Ireland
“United States of America”, “United States” or “US” the United States of America, its territories and possessions, any state of the United States and the District of Columbia
“United States Antitrust Law” the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, or any other United States federal or state law that is designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade
“UK Listing Authority” the FCA acting in its capacity as the competent authority for listing under the Financial Services and Markets Act 2000
“US Exchange Act” the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder
“Wider CBFI Group” CBFI, Canyon Bridge and Canyon Bridge Capital Partners, LLC and their respective associated undertakings and any other body corporate, partnership, joint venture or person in which CBFI, Canyon Bridge, Canyon Bridge Capital Partners, LLC and such undertakings (aggregating their interests) have a Significant Interest
“Wider Imagination Group” Imagination and associated undertakings and any other body corporate, partnership, joint venture or person in which Imagination and all such undertakings (aggregating their interests) have a Significant Interest
For the purposes of this Announcement, “subsidiary”, “subsidiary undertaking”, “undertaking”, “associated undertaking” have the meanings given by the Companies Act.
References to an enactment include references to that enactment as amended, replaced, consolidated or re-enacted by or under any other enactment before or after the date of this Announcement. All references to time in this Announcement are to London time unless otherwise stated.