TIDMCRE
RNS Number : 9857W
Creston PLC
30 November 2010
30 November 2010
Creston plc
Proposed Acquisition of US Healthcare Communications
Businesses
for up to GBP19.5 million
Creston plc, the insight and communications group, today
announces that the Board has entered into a conditional agreement
to acquire substantially all of the assets and liabilities of both
the healthcare public relations business, Cooney/Waters, and the
healthcare advocacy business, Alembic Health Communications,
Cooney/Waters' wholly owned subsidiary, for a cash-only
consideration of up to GBP19.5million ($30.8 million). The
Acquisition is conditional, inter alia, upon the approval of
Creston Shareholders.
Based in Manhattan, New York, and with a staff of approximately
50 people, Cooney/Waters and Alembic Health Communications
(together the "Cooney/Waters Businesses") are specialist
communications agencies with an exclusive focus on healthcare and
pharmaceutical PR and health advocacy.
Consideration Highlights
-- The total cash consideration of up to GBP19.5 million ($30.8
million) is to consist of:
o An initial consideration of GBP5.9 million ($9.4 million)
payable on Closing; and
o An additional earn-out consideration of up to a maximum
GBP13.5 million ($21.4 million) payable in two instalments based on
the averaged combined earnings before interest and tax of the
Cooney/Waters Businesses for the periods from Closing to 31 March
2013 and 31 March 2015.
-- The Initial payment is to be funded from existing bank
facilities, with future earn-out payments being funded by the
Enlarged Group's future operating cash flows.
Cooney/Waters Highlights
-- Founded in 1992, Cooney/Waters is one of the highest ranked
independent healthcare PR agencies in the US and, in April 2010,
was named Healthcare Agency of the Year by the Holmes Report, a
leading communications industry publication.
-- Founded and chaired by Lenore Cooney, Cooney/Waters has an
experienced management team with long tenures of service, all of
whom will remain with the company in the Enlarged Group.
-- Cooney/Waters has long standing relationships with its
clients, which range from government enterprises to large
pharmaceutical companies including Abbott Fund, Sanofi Pasteur and
Coca-Cola Company.
-- Cooney/Waters has a strong cultural and strategic fit with
Creston's healthcare PR agency, Red Door Communications, which
provides similar services and expertise in the UK.
-- In 2008, the two companies founded the Health Collective
Network, a multinational group of 10 specialist consultancies,
which has led to a number of new business successes for both firms
since formation.
Acquisition Benefits
The Directors believe that the acquisition will:
-- Enable the Cooney/Waters Businesses and Creston Health to
share knowledge of and expertise on their respective markets in the
US and the UK, allowing the Enlarged Group to benefit from enhanced
capabilities in healthcare communications.
-- Provide the necessary scale required to compete more
effectively for larger global briefs in healthcare
communications.
-- Increase the profile of Creston Health in a consolidating
industry where fewer, larger clients require both tailored, local
solutions and global reach from their consultancies.
-- Create a stronger competitive advantage for Creston Health,
leading to an increased level of new business opportunities and
lead generation.
The Board expects the Acquisition to be earnings enhancing for
the Enlarged Group in the first full financial year following
Closing.
Don Elgie, Chief Executive of Creston, said:
"Cooney/Waters is an industry leading firm with an excellent
track record and a blue-chip client list. We have been impressed by
the way that Lenore Cooney and her team have built the
Cooney/Waters Group, and their high levels of expertise and service
delivery. Cooney/Waters' strong cultural and strategic fit with Red
Door, our UK healthcare PR firm, will enable seamless integration
with Creston, which will open up new opportunities for growth in
the US and Europe."
Lenore Cooney, Founder and Chairman of Cooney/Waters,
commented:
"The proposed acquisition by Creston represents the next stage
of growth for the Cooney/Waters Group, enhancing our capabilities
and bringing innovation to our clients' brands and organisations
both in the US and internationally. This important step builds on
our successful two year affiliation with Creston's Red Door
Communications and offers strong synergistic and operational
benefits both for Cooney/Waters and Creston."
There will be a presentation for analysts at 8.30am at the
offices of Investec Securities. Please contact Creston on 020 7930
9757 for details.
For further information, contact:
Creston plc Tel: 020 7930 9757
Don Elgie, Chief Executive
Barrie Brien, COO & CFO
Sarah Macleod, Communications Director
Investec Tel: 020 7597 5120
James Grace
David Flin
Carlton Nelson
Investec, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively
for Creston and no one else in connection with the Disposal and
this announcement and will not be responsible to anyone other than
Creston for providing the protections afforded to clients of
Investec nor for providing advice in connection with the Disposal
or this announcement or any matter referred to herein.
CRESTON PLC
Proposed Acquisition of the Cooney/Waters Businesses
1. Introduction
The Board of Creston is pleased to announce that C Waters
Acquisition and Alembic Acquisition, both US subsidiaries of
Creston, has entered into a conditional agreement with
Cooney/Waters to acquire substantially all of the assets and
certain specified liabilities and the healthcare public relations
business of Cooney/Waters and substantially all of the assets and
certain specified liabilities and the healthcare advocacy business
of Alembic Health, Cooney/Waters' wholly owned subsidiary (together
the "Cooney/Waters Businesses"), both based in the United States of
America, for a consideration of up to GBP19.5 million ($30.8
million). GBP5.9 million ($9.4 million) will be payable in cash on
Closing and up to a maximum of GBP13.5 million ($21.4 million) in
additional earn-out cash consideration which will be payable in
2013 and 2015, such payments to be calculated by reference to the
performance of the Cooney/Waters Businesses since the Closing
Date.
The Acquisition is of sufficient size relative to that of the
Group to constitute a Class 1 transaction under the Listing Rules
and is therefore conditional upon, inter alia, the approval of
Shareholders. Approval of the Acquisition is being sought at a
General Meeting of the Company to be held at 12.00 p.m. on 15
December 2010 at the offices of Olswang LLP, 90 High Holborn,
London, WC1V 6XX. If the Resolution is passed at the General
Meeting on 15 December 2010, then Closing is expected to take place
shortly thereafter.
2. Information on the Cooney/Waters Businesses
Formed in 1992 and based in New York, United States of America,
Cooney/Waters is an independent healthcare communications agency
with a track record of delivering award-winning campaigns to an
international client base. With a staff of approximately 50 people,
Cooney/Waters provides a full range of public relations and public
affairs services across a number of therapeutic areas to
healthcare, pharmaceutical and biotechnology enterprises throughout
the world.
Within a broad health and medical communications offering,
Cooney/Waters specialises in strategic marketing, public education,
advocacy relations professional outreach, health science
communication, corporate reputation building and policy and issues
management programmes.
The Cooney/Waters Group's clients range from government
enterprises to industrial and non-profit organisations. Notable
clients include Abbott Fund, the Coca-Cola Company, Purdue Pharma,
Sanofi Pasteur and UCB, Inc.. The Cooney/Waters Businesses' top six
clients by revenue accounted for approximately 96 per cent. of the
total revenue generated in the year ended 31 December 2009. The
Cooney/Waters Businesses' largest client, whom they have worked
with for over 18 years, represented approximately 44 per cent. of
total revenue in the same period. For this client, however,
Cooney/Waters services ten separate accounts each of which has a
separate budget holder. The Cooney/Waters Businesses' second
largest client, which represented approximately 26 per cent. of
total revenues over the same period, is an entity that has
historically been funded by a number of pharmaceutical companies,
one of whom is the Cooney/Waters Businesses' largest client.
Cooney/Waters services eight separate accounts for this client.
For the year ended December 2009 the Cooney/Waters Businesses
recorded revenue of $12.3 million (GBP7.6 million) and a loss
before tax of $0.9 million (GBP0.6 million) (which includes the
payment of $4.9 million (GBP3.0 million) relating to director
emoluments, constituting annual salary and bonus payments (the
latter representing the majority of the charge)) and gross assets
of $8.5 million (GBP5.3 million) at the period end. The
Cooney/Waters Businesses' underlying operating margins are broadly
in line with those of Creston's other healthcare agencies.
Cooney/Waters is one of the highest ranked independent
healthcare PR agencies in the US by O'Dwyers, and in April 2010 was
named Healthcare Agency of the Year by The Holmes Report, a leading
communications industry publication.
Cooney/Waters' subsidiary Alembic Health represents
approximately one third of the revenues of the Cooney/Waters
Businesses. Alembic Health was formed in 2008 to specialise in
health advocacy communications, informing public policy to advance
public health. The Directors believe that the increasing complexity
and evolving nature of healthcare policy and practice in the US and
globally makes health advocacy an important area of growth for the
Cooney/Waters business. Alembic Health, whilst wholly owned,
operates separately from the other Cooney/Waters divisions. Recent
notable campaigns include: working with the National Foundation for
Infectious Diseases on comprehensive educational and promotional
activities designed to increase awareness in the US among
healthcare providers and consumers about the severity of influenza
and the benefits of immunisation; and with the National Meningitis
Association on a campaign across the US to raise awareness of
meningococcal disease and reinforce the importance of
vaccination.
Cooney/Waters has a history of working with Creston through
Creston's subsidiary, Red Door Communications, which provides
similar services and expertise of a similar calibre to
international clients in the UK. Cooney/Waters' areas of expertise
are closely aligned with those of Red Door Communications and the
Directors believe the two businesses are culturally compatible. In
2008, the two companies (together with 6 others) formed The Health
Collective Network, a multinational group of 10 specialist
consultancies set up to develop and manage healthcare communication
programmes across international markets. The collaboration has
resulted in a number of new international client opportunities for
both firms including supporting medical and science communication
and new programming in 2009 for Therakos Photopheresis (a Johnson
& Johnson company).
3. Background to and reasons for the Acquisition
Since 2009 Creston has been investing in its Health division to
complement its existing Insight and Communications divisions. The
Directors believe that the acquisition of the Cooney/Waters
Businesses will enhance strategically the Group's offering as well
as providing a number of additional benefits. One key benefit of
the Acquisition is the ability of the Cooney/Waters Businesses and
Creston Health to share knowledge and expertise on the contrasting
regulatory systems of Europe and the US, and the different
approaches to pharmaceutical marketing that the Directors believe
these systems require. By combining these skills, the Directors
believe that the Enlarged Group will benefit from enhanced
capabilities in healthcare communications. In addition, the
Directors believe that there are both operational and synergistic
benefits to be gained from the inclusion of the Cooney/Waters
Businesses within the Group.
Since forming the Health division in April 2009, the existing
Insight and Communications divisions have benefitted from its
expertise in the field of healthcare communications. The division
has continued to perform above management's expectations in a
recessionary environment and a consolidating healthcare industry.
In the financial year ended 31 March 2010, the Health division
generated revenue growth of 5 per cent. whilst continuing to build
its capabilities through the development of innovative new
offerings in areas such as medical education, social media and
digital marketing.
Whilst the Health division continues to benefit from commercial
success in its domestic market, the Directors believe that in
addition to raising the profile of the Health division, the
Acquisition will create a specialist healthcare communications
platform in the two key Western
markets of the UK and the US, generating new business
opportunities within both agencies and across the Enlarged Group.
In addition, the Directors believe that the Acquisition will enable
the Enlarged Group to capitalise on its innovative offering and to
compete more efficiently and more effectively for global
contracts.
This offering is seen as increasingly important in a
consolidating industry where fewer, larger clients require both
tailored, local solutions and global reach from their consultancies
despite increasing economic pressures.
Accordingly, in line with Group strategy, the Directors believe
that an international footprint in healthcare communications is
necessary to deliver enhanced levels of growth in this rapidly
evolving industry.
4. Principal terms of the Acquisition
-- Under the terms of the Acquisition Agreement:
o C Waters Acquisition has agreed to acquire substantially all
of the business and assets of Cooney/Waters and certain specified
assets of Alembic Health;
o Alembic Acquisition has agreed to acquire substantially all of
the business and assets of Alembic Health that are not directly
acquired by C Waters Acquisition; and
o C Waters Acquisition and Alembic Acquisition will assume
certain specified liabilities. Liabilities not being assumed
include US$0.3 million (GBP0.2 million) of income tax liabilities
and US $1.0 million (GBP0.6 million) of other liabilities.
-- The purchase price will be an amount up to US $30,750,000
depending on the financial results of the Cooney/Waters Businesses,
to be paid in three instalments.
-- The first instalment of the purchase price is US $9,360,000
and is payable on the Closing Date. The second instalment will be
calculated by reference to a multiple of 3.5 times C Waters
Acquisition and Alembic Acquisition's combined average annual
earnings before interest and taxes during the period from the
Closing Date to 31 March 2013 and will not exceed US $10,000,000.
The third and final instalment will be calculated by reference to a
multiple of between 5.0 and 5.5 times C Waters Acquisition and
Alembic Acquisition's combined average annual earnings before
interest and taxes during the period from the Closing Date to 31
March 2015 and when aggregated with the first and second
instalments will not exceed the overall cap on the purchase price
of US $30,750,000.
-- Closing is conditional, inter alia, on the passing of the
Resolution by the Shareholders, and Cooney/Waters and Alembic
Health not having suffered any event which has a material adverse
effect on the Cooney/Waters Businesses.
-- The Acquisition Agreement contains a number of
representations, warranties and indemnities which are customary for
a transaction of this nature.
-- Undertakings have been given by Cooney/Waters and Alembic
Health that they will carry on business as normal until the Closing
Date. Cooney/Waters and Alembic Health will ensure that the
Cooney/Waters Businesses have a minimum aggregate cash balance of
$700,000 and net assets balance of US $900,000 on Closing. In the
event that either the cash balance is below $700,000 or the net
assets balance is below $900 000 then C Waters Acquisition and
Alembic Acquisition will be reimbursed by Cooney/Waters and Alembic
Health for the shortfall. Where either there is excess cash over
$700,000 or excess net assets over $900,000 then such excess will
become payable to Cooney/Waters and Alembic Health with any payment
capped at $3,400,000, such payment being funded by the excess cash
balance acquired.
-- Creston has agreed to guarantee the obligations of C Waters
Acquisition and Alembic Acquisition to pay the purchase price and
to indemnify Cooney/Waters and Alembic Health in the case of a
breach of warranty or covenant by C Waters Acquisition or Alembic
Acquisition.
5. Directors, management and employees of the Cooney/Waters
Businesses
Creston attaches great importance to the skills and experience
of the long serving existing management and employees of the
Cooney/Waters Businesses. Lenore Cooney, founder and Chief
Executive Officer, and each of the key individuals of the
Cooney/Waters Businesses have agreed to enter into new employment
contracts with C Waters Acquisition and Alembic Acquisition
subsequent to Closing. In addition, under the terms of the
Acquisition Agreement, C Waters Acquisition and Alembic Acquisition
agreed to adopt an incentive plan under which they will pay up to
$4.3 million in cash to certain key employees of C Waters
Acquisition and Alembic Acquisition (excluding Lenore Cooney) as an
additional employment incentive. Payments under the plan will be
calculated by reference to the earnings of the Cooney/Waters
Businesses and paid in 2013 and 2016 to those participants who are
still employees at that time. Any payments made to participants in
2013 will be capped at $1,000,000 in aggregate and any payments
made to participants in 2016 will be capped at $3,250,000 in
aggregate. Directors of Creston may not participate in the
plan.
Upon Completion, it is intended that Timothy Bird (Executive
Vice President and General Manager of Cooney/Waters) will join the
Creston Health management committee to enable the Enlarged Group to
exploit collaborative opportunities in client accounts and service
offerings.
6. Financial effects of the Acquisition on the Group
The Board believes that the Acquisition will be earnings
enhancing for the Enlarged Group in the first full financial year
following Closing. This statement is not meant or intended to be a
profit forecast, and should not be interpreted to mean that the
earnings per share of Creston following the Acquisition will
necessarily match or exceed the historical published earnings per
share.
The table below summarises the financial performance of
Cooney/Waters for the three years ended 31 December 2009:
Year ended 31 December 2007 2008 2009
$'000 $'000 $'000
Revenue 10,105 10,239 12,329
Profit/(Loss) before interest
and taxation 1,442 1,056 -934
Profit/(Loss) for the year 1,510 969 -1,091
Gross assets 6,704 8,686 8,456
The loss before interest and tax for the year ended 31 December
2009 of $0.9 million was significantly less than the profits
recorded in the two preceding years ended 31 December 2007 and 31
December 2008, primarily as a result of the $4.9 million of
director emoluments (2007: $1.5 million; 2008: $1.8 million) paid
by Cooney/Waters during the period.
The initial payment of GBP5.9 million ($9.4 million), payable on
Closing will be funded from Creston's existing GBP25 million
committed bank facilities which at 30 September 2010 were undrawn.
It is anticipated that the future consideration payments will be
funded by the Enlarged Group's future operating cash flows. The
Directors believe that the Enlarged Group will be able to obtain
tax relief in the US on the majority of the consideration payments
over 15 years.
At 30 September 2010 the Group had net assets of GBP95.4 million
and net cash of GBP0.2 million. Following the Acquisition, the pro
forma net assets of the Enlarged Group as at 30 September 2010
would have been GBP92.7 million and pro forma net debt of GBP2.4
million. If the estimated contingent deferred consideration
liabilities, which are due over the next five years, of GBP8.9
million are included (which the Directors believe currently
represents the most likely amount to be paid), the pro forma net
debt increases to GBP11.3 million. The Board remains committed to
controlling the Enlarged Group's net debt position and ensuring the
Acquisition's impact on the Enlarged Group does not exceed the
gearing levels previously set by the Board.
7. Current trading and prospects
On 30 November 2010 the Group announced its interim results for
the six months ended 30 September 2010. This announcement contained
the following statement:
"After a particularly strong revenue performance in the first
half of the year, there is positive momentum across the Group and
the new business pipeline remains active. During the second half,
anticipated new business wins are expected to offset tightening
public sector research and marketing budgets which, although
minimal, will have some impact on the Group.
Our second half is traditionally our strongest period. With
continuing new business successes, the upside from investments in
the first half and the proposed acquisition of Cooney Waters, we
believe we are well positioned for the period ahead."
8. Recommendation
The Board, who has received financial advice from Investec, is
of the opinion that the Acquisition is in the best interests of the
Company and Shareholders as a whole. In providing advice to the
Board, Investec has taken into account the Board's commercial
assessments.
Accordingly, the Board unanimously recommends that you vote in
favour of the Resolution to be proposed at the General Meeting, as
the Directors who are interested in shares intend to do in respect
of their own beneficial holdings, which amount in aggregate to
2,277,821 Ordinary Shares and represent approximately 3.71 per
cent. of Creston's issued share capital as at 29 November 2010 (the
latest practicable date prior to publication of this
announcement).
Shareholders should read the whole of the circular to be sent to
them and not just rely on the summarised information set out in
this announcement.
Definitions
The following definitions apply throughout this document, unless
the context requires otherwise:
Acquisition the proposed acquisition of substantially all of the
business and assets of Cooney/Waters and Alembic Health and the
assumption of certain specified liabilities relating to the
Cooney/Waters Businesses pursuant to the Acquisition Agreement;
Acquisition Agreement the agreement relating to the
Acquisition;
Alembic Acquisition Alembic Acquisition LLC, an indirect
subsidiary of Creston incorporated in Delaware with registered
number 4898254 whose registered office is at 160 Greentree Drive,
Suite 101, Dover, DE19904;
Alembic Health Alembic Health Communications Inc., a New York
corporation whose registered office is at 90th 5th Avenue, 8th
Floor, New York, NY10011;
Board the board of directors of Creston;
business day any day, other than a Saturday, Sunday or public or
bank holiday, on which banks are generally open for business in the
City of London;
C Waters Acquisition C Waters Acquisition LLC, an indirect
subsidiary of Creston incorporated in Delaware with registered
number 4898257 whose registered office is at 160 Greentree Drive,
Suite 101, Dover, DE 19904;
Creston or Company Creston plc, a company incorporated in
England and Wales with registered number 210505 whose registered
office is at 30 City Road, London, EC1Y 2AG
Creston Share Schemes the EMI Scheme, the Sharesave Scheme, the
Unapproved Plan and the LTIP;
Closing the completion of the Acquisition in accordance with the
terms of the Acquisition Agreement;
Closing Date the date of completion of the Acquisition in
accordance with the terms of the Acquisition Agreement;
Companies Act 2006 the Companies Act 2006, as amended;
Cooney/Waters Cooney/Waters Group, Inc., a New York corporation
whose registered office is at 104 5th Avenue, New York,
NY10011;
Cooney/Waters Businesses the healthcare and public relations
business and substantially all of the assets and liabilities of
Cooney/Waters and the Healthcare advocacy business and
substantially all of the assets and liabilities of Alembic
Health;
Cooney/Waters Director Lenore Cooney;
Cooney/Waters Group Cooney/Waters and its subsidiaries;
CREST the relevant system (as defined in the Regulations) in
respect of which Euroclear is the Operator (as defined in the
Regulations);
Directors the members of the board of directors of Creston;
Disclosure and the disclosure and transparency rules made by
the
Transparency Rules Financial Services Authority 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;
EMI Scheme the Creston plc Enterprise Management Incentive
Scheme;
Enlarged Group Creston and its subsidiaries, including the
Cooney/Waters Businesses;
Euroclear Euroclear UK & Ireland Limited, the operator of
CREST;
Form of Proxy the form of proxy accompanying this document for
use by Shareholders in connection with the General Meeting;
General Meeting the general meeting of the Company convened by
the Notice of General Meeting to be held at 12.00 p.m. on 15
December 2010 at the offices of Olswang LLP, 90 High Holborn,
London WC1V 6XX or any reconvened meeting following any adjournment
thereof;
Group Creston and its subsidiaries, excluding the Cooney/Waters
Businesses;
Investec Investec Bank plc whose registered office is at 2
Gresham Street, London, EC2V 7QP and registered number is
489604;
Listing Rules the rules and regulations made by the Financial
Services Authority 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;
London Stock Exchange London Stock Exchange plc;
LTIP the Creston plc Long Term Incentive Plan;
Notice of General Meeting the notice of General Meeting set out
at the end of this document;
Ordinary Shares ordinary shares of 10 pence each in the capital
of the Company;
Prospectus Rules the rules and regulations made by the Financial
Services Authority 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;
PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP, whose
registered office is at 1 Embankment Place, London, WC2N 6RH and
registered number is OC303525;
Red Door Communications Red Door Communications Limited, a
subsidiary of Creston;
Regulations the Uncertificated Securities Regulations 2001 (St
2001 No. 3755);
Resolution the ordinary resolution to approve the Acquisition
set out in the Notice of General Meeting;
Shareholders holders of Ordinary Shares, and Shareholder shall
be construed accordingly;
Sharesave Scheme the Creston plc 2004 Sharesave Scheme;
subsidiary and subsidiary undertaking have the meanings given to
them in the Companies Act 2006;
UK or United Kingdom the United Kingdom of Great Britain and
Northern Ireland;
UK Listing Authority the Financial Services Authority acting in
its capacity as the competent authority for listing purposes under
Part VI of the Financial Services and Markets Act 2000;
Unapproved Plan the Creston plc Unapproved Share Option Plan;
and
US the United States of America.
References to "GBP" and "p" or "pence" are to pounds sterling
and pence being the lawful currency of the United Kingdom.
References to "$" are to dollars being the lawful currency of the
United States of America.
Headings are included in this announcement for convenience only
and do not affect its interpretation.
All references to legislation in this announcement are to
English legislation unless the contrary is indicated. Any reference
to any provision of any legislation shall include any amendment,
modification, re-enactment or extension thereof.
Words importing the singular shall include the plural and vice
versa, and words importing the masculine gender shall include the
feminine or neutral gender.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQKKCDKPBDDNDB
Conduit (LSE:CRE)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Conduit (LSE:CRE)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024