TIDMPHP TIDMMXF
RNS Number : 9815N
Primary Health Properties PLC
24 January 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
THIS ANNOUNCEMENT IS DEEMED BY PHP AND MEDICX TO CONTAIN INSIDE
INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION NO
596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY
INVESTMENT DECISION IN RELATION TO THE NEW PHP SHARES EXCEPT ON THE
BASIS OF INFORMATION IN THE SCHEME DOCUMENT AND THE COMBINED
CIRCULAR AND PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE
COURSE
FOR IMMEDIATE RELEASE
24 January 2019
RECOMMED ALL-SHARE MERGER OF
PRIMARY HEALTH PROPERTIES PLC
AND
MEDICX FUND LIMITED
-- The Boards of PHP and MedicX are pleased to announce that
they have reached agreement on the terms of a recommended all-share
merger between MedicX and PHP, which is intended to be implemented
by way of a scheme of arrangement of MedicX, under which PHP will
acquire the entire issued and to be issued share capital of
MedicX.
-- Under the terms of the Merger, MedicX Scheme Shareholders will be entitled to receive:
0.77 New PHP Shares for each MedicX Scheme Share held
On this basis, following the Merger, existing PHP Shareholders
will hold 69.4 per cent. and MedicX Shareholders 30.6 per cent.
respectively of the Enlarged Company.
-- The Boards of PHP and MedicX believe that there is a
compelling strategic, operational and financial rationale for the
Merger.
o The two companies' respective portfolios are highly
complementary and the combined business will represent a stronger
platform with increased scale and financial resources for further
investment into its NHS-supporting estate.
o The Enlarged Group will be more able to meet the increasing
demand for high quality primary healthcare facilities across the UK
and the Republic of Ireland thereby supporting doctors, alleviating
pressure on hospital departments and ultimately aiding the welfare
of patients.
o Combining the two businesses is expected to create significant
value for both MedicX and PHP shareholders through operational and
investment management synergies, leading to a reduced EPRA Cost
Ratio, as well as financing savings over the medium term.
-- Nexus, which provides property management, administrative and
advisory services to PHP, has agreed to provide such services to
the Enlarged Group, with certain employees of Octopus Healthcare,
MedicX's existing investment adviser, and OAIFM, MedicX's existing
investment manager, transferring to Nexus. Octopus Healthcare has
entered into a transitional services agreement with, amongst
others, MedicX and Nexus to provide for an orderly handover to
Nexus of property management, administrative and advisory services
in respect of MedicX. Nexus looks forward to welcoming all Octopus
Healthcare and OAIFM employees who transfer to it.
-- Following completion of the Merger, it is expected that Helen
Mahy will join the PHP Board as Deputy Chairman and Senior
Independent Non-executive Director, and Laure Duhot will join the
PHP Board as Non-executive Director and Chairman of the Adviser
Engagement Committee. In order to maintain an appropriately sized
board and balance between PHP and MedicX directors post the Merger,
Nick Wiles and Geraldine Kennell will step down from the PHP
Board.
-- The Enlarged Group will benefit from:
o a portfolio of 479 properties in the UK and the Republic of
Ireland with a combined value of approximately GBP2.3 billion;
o a strategic focus on the delivery of primary healthcare
reflected in the increase in funding set out in the NHS Long Term
Plan published earlier this month;
o an enhanced ability to meet the increasing needs of the
primary healthcare sector in the UK and the Republic of Ireland,
for the provision of a range of modern, purpose-built and
integrated primary healthcare services to the local
communities;
o significant cost savings, estimated at GBP4.0 million per
annum from the end of the first full year following the Effective
Date (reducing to GBP3.5 million from the sixth year following the
Effective Date), equivalent to an annual saving of 0.4 pence per
share in the Enlarged Company, comprising:
-- immediate savings in aggregate management fees arising from
the unification of management under Nexus, PHP's existing property
adviser, which are estimated to represent an annual saving of
GBP3.0 million (GBP2.5 million from the sixth year following the
Effective Date); and
-- operational cost savings from duplicated listing,
administrative and other operational expenses and direct property
costs which are estimated at GBP1.0 million per annum by the end of
the first full year of operation following the Effective Date;
o an EPRA Cost Ratio expected to be the lowest in the UK-REIT
sector;
o broader access to capital at a reduced cost - over the medium
term it is expected that there will be opportunities for material
cost savings (in addition to the quantified synergy estimate above)
through optimisation of the Enlarged Group's financing
arrangements;
o the ability to capitalise on and expand the pipeline of new
investment opportunities due to the greater financial flexibility
of the Enlarged Group;
o strong, highly predictable cash flows to support further
investment and dividends to shareholders of the Enlarged Company;
and
o a proven management team that has delivered over 22 years of
attractive returns and continued dividend growth to
shareholders.
-- Based on the Closing Price of 115.2 pence per PHP Share on
the Latest Practicable Date, the Merger values each MedicX Share at
88.7 pence and the entire issued and to be issued ordinary share
capital of MedicX at GBP392.9 million. The Merger represents a
premium of approximately:
o 14.3 per cent. to 77.6 pence - the Closing Price per MedicX
Share on the Latest Practicable Date;
o 15.1 per cent. to 77.1 pence - the volume weighted average
Closing Price per MedicX Share in the three months ending on the
Latest Practicable Date; and
o 8.5 per cent. to 81.8 pence - MedicX's last reported EPRA NAV
per MedicX Share at 30 September 2018.
-- MedicX Shareholders will also be entitled to receive and
retain the MedicX quarterly dividend in respect of the period
October to December 2018, which is expected to be declared at the
time of MedicX's announcement of its results for that quarter in
February 2019. Based on the expected timetable for Completion,
MedicX Scheme Shareholders would receive the PHP second quarterly
interim dividend for 2019 expected to be paid in May 2019.
-- The Enlarged Group will be committed to maintaining a fully
covered dividend, whilst paying out substantially all of its
underlying earnings. The Merger is expected to deliver a material
uplift in the dividend to be received by MedicX Scheme Shareholders
- on the basis of the latest PHP quarterly dividend and the
expected MedicX quarterly dividend for the MedicX financial year
ending 30 September 2019, this would amount to an increase of 13.5
per cent.
-- The MedicX Directors, who have been so advised by Evercore,
consider the financial terms of the Merger to be fair and
reasonable. In providing advice to the MedicX Directors, Evercore
has taken into account the commercial assessments of the MedicX
Directors.
-- Accordingly, the MedicX Directors intend to recommend
unanimously that MedicX Scheme Shareholders vote or procure votes
in favour of the resolutions relating to the Scheme at the MedicX
Court Meeting and that the MedicX Shareholders vote or procure
votes in favour of the resolutions relating to the Merger at the
MedicX General Meeting (or in the event that the Merger is
implemented by way of a Takeover Offer, accept or procure
acceptance of the Takeover Offer) as those MedicX Directors who
hold MedicX Shares have irrevocably undertaken to do in respect of
their own beneficial holdings (and the beneficial holdings which
are under their control and those of their close relatives)
totalling 189,700 MedicX Shares representing approximately 0.043
per cent. of the issued ordinary share capital of MedicX as at
close of business on the Latest Practicable Date.
-- In addition to the irrevocable undertakings received from
each of the MedicX Directors, PHP has received an irrevocable
undertaking from Investec Wealth & Investment in respect of
26.26 million MedicX Shares, representing approximately 5.929 per
cent. of the ordinary share capital of MedicX in issue as at close
of business on the Latest Practicable Date, to vote or procure
votes in favour of the resolutions relating to the Scheme at the
MedicX Shareholder Meetings (or in the event that the Merger is
implemented by way of a Takeover Offer, accept or procure
acceptance of the Takeover Offer).
-- PHP has therefore received, in aggregate, irrevocable
undertakings representing approximately 5.972 per cent. of MedicX's
issued ordinary share capital as at close of business on the Latest
Practicable Date.
-- The Merger constitutes a Class 1 transaction for PHP for the
purposes of the Listing Rules. Accordingly, the Merger will be
conditional, inter alia, on the approval of the PHP Shareholders at
the PHP General Meeting.
-- As part of the Merger arrangements, certain amendments will
be made to the existing Advisory Agreement with Nexus. As a result
of these amendments, PHP will, pursuant to the Amendment Deed,
benefit from a reduction in the marginal property fee scale applied
to calculate the annual property services fee payable by PHP to
Nexus. In addition, PHP will, pursuant to the Deed of Variation,
receive over a five year period, a rebate of GBP2.5 million as a
contribution by Nexus towards the cost of the one-off contractual
termination fee of approximately GBP10 million (which is payable to
Octopus Healthcare on termination of the MedicX Investment
Management Agreement). Nexus will, at the same time, benefit from
an extension of its term of appointment for an initial period of
three years from the date of Completion with two years' notice
thereafter to terminate. Nexus and PHP have also entered into an
agreement (the TUPE Deed) dealing with potential employment
liabilities arising from the termination of the MedicX Investment
Management Agreement.
-- As Harry Hyman is indirectly the majority shareholder of
Nexus, which is the counterparty to the Deed of Variation and the
TUPE Deed, as well as being both the managing director of Nexus and
PHP and Richard Howell, the finance director of PHP, is an employee
of Nexus and PHP, they and Nexus (amongst others) are considered to
be related parties of PHP for the purposes of Chapter 11 of the
Listing Rules. Accordingly, the Deed of Variation and the TUPE Deed
are conditional upon the passing of an ordinary resolution of the
Independent PHP Shareholders (which requires more than 50 per cent.
of the votes cast by Independent PHP Shareholders to be cast in
favour) to approve each of them. The Deed of Variation and the TUPE
Deed are also conditional upon Completion. Details of the Deed of
Variation, the Amendment Deed and the TUPE Deed are set out in
paragraph 3 of this Announcement.
-- The Independent PHP Directors consider the reduction in
Nexus' net advisory fees, together with the stability created by
the extension of the term of the Advisory Agreement, to be
fundamental to the Merger. Accordingly, the Merger is conditional
on, amongst other things, the approval of the Related Party
Resolution by Independent PHP Shareholders at the PHP General
Meeting.
-- The PHP Board intends to recommend that PHP Shareholders vote
or procure votes in favour of the resolutions to be proposed at the
PHP General Meeting, as they have irrevocably undertaken to do in
respect of their own beneficial holdings (and the beneficial
holdings which are under their control and those of their close
relatives), to the extent that they are permitted to vote on such
resolutions. The PHP Directors who hold PHP Shares have therefore
undertaken to vote or procure votes in favour of the Merger
Resolution to be proposed at the PHP General Meeting in respect of
13,443,043 PHP Shares, in aggregate, representing approximately
1.742 per cent. of PHP's issued ordinary share capital as at the
close of business on the Latest Practicable Date. The Independent
PHP Directors who hold PHP Shares have also undertaken to vote or
procure votes in favour of the Related Party Resolution to be
proposed at the PHP General Meeting in respect of 478,387 PHP
Shares, in aggregate, representing approximately 0.062 per cent. of
PHP's issued ordinary share capital as at the close of business on
the Latest Practicable Date.
-- In addition to the irrevocable undertakings received from
each of the PHP Directors who hold PHP Shares, PHP has received an
undertaking from Investec Wealth & Investment to vote or
procure votes in favour of the resolutions to be proposed at the
PHP General Meeting in respect of 37.32 million PHP Shares,
representing approximately 4.836 per cent. of PHP's issued ordinary
share capital as at the close of business on the Latest Practicable
Date.
-- PHP has therefore received, in aggregate, irrevocable
undertakings representing approximately 6.578 per cent. of PHP's
issued ordinary share capital as at close of business on the Latest
Practicable Date.
-- Further details of all irrevocable undertakings, including
the circumstances in which they cease to be binding, are set out in
Appendix III to this Announcement.
-- It is intended that the Merger will be implemented by way of
a Court-sanctioned scheme of arrangement under Part VIII of the
Companies Law of Guernsey. The Scheme will also be subject to the
conditions and further terms set out in Appendix I to this
Announcement and to be set out in the Scheme Document. It is
anticipated that formal documents will be sent to PHP Shareholders
and MedicX Shareholders within 28 days of the date of this
Announcement and expected that the Merger will have an Effective
Date in late March 2019. The Scheme Document will contain an
updated portfolio valuation for each of PHP and MedicX reported on
in accordance with Rule 29 of the Takeover Code.
Commenting on the Merger, Steven Owen, Chairman of PHP said:
"The Merger represents a major step forward in PHP's strategy
which significantly extends the scale of our business and asset
value. The highly complementary nature of the two portfolios will
allow the combined business to continue to maximise shareholder
value through delivering synergies across the businesses and
accelerate the Enlarged Group's role in the modernisation of the
primary care estate in the UK and Ireland.
I believe we have established a genuine rapport with our
colleagues on the MedicX Board. I look forward to working with
Helen Mahy and Laure Duhot who are expected to join the PHP Board
which I am confident will have the skill, diversity and culture to
drive the Enlarged Group forward. I am also very grateful to my
colleagues Nick Wiles and Geraldine Kennell for their commitment
and dedication to the Company over the past three years and their
contribution to and support for the Merger. "
Commenting on the Merger, Helen Mahy CBE, Chairman of MedicX,
said:
"I am delighted to announce this all-share merger of MedicX and
PHP, a transaction that will create a strong, new healthcare group
which can deliver real benefits to doctors, the NHS, and the HSE in
the Republic of Ireland as well as our shareholders. Both
businesses share a similar focus on high quality, purpose-built
primary healthcare assets and have complementary portfolios. The
strategic fit of the two businesses is excellent and shareholders
in the Enlarged Group will have the opportunity to participate in
further growth and share in the significant benefits of scale and
operational efficiencies. Financially, the Merger offers MedicX
shareholders a premium to NAV as well as attractive accretion to
earnings and dividends per share. Therefore, the MedicX Board
unanimously recommends the merger to its shareholders.
On behalf of the MedicX Board, I would like to thank the entire
team at Octopus Healthcare for their strong support, dedication,
professionalism and expertise over the past 12 years as investment
adviser of MedicX.
I would also like to thank Steve Le Page and John Hearle, who
will be stepping down from the MedicX Board and not joining that of
the Enlarged Company, for their important contributions to the
development of the fund and their sage advice as Non-executive
Directors of MedicX over a number of years."
Commenting on the Merger, Harry Hyman, Managing Director of PHP,
said:
"This is a great opportunity for the combined team. After
Completion Nexus will manage the enlarged portfolio and I look
forward to working with the employees from Octopus transferring to
Nexus who will bring highly valued experience to the combined
operation."
This summary should be read in conjunction with the full
Announcement, including its Appendices. Definitions are set out in
Appendix VI.
PHP and MedicX will hold a briefing for analysts at 8:30 am (UK
time) today (24 January) to discuss the Merger.
Enquiries:
PHP Tel: +44 (0) 207
451 7050
Steven Owen (Chairman)
Harry Hyman (Managing Director)
Richard Howell (Finance Director)
Numis (Lead Financial Adviser, Sponsor Tel: +44 (0) 207
and Joint Broker to PHP) 260 1000
Michael Meade
James Black
Kevin Cruickshank
Huw Jeremy
Peel Hunt (Joint Financial Adviser and Tel: +44 (0) 207
Joint Broker to PHP) 418 8900
James Britton
Capel Irwin
Harry Nicholas
Jock Maxwell Macdonald
Buchanan (Public Relations Adviser to Tel: +44 (0) 207
PHP) 466 5000
David Rydell
Steph Watson
Tilly Abraham
MedicX Tel: +44 (0) 148
172 3450
Helen Mahy (Non-Executive Chairman)
Octopus Healthcare Tel: +44 (0) 203
142 4820
Mike Adams (Executive Chairman, Octopus
Healthcare)
Evercore (Financial Adviser and Rule Tel: +44 (0) 207
3 Adviser to MedicX) 653 6000
Edward Banks
Ollie Clayton
Taurus (Independent Adviser to MedicX) Tel: +44 (0) 207
959 7000
Peter Tracey
Tom Fyson
Canaccord (Joint Corporate Broker to Tel: +44 (0) 207
MedicX) 523 8000
Robbie Robertson
Helen Goldsmith
Liberum (Joint Corporate Broker to MedicX) Tel: +44 (0) 203
100 2000
Richard Crawley
Jamie Richards
Maitland/AMO (Public Relations Adviser Tel: +44 (0) 207
to MedicX) 379 5151
Andy Donald
Jason Ochere
DETAILS OF THE RECOMMED ALL-SHARE MERGER OF PHP AND MEDICX
1. The Merger
Under the Merger, which will be subject to the conditions and
further terms set out below and in Appendix I to this Announcement
(and to be set out in the Scheme Document), MedicX Scheme
Shareholders will be entitled to receive:
0.77 New PHP Shares for each MedicX Scheme Share held
The Merger will involve PHP issuing approximately 341.0 million
New PHP Shares, with the result that PHP Shareholders will own
approximately 69.4 per cent. of the Enlarged Company and MedicX
Shareholders will own approximately 30.6 per cent. of the Enlarged
Company. On this basis, MedicX Scheme Shareholders will share in
the benefits accruing to the Enlarged Group via the enhanced
opportunities for the combined business and the realisation of
significant cost savings.
Based on the Closing Price of 115.2 pence per PHP Share on the
Latest Practicable Date, the Merger values each MedicX Share at
88.7 pence and the entire issued and to be issued ordinary share
capital of MedicX at approximately GBP392.9 million.
The Merger represents a premium of approximately:
o 14.3 per cent. to 77.6 pence - the Closing Price per MedicX
Share on the Latest Practicable Date;
o 15.1 per cent. to 77.1 pence - the volume weighted average
Closing Price per MedicX Share in the three months ending on the
Latest Practicable Date; and
o 8.5 per cent. to 81.8 pence - MedicX's last reported EPRA NAV
per MedicX Share at 30 September 2018. It is expected that the
Scheme Document will contain an updated portfolio valuation in
respect of MedicX's UK and the Republic of Ireland property
portfolios as at 31 December 2018 reported on in accordance with
Rule 29 of the Takeover Code.
2. Background to and reasons for the Merger
The Directors of PHP and MedicX believe that the businesses are
highly complementary - strategically, geographically, operationally
and culturally - and that the Enlarged Group would be significantly
more attractive for all stakeholders, including investors, the NHS
and the HSE.
Growing market with solid fundamentals
-- PHP and MedicX both invest in modern purpose-built healthcare
properties in the UK and the Republic of Ireland, a sector which
has:
o favourable market dynamics arising from ageing and growing
populations and increasing demands on underinvested healthcare
provision;
o an historically underinvested estate in need of replacement
and modernisation; and
o unwavering political support in the UK and the Republic of
Ireland for the promotion of a model of integrated care delivered
in a modern primary care setting, with, in the UK, proposed
increased funding for primary care as set out in the NHS Long Term
Plan published earlier this month.
-- Combining the two businesses will give the Enlarged Group
greater scale with which to participate in this growing market with
an enhanced ability to meet the increasing needs of the primary
healthcare sector in the UK and the Republic of Ireland for the
provision of a range of modern, purpose built and integrated
primary healthcare services to the local communities.
Complementary portfolios with attractive characteristics
-- Upon Completion, PHP and MedicX will own a portfolio of 479
properties with a combined value of approximately GBP2.3 billion
and annual rental income of over GBP120.0 million (the combination
of the large portfolios having been effected without incurring a
stamp duty liability of approximately GBP40.0 million that would
have arisen on an asset transfer). This will create a strong
platform for further acquisitions and development
opportunities.
-- The respective portfolios are highly complementary with
little geographic overlap and the Merger will create an attractive
investment partner, able to provide significant financing and
extensive experience in the primary healthcare sector.
-- Both PHP's and MedicX's portfolios have long weighted average
unexpired lease terms (WAULT) (12.9 years and 14.2 years
respectively) with over 90 per cent. of rents payable by or
guaranteed by the NHS or the HSE.
Improved value creation opportunities and strong balance
sheet
-- The Enlarged Group will be managed by Nexus, which has a
successful track record in creating value for shareholders, having
managed PHP's portfolio since PHP's founding in 1995. Nexus has
managed the successful implementation and integration of a number
of acquisitions, including that of Prime Public Partnerships
(Holdings) Limited in 2013, which involved the acquisition of a
portfolio of 54 properties with an aggregate value of GBP233.0
million.
-- The Directors of MedicX and PHP are confident that the growth
prospects of the Enlarged Group will be greater than those of
either business on its own.
-- An enhanced presence in the primary health sector is expected
to provide increased investment opportunities and enable a deeper
relationship with the NHS and Department of Health in the UK and
HSE in the Republic of Ireland.
-- The Enlarged Group will benefit from a strengthened
investment case and rental growth prospects from the asset
management expertise of the combined teams.
-- It will have a strong balance sheet, with a pro-forma loan to
value ratio of 48 per cent., with long weighted average debt
maturity of over eight years and is anticipated to have greater
access to broader and more competitively priced debt facilities, as
well as improved access to equity capital markets for fund
raisings. The current financing facilities of MedicX are expected
to remain in place following the Effective Date with no break fees
becoming due as a result of the Merger. The anticipated strong
balance sheet is expected to facilitate access to new and cheaper
forms of debt funding over the medium term (the actual financial
benefits of this have not been quantified for reporting on under
the Takeover Code).
-- A strengthened balance sheet will provide flexibility for
future development activity and underpin an attractive, sustainable
dividend policy, fully covered by the combined earnings.
Synergies and efficiencies
-- PHP has entered into the Deed of Variation with Nexus which,
conditional upon shareholder approval at the PHP General Meeting,
amends the Advisory Agreement in respect of services to be provided
in relation to the MedicX Group. PHP has also entered into the
Amendment Deed with Nexus which amends the Advisory Agreement in
relation to the management of the enlarged portfolio. The fee
structure of the amended Advisory Agreement is more favourable from
shareholders' perspective than the terms in the existing management
arrangements of either PHP or MedicX on a standalone basis and will
result in lower fees being paid.
Quantified Financial Benefits Statement
-- The PHP Directors, having reviewed and analysed the potential
synergies of the Enlarged Group, as well as taking into account
factors they can influence, believe that the Enlarged Group can
deliver shareholder value through expected realisation of
approximately GBP4.0 million of recurring cost synergies from the
end of the first year following the Effective Date, reducing to
GBP3.5 million of recurring cost synergies from the sixth year
following the Effective Date.
-- The cost synergies will be realised principally from:
o Management fee savings: Unification of property management
under Nexus delivering approximately GBP3.0 million of cost savings
per annum derived from GBP2.5 million of lower management fees
charged on the MedicX investment properties and a GBP0.5 million
rebate given by Nexus for the management of the investment
properties in the first five years following the Effective Date;
and
o Administration and direct property cost savings:
Rationalisation of duplicated listing, administration and
operational expenses and reducing direct property costs through
procurement and scale benefits, delivering an estimated GBP1.0
million of run rate cost savings per annum by the end of the first
full year of operation.
-- The PHP Directors expect the management fee savings to be
achieved from the Effective Date, with the administration and
direct property cost savings delivered progressively through the
first year, resulting in a first year synergy of GBP3.8 million,
rising to the GBP4.0 million run rate by the end of the first year
following the Effective Date and GBP3.5 million run rate from the
sixth year following the Effective Date.
-- In order to achieve the management fee savings, the Enlarged
Group will incur a one-off contractual termination payment of
approximately GBP10 million payable to Octopus Healthcare, the
current MedicX investment adviser, on termination of the MedicX
Investment Management Agreement. This payment will fall due within
the first year following the Effective Date. The PHP Directors
expect that any costs incurred in the realisation of the other cost
synergies will be immaterial.
-- The identified cost synergies will accrue as a direct result
of the Merger and would not be achieved on a standalone basis. The
estimated cost synergies referred to above reflect both the
beneficial elements and the relevant costs.
-- The PHP Directors do not expect any material dis-synergies to
arise in connection with the Merger.
-- These statements relating to identified cost savings and
estimated savings relate to future actions or circumstances which
by their nature involve risks, uncertainties and contingencies. As
a consequence, the identified synergies and estimated savings
referred to may not be achieved, may be achieved later or sooner
than estimated, or those achieved could be materially different
from those estimated.
-- Further information on the bases of belief supporting the
Quantified Financial Benefits Statement, including the principal
assumptions and sources of information, is set out in Appendix IV
to this Announcement. These estimated synergies have been reported
on under the Takeover Code by Deloitte, and by PHP's financial
advisers, Numis and Peel Hunt. Copies of their letters are included
in Parts B and C of Appendix IV. References in this Announcement to
those estimated cost savings should be read in conjunction with
Appendix IV.
Other efficiencies
-- Incremental to these quantified cost synergies, the PHP
Directors expect that the Enlarged Group will benefit from further
unquantified cost synergies derived from the optimisation of its
financing arrangements.
-- PHP's EPRA Cost Ratio of 14 per cent. is already amongst the
lowest in the UK-REIT sector and is expected to reduce further to
12 per cent. following Completion, estimated on a pro-forma basis
of the financial information for PHP for the year to 30 June 2018
and the published accounts for MedicX for the year ended 30
September 2018 and the estimated cost savings above in comparison
with published historic results for other UK-REITs.
-- The combined asset portfolio will benefit from lower weighted
average external management fees (as a percentage of the total
portfolio size) together with unquantified reduced professional
valuation, audit and other professional advisory fees (as a
percentage of the total portfolio size).
Increased liquidity
-- The Merger will result in a broadening of the shareholder
base and MedicX Scheme Shareholders will benefit from greater
liquidity in the secondary market afforded by PHP's inclusion in
the FTSE 250 index and a high quality and more diverse shareholder
register is expected to develop over time. The Enlarged Group will
be one of the largest healthcare UK-REITs, with a pro forma market
capitalisation in excess of GBP1 billion.
-- This increased prominence, combined with the attractive
investment proposition and opportunity for improved shareholder
returns, is expected by PHP to drive increased investor interest in
the Enlarged Group and create further value for both sets of
existing shareholders, as well as providing a more liquid market in
the shares of the Enlarged Company.
3. Strategic plans and intentions with regard to assets,
management and employees of the Enlarged Group
Boards of Directors
Following Completion, it is expected that Helen Mahy will join
the PHP Board as Deputy Chairman and Senior Independent
Non-executive Director, and Laure Duhot will join the PHP Board as
a Non-executive Director and Chairman of the Adviser Engagement
Committee. Nick Wiles and Geraldine Kennell will step down from the
PHP Board on Completion. This will deliver an appropriately sized
and balanced Board with the complementary skills necessary to drive
the Enlarged Group forward following the Merger. The Board will
therefore comprise: Steven Owen, Peter Cole, Laure Duhot, Richard
Howell, Harry Hyman, Dr Stephen Kell OBE, Ian Krieger and Helen
Mahy. In addition, it is expected that Steve Le Page and John
Hearle may act as consultants to PHP for a limited period following
Completion, on terms to be agreed, to assist with integration.
PHP intends to delist MedicX following Completion. Consequently,
MedicX will not require listed company governance structures and
accordingly, it is intended that the MedicX Directors will cease to
be directors of MedicX following Completion.
Advisory and transitional services to MedicX
Nexus, which provides property management, administrative and
advisory services to PHP, has agreed to provide such services to
the Enlarged Group. Accordingly, on Completion, the MedicX
Investment Management Agreement will terminate. In order to provide
for an orderly handover to Nexus of property management,
administrative and advisory services, Octopus Healthcare, the
current MedicX investment adviser, and OAIFM, the current MedicX
investment manager, have entered into the Transitional Services
Agreement with MedicX and Nexus which provides for access to books
and records and such other transitional services as the parties may
agree on arms' length terms. These arrangements are intended to
minimise potential disruption to the Enlarged Group. The
arrangements relating to the termination of the MedicX Investment
Management Agreement are also provided for in the Transitional
Services Agreement. The key terms of the Transitional Services
Agreement are described in paragraph 12 below.
Transfer of Octopus employees to Nexus
PHP confirms that, under the terms of the Transitional Services
Agreement, Nexus has undertaken to comply with its statutory
obligations under TUPE. Under TUPE, certain persons employed by
Octopus Healthcare and OAIFM, whose principal role is the carrying
out of activities on behalf of MedicX, will transfer their
employment to Nexus. Octopus Healthcare and OAIFM have undertaken
to MedicX to commence a statutory information and consultation
process in connection with the proposed transfer as soon as
reasonably practicable prior to Completion (but in any event no
later than 28 days prior to Completion). Mike Adams, Executive
Chairman of Octopus Healthcare, will not be transferring to Nexus
as agreed with Nexus, Octopus and Mike Adams.
TUPE Deed
PHP and Nexus have entered into the TUPE Deed, the key terms of
which are:
-- the parties offer cross-indemnities in respect of pre and
post-TUPE transfer employment liabilities associated with those
employees who will transfer under TUPE to Nexus from Octopus
Healthcare and OAIFM in consequence of the appointment of Nexus as
the adviser for the Enlarged Group;
-- the parties offer cross-indemnities in respect of pre and
post-TUPE transfer employment liabilities associated with those
employees who would transfer under TUPE from Nexus to PHP or a
replacement service provider in the event that the Advisory
Agreement expires or is terminated without renewal; and
-- each party's liabilities under its indemnities are capped at
a maximum amount of GBP3.75 million.
Further details relating to the TUPE Deed will be set out in the
Combined Circular and Prospectus.
The TUPE Deed requires the approval of Independent PHP
Shareholders at the PHP General Meeting and further details of the
requirements for such approval are set out in paragraph 13 of this
Announcement.
Advisory Agreement amendments
As part of the Merger arrangements, certain amendments will be
made to the existing Advisory Agreement with Nexus. As a result of
these amendments, PHP will, pursuant to the Amendment Deed, benefit
from a reduction in the marginal property fee scale applied to
calculate the annual property services fee payable by PHP to Nexus.
In addition, PHP will, pursuant to the Deed of Variation, receive,
over a five year period, a rebate of GBP2.5 million as a
contribution by Nexus towards the cost of the one-off contractual
termination fee of approximately GBP10 million which is payable to
Octopus Healthcare on termination of the MedicX Investment
Management Agreement. Nexus will, at the same time, benefit from an
extension of its term of appointment for an initial period of three
years from the date of Completion with two years' notice thereafter
to terminate. The Independent PHP Directors consider this reduction
in Nexus' net advisory fees, together with the stability created by
the extension of the term of the Advisory Agreement to be
fundamental to the Merger. Accordingly, the Merger is conditional
on, amongst other things, the approval of the Related Party
Resolution by Independent PHP Shareholders at the PHP General
Meeting.
Under the terms of the Advisory Agreement, as amended by the
Deed of Variation, the fees payable for the management of the
Enlarged Group's portfolio will be lower than the comparable fees
paid to Octopus Healthcare for the management of the MedicX
portfolio under the MedicX Investment Management Agreement and,
accordingly, it is expected that significant cost savings will be
realised as a result.
Deed of Variation
The key terms of the Deed of Variation include:
-- in respect of the services provided in relation to the
properties currently owned by the MedicX Group, PHP shall pay a
monthly fee to Nexus equal to 0.225 per cent. per annum of the
MedicX Group's gross asset value for a period of five years from
the date of Completion, after which PHP's marginal property fee
scale will apply - this monthly fee will be reduced by the monthly
cost contribution from Nexus referred to in the next paragraph;
-- a cost contribution paid by Nexus to PHP equal to 25 per
cent. of the payment made by MedicX to terminate the MedicX
Investment Management Agreement with Octopus Healthcare (capped at
GBP2.5 million), such contribution to be payable in monthly
instalments, over five years, by reducing the fees payable to Nexus
under the Advisory Agreement with such contribution terminating
five years after the date of Completion or, if earlier, the date on
which the Company serves notice terminating the Advisory
Agreement;
-- the fee payable in respect of the provision of the finance
and company secretarial services shall increase by an annual figure
of GBP250,000;
-- in respect of property management services, setting an
initial term of the appointment of three years from the date of
Completion and thereafter continuing until terminated on at least
two years' notice; and
-- in respect of financial and company secretarial services,
setting an initial term of appointment of three years from the date
of Completion and thereafter continuing until terminated on at
least 12 months' notice.
Further details relating to the Deed of Variation will be set
out in the Combined Circular and Prospectus.
The Deed of Variation, which is conditional on Completion,
requires the approval of Independent PHP Shareholders at the PHP
General Meeting and further details of the requirements for such
approval are set out in paragraph 13 of this Announcement.
Amendment Deed
PHP and Nexus have also entered into the Amendment Deed. The key
amendments provide that PHP's current marginal property fee scale
of 0.275 per cent., applied in calculating the annual property
services fee, will reduce in accordance with the following scale -
where the gross asset value of the portfolio is:
-- between GBP1.75-GBP2.00 billion, the rate applied is 0.250 per cent.;
-- between GBP2.00-GBP2.25 billion, the rate applied is 0.225 per cent.; and
-- GBP2.25 billion and above, the rate applied is 0.200 per cent.
Prior to the amendments made by the Amendment Deed, a rate of
0.250 per cent. was applied in calculating the annual property
services fee where the gross asset value of the portfolio was
greater than GBP1.75 billion.
The Amendment Deed is not conditional on Completion and does not
require the approval of PHP Shareholders.
Management and employees
MedicX has no employees and therefore does not operate any
pension scheme, nor does it have any arrangements in place for any
employee involvement in its capital. MedicX has no place of
business, research and development function or headquarters.
Following Completion, certain functions which exist in relation
to MedicX's status as a publicly traded company will no longer be
required or will be reduced in size, reflecting the new structure
within the Enlarged Group.
Listing and registered office
Following Completion, the Enlarged Company will remain listed on
the London Stock Exchange. The registered office of PHP will remain
in London following Completion.
4. PHP Board recommendation
The PHP Board, which has received financial advice from Numis
and Peel Hunt in relation to the Merger, consider the Merger to be
in the best interests of PHP and the PHP Shareholders as a whole.
Accordingly, the PHP Board intends to unanimously recommend that
PHP Shareholders vote or procure votes in favour of the Merger
Resolution to be proposed at the PHP General Meeting, as those PHP
Directors who hold PHP Shares have irrevocably undertaken to do in
respect of their own beneficial holdings (and the beneficial
holdings which are under their control and those of their close
relatives) aggregating 13,443,043 PHP Shares representing
approximately 1.742 per cent. of PHP's issued ordinary share
capital as at the close of business on the Latest Practicable Date.
In providing their advice, Numis and Peel Hunt have relied on the
PHP Directors' commercial assessment of the Merger.
The PHP Board, which has been so advised by Numis, also
considers the Deed of Variation and the TUPE Deed to be in the best
interests of PHP and the PHP Shareholders as a whole and intends to
unanimously recommend that Independent PHP Shareholders vote or
procure votes in favour of the Related Party Resolution, as
Independent PHP Directors who hold PHP Shares have irrevocably
undertaken to do in respect of their own beneficial holdings (and
the beneficial holdings which are under their control and those of
their close relatives) aggregating 478,387 PHP Shares representing
approximately 0.062 per cent. of PHP's issued ordinary share
capital as at close of business on the Latest Practicable Date.
Neither Harry Hyman nor Richard Howell took part in the PHP Board's
consideration of the Related Party Transactions. In providing its
advice, Numis has relied on the Independent PHP Directors'
commercial assessment of the Deed of Variation and the TUPE
Deed.
5. MedicX Board recommendation
The MedicX Directors, who have been so advised by Evercore,
consider the financial terms of the Merger to be fair and
reasonable. In providing advice to the MedicX Directors, Evercore
has taken into account the commercial assessments of the MedicX
Directors. Evercore is providing independent financial advice to
the MedicX Directors for the purposes of Rule 3 of the Takeover
Code.
Accordingly, the MedicX Directors intend to recommend
unanimously that MedicX Scheme Shareholders vote or procure votes
in favour of the resolutions relating to the Scheme at the MedicX
Court Meeting and that the MedicX Shareholders vote or procure
votes in favour of the resolutions relating to the Merger at the
MedicX General Meeting (or in the event that the Merger is
implemented by way of a Takeover Offer, accept or procure
acceptance of the Takeover Offer) as those MedicX Directors who
hold MedicX Shares have irrevocably undertaken to do in respect of
their own beneficial holdings (and the beneficial holdings which
are under their control and those of their close relatives)
totalling 189,700 MedicX Shares representing approximately 0.043
per cent. of the issued ordinary share capital of MedicX as at
close of business on the Latest Practicable Date.
6. Background to and reasons for the MedicX Recommendation
As a leading investor in purpose-built primary healthcare
properties, MedicX has assembled an attractive portfolio of modern,
high quality assets throughout the United Kingdom and the Republic
of Ireland. MedicX's strategy of selective investing and its focus
on enhancing fundamental portfolio metrics has, over the longer
term, delivered good shareholder returns, sustainable NAV growth
and tangible benefits to the UK and Irish communities' healthcare
infrastructure.
Following a strategic review in 2018, the MedicX Directors
decided to rebase MedicX's dividend distribution policy, thereby
providing for a fully covered dividend, for the financial year
ending 30 September 2019 and onwards. This allowed MedicX to better
align its dividend distributions with its cash flows and further
strengthen its capital structure.
The MedicX Directors believe that MedicX continues to have
strong prospects as an independent fund.
However, the MedicX Directors also recognise that the Merger
represents an attractive opportunity for MedicX Shareholders and
its other stakeholders, including tenants, patients and the wider
communities in the UK and the Republic of Ireland. The efficiencies
associated with greater scale and the complementary nature of PHP
and MedicX's portfolios should enable MedicX Scheme Shareholders to
benefit more fully from the opportunities offered by the Enlarged
Group.
The MedicX Directors believe that the Enlarged Group's strategy
will be consistent with MedicX's current strategy of disciplined
investment, maintaining a covered dividend and paying out
substantially all of its underlying earnings.
The MedicX Directors note Nexus's undertaking pursuant to the
Transitional Services Agreement that certain persons employed by
the Octopus Group whose principal role is the carrying out of
activities on behalf of MedicX will be offered the opportunity to
transfer to Nexus under TUPE. The MedicX Directors believe that
such an undertaking will provide additional stability to the
day-to-day operations of the Enlarged Group and facilitate
strategic continuity.
The MedicX Directors believe that a combination with PHP,
resulting in MedicX Shareholders owning approximately 30.6 per
cent. of the Enlarged Company, represents a compelling opportunity
to create a business capable of achieving significant strategic,
operational and financial benefits, including:
-- establishing a GBP2.3 billion portfolio of high quality
primary healthcare assets, well positioned to benefit from growing
market opportunities;
-- unlocking significant operational synergies which are
estimated at GBP4.0 million per annum of recurring cost synergies
from the end of the first full year following the Effective Date
(reducing to GBP3.5 million from the sixth year following the
Effective Date), comprising GBP3.0 million per annum (GBP2.5
million from the sixth year following the Effective Date) in cost
savings as a result of a unified management of the combined
portfolio, and GBP1.0 million in further operational run rate cost
savings from duplicated overheads, listing, other administrative
and direct property costs by the end of the first full year of
operation;
-- providing broader access to capital at a reduced cost - over
the medium term it is expected that there will be material cost
saving opportunities (in addition to the quantified synergy
estimates above) through optimisation of the Enlarged Group's
financing arrangements;
-- potentially delivering significant accretion to EPRA EPS
(before exceptional costs) and DPS in the first full year of
operation for MedicX Scheme Shareholders.
-- delivering what is expected to be the lowest EPRA Cost Ratio in the UK-REIT market;
-- enhancing balance sheet strength, which will enable access to a broader range of investment opportunities, strengthen the pipeline of acquisitions and optimise the Enlarged Group's financing arrangements; and
-- generating strong cash flows to support a disciplined
investment strategy, while sustaining a growing dividend for
shareholders.
The Merger also offers MedicX Scheme Shareholders the
opportunity to benefit from an upfront premium of 14.3 per cent. to
the Closing Price per MedicX Share on the Latest Practicable
Date.
MedicX Shareholders will also be entitled to receive and retain
the MedicX quarterly dividend in respect of the period from October
to December 2018, which is expected to be declared at the time of
MedicX's announcement of its results for that quarter in February
2019. Based on the expected timetable for Completion, MedicX Scheme
Shareholders would receive the PHP second quarterly interim
dividend in 2019 expected to be paid in May 2019.
On the basis of the latest PHP quarterly dividend and the
expected MedicX quarterly dividend for the MedicX financial year
ending 30 September 2019, the uplift in dividends to MedicX Scheme
Shareholders expected to be delivered by the Merger would amount to
an increase of 13.5 per cent. In addition, MedicX Scheme
Shareholders will benefit from an accelerated dividend cycle as PHP
pays its quarterly dividends approximately one month before MedicX
pays its dividend for the same quarter.
The MedicX Directors believe that the terms of the Merger fairly
reflect MedicX's and PHP's respective standalone businesses and
their prospects, and an appropriate sharing of the expected
synergies resulting from the Merger.
The MedicX Directors are confident that the Enlarged Group will
benefit from a strengthened management team, as the Merger will
enhance Nexus's management capabilities through the transfer of
experienced Octopus employees, which will also help to minimise
potential business disruption.
Following consideration of the above factors, the MedicX
Directors intend to unanimously recommend that MedicX Scheme
Shareholders vote or procure votes in favour of the resolutions
relating to the Scheme at the MedicX Court Meeting and that the
MedicX Shareholders vote or procure votes in favour of the
resolutions relating to the Merger at the MedicX General Meeting
(or, in the event that that the Merger is implemented by way of a
Takeover Offer, accept or procure the acceptance of the Takeover
Offer), as those MedicX Directors who hold MedicX Shares have each
irrevocably undertaken to do, in respect of their entire respective
beneficial holdings (and the beneficial holdings which are under
their control and those of their close relatives) aggregating
189,700 MedicX Shares, representing approximately 0.043 per cent.
of the issued ordinary share capital of MedicX as at close of
business on the Latest Practicable Date.
7. Irrevocable undertakings
Undertakings from MedicX Shareholders
PHP has received irrevocable undertakings to vote or procure
votes in favour of the resolutions relating to the Scheme at the
MedicX Shareholder Meetings (or in the event that the Merger is
implemented by way of a Takeover Offer, to accept or procure
acceptance of the Takeover Offer) from the MedicX Directors who
hold MedicX Shares and who beneficially own or control 189,700
MedicX Shares, in aggregate, representing approximately 0.043 per
cent. of MedicX's ordinary share capital in issue as at close of
business on the Latest Practicable Date.
In addition to the irrevocable undertakings received from each
of the MedicX Directors, PHP has received an irrevocable
undertaking from Investec Wealth & Investment in respect of
26.26 million MedicX Shares, representing approximately 5.929 per
cent. of the ordinary share capital of MedicX in issue as at close
of business on the Latest Practicable Date to vote or procure votes
in favour of the resolutions relating to the Scheme at the MedicX
Shareholder Meetings (or in the event that the Merger is
implemented by way of a Takeover Offer, accept or procure
acceptance of the Takeover Offer).
PHP has therefore received, in aggregate, irrevocable
undertakings representing approximately 5.972 per cent. of MedicX's
issued ordinary share capital as at close of business on the Latest
Practicable Date.
Undertakings from PHP Shareholders
PHP has also received irrevocable undertakings from each of the
PHP Directors who hold PHP Shares to vote or procure votes in
favour of the Merger Resolution to be proposed at the PHP General
Meeting in respect of their beneficial holdings (and the beneficial
holdings which are under their control and those of their close
relatives) of 13,443,043 PHP Shares, in aggregate, representing
approximately 1.742 per cent. of PHP's issued ordinary share
capital as at close of business on the Latest Practicable Date. The
Independent PHP Directors who hold PHP Shares have undertaken to
vote or procure votes in favour of the Related Party Resolution to
be proposed at the PHP General Meeting in respect of 478,387 PHP
Shares, in aggregate, representing approximately 0.062 per cent. of
PHP's ordinary share capital as at the close of business on the
Latest Practicable Date.
In addition to the irrevocable undertakings received from each
of the PHP Directors who hold PHP Shares, PHP has received an
undertaking from Investec Wealth & Investment to vote or
procure votes in favour of the resolutions to be proposed at the
PHP General Meeting in respect of 37.32 million PHP Shares
representing approximately 4.836 per cent. of PHP's issued ordinary
share capital as at the close of business on the Latest Practicable
Date.
PHP has therefore received, in aggregate, irrevocable
undertakings representing approximately 6.578 per cent. of PHP's
issued ordinary share capital as at close of business on the Latest
Practicable Date.
Further details of these irrevocable undertakings are set out in
Appendix III to this Announcement.
8. Information on PHP
PHP is a UK-REIT incorporated in 1995. The principal activity of
the PHP Group is the generation of rental income and capital growth
for its shareholders through the acquisition and development of
healthcare property in the United Kingdom and the Republic of
Ireland. Its properties are leased principally to GPs, the NHS, the
HSE and other governmental bodies and other associated healthcare
users. It currently has a market capitalisation of approximately
GBP889.0 million, property investments of approximately GBP1.4
billion and is a member of the FTSE 250 and EPRA indices.
In the most recent results for the six months ended 30 June
2018, PHP reported EPRA earnings per PHP Share of 2.5 pence and
EPRA NAV of GBP762.9 million.
As at 30 June 2018, PHP's property portfolio was independently
valued at GBP1.4 billion. It is expected that the Scheme Document
will contain an updated portfolio valuation in respect of PHP's
property portfolio as at 31 December 2018 reported on in accordance
with Rule 29 of the Takeover Code.
Nexus has provided property management and other services to PHP
since 1995 when the business was established. It is majority owned
by Harry Hyman, PHP's founder. Under Nexus's management PHP has
returned 22 years of continued dividend growth and EPRA NAV and
maintained a consistently low EPRA Cost Ratio.
9. Information on MedicX
MedicX is also a specialist primary care infrastructure investor
in modern, purpose-built primary healthcare properties in the
United Kingdom and the Republic of Ireland. It is a closed-ended
investment company and a UK-REIT which was incorporated in Guernsey
on 25 August 2006. MedicX is listed on the London Stock Exchange,
with a portfolio comprising 166 properties with a value of
approximately GBP806.7 million as at 30 September 2018.
In the most recent annual results for the year ended 30
September 2018, MedicX reported EPRA earnings per share of 3.9
pence and EPRA NAV of GBP362.2 million.
It is expected that the Scheme Document will contain updated
portfolio valuations in respect of MedicX's UK and Republic of
Ireland property portfolios as at 31 December 2018 reported on in
accordance with Rule 29 of the Takeover Code.
The investment adviser to MedicX is Octopus Healthcare, which is
part of the Octopus Group. The Octopus Group invests in and
develops properties and creates partnerships to deliver innovative
healthcare buildings to improve the health, wealth and wellbeing of
the UK with a focus on three core areas: GP surgeries, care homes
and retirement housing.
10. MedicX Profit Forecast
On 11 December 2018, MedicX released its results for the year
ended 30 September 2018. Included in the results announcement,
annual report and annual results presentation was the following
guidance for the financial year ending 30 September 2019, which for
the purposes of Rule 28.1(c) of the Takeover Code constitutes an
ordinary course profit forecast pursuant to Note 2(a) on Rule 28.1
of the Takeover Code:
"Going forward, the Company intends to continue to pay
shareholders the dividend on a quarterly basis, in March, June,
September and December of each financial year and on a growing
covered basis. Subject to unforeseen circumstances and based on the
current performance, the Directors are targeting dividends of 3.80p
per share for the financial year ended 30 September 2019".
The MedicX Directors confirm that the MedicX Profit Forecast
remains valid and confirm that the MedicX Profit Forecast has been
properly compiled on the basis of the assumptions stated and that
the basis of accounting used is consistent with MedicX's accounting
policies.
The MedicX Profit Forecast does not take into account any impact
of the Merger.
Appendix V of this Announcement sets out further information in
relation to the MedicX Profit Forecast.
11. Dividends
Following Completion, MedicX Scheme Shareholders will benefit
from an accelerated dividend cycle as PHP pays its quarterly
dividends approximately one month before MedicX pays its dividend
for the same quarter.
For each calendar quarter which ends before the Effective Date,
MedicX Shareholders will be entitled to receive and retain the
Permitted Dividends with any such dividend(s) having a record date
of the earlier of: (i) the ordinary course MedicX record date for
the dividend declared in respect of that calendar quarter; and (ii)
the Scheme Record Time. PHP will ensure that the record date and
ex-dividend date on its own dividend for the same quarter is set on
or sufficiently before the Effective Date, such that MedicX
Shareholders will not be entitled to receive the PHP dividend in
respect of that calendar quarter in addition to the relevant
Permitted Dividend.
Accordingly, MedicX Shareholders will also be entitled to
receive and retain the MedicX quarterly dividend in respect of the
period October to December 2018, which is expected to be declared
at the time of MedicX's announcement of its results for that
quarter in February 2019. Based on the expected timetable for
Completion, MedicX Scheme Shareholders would also receive the PHP
second quarterly interim dividend in 2019 expected to be paid in
May 2019.
The New PHP Shares will be issued credited as fully paid-up and
will rank pari passu in all respects with the PHP Shares in issue
at the time the New PHP Shares are issued, including the right to
receive and retain dividends and other distributions declared, made
or paid by reference to a record date on or after the Effective
Date.
Prior to Completion, a MedicX Scheme Shareholder will therefore
receive, for any completed quarters prior to the Effective Date,
the Permitted Dividend in respect of such quarter(s) and, following
Completion and assuming the MedicX Scheme Shareholder has retained
his/her shares in the Enlarged Company, dividends declared in the
ordinary course on New PHP Shares with a record date on or after
the Effective Date.
Other than Permitted Dividends, if any dividend or other
distribution is authorised, declared, made or paid in respect of
MedicX Shares on or after the date of this Announcement and with a
record date on or before the Scheme Record Time, PHP reserves the
right to adjust the Merger Ratio accordingly by reference to the
amount per MedicX Share of all or part of any such dividend or
other distribution.
PHP has agreed not to authorise, declare, make or pay any
dividend or other distribution in excess of 1.40 pence per PHP
Share per quarter on or after the date of this Announcement and
prior to the Effective Date.
On 3 January 2019, PHP announced an interim dividend of 1.40
pence per PHP Share which will be paid on 22 February 2019 to PHP
Shareholders on the register of members on 11 January 2019, in
accordance with PHP's normal dividend timetable. MedicX Scheme
Shareholders will not be entitled to receive this dividend.
Following Completion, the Enlarged Group will be committed to
maintaining a fully-covered dividend, whilst paying out
substantially all of its underlying earnings. The Merger is
expected to deliver a material uplift in the dividend to be
received by MedicX Scheme Shareholders - on the basis of the latest
PHP quarterly dividend and the expected MedicX quarterly dividend
for the MedicX financial year ending 30 September 2019, this would
amount to an increase of 13.5 per cent.
12. Merger-related arrangements
Confidentiality Agreement
PHP and MedicX have entered into the Confidentiality Agreement,
pursuant to which each has undertaken to keep certain information
relating to the Merger and to the other party confidential and not
to disclose such information to third parties, except to certain
permitted disclosees for the purposes of evaluating the Merger or
if required by applicable laws or regulations. The confidentiality
obligations of each party under the Confidentiality Agreement
continue for 24 months from 6 December 2018. The Confidentiality
Agreement also contains customary: (a) non-solicit provisions,
subject to customary carve-outs, for a period of 12 months from 6
December 2018; and (b) standstill provisions, subject to customary
carve-outs, for a period of six months from 6 December 2018.
Transitional Services Agreement
Under the terms of the Transitional Services Agreement, the
MedicX Investment Management Agreement is to be terminated
immediately upon Completion. Octopus Healthcare, the current MedicX
investment adviser, and OAIFM, MedicX's existing investment
manager, have agreed to provide access to books and records and
such other transitional services as the parties may agree on arms'
length terms following Completion. In addition, in the period prior
to Completion, Octopus Healthcare and OAIFM will co-operate and
consult with MedicX to identify any additional services or
requirements which MedicX may require following termination of the
MedicX Investment Management Agreement so as to allow MedicX and
Nexus to minimise business disruption arising from termination of
the MedicX Investment Management Agreement.
Other key terms of the Transitional Services Agreement
include:
-- a one-off, contractual termination payment of approximately
GBP10 million, which will be payable by MedicX to Octopus
Healthcare, on termination of the MedicX Investment Management
Agreement (in addition to all accrued and unpaid fees and expenses
up to the date of Completion);
-- an obligation on Octopus Healthcare to indemnify MedicX for
employment claims which relate to the period prior to the date of
Completion or the failure by Octopus Healthcare to comply with its
obligations under TUPE (save to the extent that such employment
claims arise from, or relate to, the determination, act or omission
of Nexus); and
-- an undertaking by Nexus to comply with its statutory
obligations under TUPE and an indemnity given by Nexus in favour of
Octopus Healthcare for employment claims arising on or after the
date of Completion or from the failure by Nexus to comply with its
obligations under TUPE (save to the extent that such employment
claims result from the act or omission of Octopus Healthcare or
OAIFM.
The parties to the Transitional Services Agreement have agreed
that, if the Panel determines that any provision of the
Transitional Services Agreement that requires MedicX, Octopus
Healthcare, OAIFM or Nexus to take or not to take action, whether
as a direct obligation or as a condition to any other person's
obligation (however expressed) prior to the date of Completion, is
not permitted by Rule 21.2 of the Code, that provision shall have
no effect and shall be disregarded.
13. PHP Shareholder approval
Approval of the Merger
The Merger constitutes a Class 1 transaction for PHP for the
purposes of the Listing Rules. Accordingly, the Merger will be
conditional on, inter alia, the requisite resolutions being passed
by the PHP Shareholders at the PHP General Meeting.
Approval of the Deed of Variation and the TUPE Deed
As Harry Hyman is indirectly the majority shareholder of Nexus,
which is the counterparty to the Deed of Variation and the TUPE
Deed, as well as being both the managing director of Nexus and PHP,
and Richard Howell, the finance director of PHP, is an employee of
Nexus and PHP, they and Nexus are considered to be related parties
of PHP for the purposes of Chapter 11 of the Listing Rules. Anita
Hyman, as former spouse of Harry Hyman; and Fiona Howell, as spouse
of Richard Howell, are also considered to be related parties of PHP
for the purposes of Chapter 11 of the Listing Rules. As (i) Nexus
Group Holdings Limited is a wholly owned subsidiary of Nexus
Investco Limited, which is owned by Harry Hyman and his children;
and (ii) Nexus Central Management Services Limited holds shares as
trustee for Richard Howell, they are each considered to be related
parties of PHP for the purposes of Chapter 11 of the Listing
Rules.
Therefore, in accordance with the Listing Rules, Nexus, Harry
Hyman, Anita Hyman, Richard Howell, Fiona Howell, Nexus Central
Management Services Limited and Nexus Group Holdings Limited will
not be able to vote on the resolution to approve the Related Party
Transactions. Harry Hyman and Richard Howell have each undertaken
not to vote on the Related Party Resolution and to take all
reasonable steps to ensure that their associates will not vote on
the Related Party Resolution. Both Harry Hyman and Richard Howell
did not take part in the PHP Board's consideration of the Related
Party Transactions.
Accordingly, the Deed of Variation and the TUPE Deed are each
conditional upon the passing of an ordinary resolution of the
Independent PHP Shareholders (which requires more than 50 per cent.
of the votes cast by Independent PHP Shareholders to be cast in
favour) to approve them. The Deed of Variation and TUPE Deed are
also conditional upon Completion.
The key terms of the Deed of Variation and the TUPE Deed are
described in paragraph 3 above.
Combined Circular and Prospectus
Pursuant to the Listing Rules, PHP is required to prepare and
send to PHP Shareholders, as soon as is reasonably practicable, an
explanatory circular summarising the background to and reasons for
the Proposals. PHP is also required to publish a prospectus in
connection with the issue of the New PHP Shares. Accordingly, PHP
will prepare the Combined Circular and Prospectus which will
contain a notice convening the PHP General Meeting and information
relating to, amongst other things, the Enlarged Group and the New
PHP Shares.
It is expected that the Combined Circular and Prospectus will be
published and posted to PHP Shareholders and MedicX Shareholders at
the same time as the Scheme Document is posted to MedicX
Shareholders. It will also be made available by PHP on its website
at www.phpgroup.co.uk/investors and MedicX on its website at
http://www.medicxfund.com/investors. The PHP General Meeting will
be held shortly before the MedicX Court Meeting and the MedicX
General Meeting.
14. Structure of the Merger
Scheme of arrangement and New PHP Shares
It is intended that the Merger will be implemented by means of a
Court-sanctioned scheme of arrangement under Part VIII of the
Companies Law of Guernsey. The Scheme is an arrangement between
MedicX and the MedicX Scheme Shareholders and is subject to the
approval of the Court. The procedure involves, among other things,
an application by MedicX to the Court to sanction the Scheme. If
the Court sanctions the Scheme, the MedicX Scheme Shares held by
the MedicX Scheme Shareholders will be transferred to PHP and, in
consideration, PHP will issue New PHP Shares to the MedicX Scheme
Shareholders on the basis of the Merger Ratio. The purpose of the
Scheme is to provide for PHP to become the owner of the entire
issued and to be issued ordinary share capital of MedicX.
Upon the Scheme becoming Effective it will be binding on all
MedicX Scheme Shareholders, irrespective of whether or not they
attended or voted at the MedicX Court Meeting and the MedicX
General Meeting (and if they attended and voted, whether or not
they voted in favour).
The New PHP Shares will be issued in registered form and will be
capable of being held in both certificated and uncertificated form.
The New PHP Shares will be issued by PHP to MedicX Scheme
Shareholders no later than 14 days after the Effective Date.
Fractions of the New PHP Shares will not be allotted or issued
pursuant to the Merger, but entitlements of MedicX Scheme
Shareholders will be rounded down to the nearest whole number of
New PHP Shares and all fractions of New PHP Shares will be
aggregated and sold in the market as soon as practicable after the
Merger becomes Effective. The net proceeds of such sale (after
deduction of all expenses and commissions incurred in connection
with the sale) will be distributed in due proportions to MedicX
Scheme Shareholders who would otherwise have been entitled to such
fractions (rounded down to the nearest penny).
Conditions
The Merger is subject to the terms and conditions in Appendix I
to this Announcement and on the further terms and conditions that
will be set out in the Scheme Document.
The Merger will be conditional upon the Scheme becoming
unconditional and becoming Effective, subject to the Takeover Code,
by not later than 11.59 pm on the Long-stop Date.
Election to switch
Subject to obtaining the consent of the Panel, PHP reserves the
right to elect to implement the Merger by way of a Takeover Offer
as an alternative to the Scheme. In any such event a Takeover Offer
would be implemented on the same terms, so far as applicable, as
those which apply to the Scheme. Further details relating to this
right are set out in the terms and conditions in Appendix I to this
Announcement.
15. De-listing and cancellation of trading of MedicX Shares
It is intended that dealings in, and for registration of
transfers of, MedicX Shares (other than the registration of the
transfer of the MedicX Scheme Shares to PHP pursuant to the Scheme)
will be suspended shortly before the Effective Date at a time to be
set out in the Scheme Document. It is further intended that
applications will be made to the London Stock Exchange to cancel
trading in MedicX Shares on the Main Market of the London Stock
Exchange, and to the UK Listing Authority to cancel the listing of
the MedicX Shares on the Official List, in each case with effect
from or shortly following the Effective Date.
On the first Business Day after the Effective Date, entitlements
to MedicX Shares held within the CREST system will be cancelled,
and share certificates in respect of MedicX Shares will cease to be
valid.
16. Listing, dealing and settlement New PHP Shares
Prior to the Effective Date, an application will be made to the
FCA and to the London Stock Exchange for the New PHP Shares to be
admitted to the premium listing segment of the Official List and
for such shares to be admitted to trading on the London Stock
Exchange's market for listed securities. It is expected that
Admission will become effective and that unconditional dealings in
the New PHP Shares will commence on the London Stock Exchange at
8.00 am on the first Business Day following the Effective Date. The
New PHP Shares will not be listed on any stock exchange other than
the London Stock Exchange.
17. Expected timetable
The Scheme Document containing further details of the Merger
will be despatched to MedicX Shareholders (other than to Restricted
Overseas Persons) as soon as is reasonably practicable and, in any
event, within 28 days of the date of this Announcement. The Scheme
Document will include the anticipated timetable and will specify
the necessary actions to be taken by MedicX Shareholders. However
it is expected that the Merger will have an Effective Date in late
March 2019.
18. Overseas
The distribution of this Announcement to, and the availability
of the New PHP Shares to be issued pursuant to the Merger to,
persons who are not resident in the United Kingdom, Guernsey or the
United States may be affected by the laws of their relevant
jurisdiction. Such persons should inform themselves of and observe
any applicable legal or regulatory requirements of their
jurisdiction. Further details in relation to Overseas Shareholders
of MedicX will be found in the Scheme Document.
19. Disclosure of interests in MedicX Shares
Save in respect of the irrevocable undertakings referred to in
paragraph 7 above, as at the close of business on the Latest
Practicable Date neither PHP, nor any of its directors, nor, so far
as PHP is aware, any person acting in concert (within the meaning
of the Takeover Code) with it:
(i) had any interest in or right to subscribe for any relevant securities of MedicX;
(ii) had any short positions in respect of relevant securities
of MedicX (whether conditional or absolute and whether in the money
or otherwise), including any short position under a derivative, any
agreement to sell or any delivery obligation or right to require
another person to purchase or take delivery;
(iii) had borrowed or lent any relevant securities of MedicX
(including, for these purposes, any financial collateral
arrangements of the kind referred to in Note 4 on Rule 4.6 of the
Takeover Code) save for any borrowed shares which have been either
on-lent or resold; or
(iv) was a party to any dealing arrangement of the kind referred
to in Note 11 on the definition of acting in concert in the
Takeover Code.
20. Documents available on website
Copies of the following documents will be made available on
PHP's and MedicX's websites at www.phpgroup.co.uk/investors and
www.medicxfund.com/investors respectively, by no later than 12 noon
(London time) on the Business Day following the date of this
Announcement until the end of the Offer Period:
-- this Announcement;
-- the Confidentiality Agreement;
-- the Transitional Services Agreement; and
-- the irrevocable undertakings referred to in paragraph 7 above
and summarised in Appendix III to this Announcement.
None of the contents of MedicX's website, the contents of PHP's
website, or the content of any other website accessible from
hyperlinks on either such website, is incorporated into or forms
part of, this Announcement.
21. General
The bases and sources for certain financial information
contained in this Announcement are set out in Appendix II. Details
of undertakings received by PHP and given by the PHP Directors are
set out in Appendix III. Information relating to the anticipated
quantified financial benefits of the Merger is set out in Appendix
IV. Further information in relation to the MedicX Profit Forecast
is set out in Appendix V. Certain definitions and terms used in
this Announcement are set out in Appendix VI.
For the purposes of Rule 28 of the Takeover Code, the Quantified
Financial Benefits Statement is the responsibility of PHP and the
PHP Directors. Appendix IV sets out the Quantified Financial
Benefits Statement relating to cost savings and synergies arising
out of the Merger and provides underlying information and bases of
belief. Appendix IV also includes reports from PHP's reporting
accountant, Deloitte, and its joint financial advisers, Numis and
Peel Hunt, in connection with the Quantified Financial Benefits
Statement, as required pursuant to Rule 28.1(a) of the Takeover
Code, and provides underlying information and bases for the
accountant's and advisers' respective reports.
Each of Deloitte, Evercore, Numis and Peel Hunt have given and
not withdrawn their consent to the publication of this Announcement
with the inclusion herein of the references to their opinions and
names in the form and context in which they are included.
Legal advisers
CMS Cameron McKenna Nabarro Olswang LLP is retained as legal
adviser to PHP. Ashurst LLP is retained as legal adviser to
MedicX.
Financial advisers
Numis, which is authorised and regulated by the FCA, is acting
exclusively as financial adviser to PHP and no one else in
connection with the Proposals and will not be responsible to anyone
other than PHP for providing the protections afforded to clients of
Numis nor for providing advice in connection with the Proposals or
any matter referred to herein.
Peel Hunt, which is authorised and regulated by the FCA, is
acting exclusively as financial adviser to PHP and no one else in
connection with the Proposals and will not be responsible to anyone
other than PHP for providing the protections afforded to clients of
Peel Hunt nor for providing advice in connection with the Proposals
or any matter referred to herein.
Evercore, which is authorised and regulated by the FCA in the
UK, is acting exclusively as financial adviser to MedicX and no one
else in connection with the Merger and will not be responsible to
anyone other than MedicX for providing the protections afforded to
clients of Evercore nor for providing advice in connection with the
matters referred to herein. Neither Evercore nor any of its
subsidiaries, branches or affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Evercore in connection with this
Announcement, any statement contained herein, the acquisition or
otherwise. Apart from the responsibilities and liabilities, if any,
which may be imposed on Evercore by FSMA, or the regulatory regime
established thereunder, or under the regulatory regime of any
jurisdiction where exclusion of liability under the relevant
regulatory regime would be illegal, void or unenforceable, neither
Evercore nor any of its affiliates accepts any responsibility or
liability whatsoever for the contents of this Announcement, and no
representation, express or implied, is made by it, or purported
to
be made on its behalf, in relation to the contents of this
Announcement, including its accuracy, completeness or verification
of any other statement made or purported to be made by it, or on
its behalf, in connection with MedicX or the matters described in
this Announcement. To the fullest extent permitted by applicable
law, Evercore and its affiliates accordingly disclaim all and any
responsibility or liability whether arising in tort, contract or
otherwise (save as referred to above) which they might otherwise
have in respect of this Announcement or any statement contained
therein.
Taurus, a trading name of Liberum which is authorised and
regulated by the FCA, is acting exclusively as independent adviser
to MedicX and no one else in connection with the Merger and will
not be responsible to anyone other than MedicX for providing the
protections afforded to clients of Taurus nor for providing advice
in connection with the Merger or any matter referred to herein.
Canaccord, which is authorised and regulated by the FCA, is
acting exclusively as corporate broker to MedicX and no one else in
connection with the Merger and will not be responsible to anyone
other than MedicX for providing the protections afforded to clients
of Canaccord nor for providing advice in connection with the Merger
or any matter referred to herein.
Liberum, which is authorised and regulated by the FCA, is acting
exclusively as corporate broker to MedicX and no one else in
connection with the Merger and will not be responsible to anyone
other than MedicX for providing the protections afforded to clients
of Liberum nor for providing advice in connection with the Merger
or any matter referred to herein.
Further information
This Announcement is for information purposes only. It is not
intended to and does not constitute, or form part of, any 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 Merger or otherwise, nor shall there
be any sale, issuance or transfer of securities of MedicX pursuant
to the Merger or otherwise in any jurisdiction in contravention of
applicable law. The Merger will be implemented solely by means of
the Scheme Document (or, in the event that the Merger is to be
implemented by means of a Takeover Offer, the offer document) or
any document by which the Merger is made which will contain the
full terms and conditions of the Merger, including details of how
to vote in respect of the Merger.
MedicX will prepare the Scheme Document to be distributed to
MedicX Shareholders. MedicX and PHP urge MedicX Shareholders to
read the Scheme Document and the Combined Circular and Prospectus
carefully as each will contain important information relating to
the Merger. MedicX Shareholders are also advised to read the
Combined Circular and Prospectus, which will be distributed to them
by PHP, as it will contain important information relating to the
New PHP Shares. Any vote, decision in respect of or other response
to the Merger (or the Scheme, if applicable) should only be made on
the basis of the information contained in the Scheme Document and
Combined Circular and Prospectus. Each MedicX Shareholder is urged
to consult its independent professional advisers immediately
regarding the tax consequences of the Merger applicable to
them.
It is expected that the Scheme Document (including notices of
the MedicX Shareholder Meetings) together with the relevant Forms
of Proxy, will be posted to MedicX Shareholders as soon as is
reasonably practicable and in any event within 28 days of this
Announcement, unless otherwise agreed with the Panel.
PHP will prepare the Combined Circular and Prospectus to be
distributed to PHP Shareholders and which will be available on
PHP's website at www.phpgroup.co.uk/investors and MedicX's website
at www.medicxfund.com/investors. PHP urges PHP Shareholders to read
the Combined Circular and Prospectus when it becomes available as
it will contain important information relating to the Proposals.
Any approval, decision or other response to the Proposals should be
made only on the basis of the information in the Combined Circular
and Prospectus. PHP Shareholders are strongly advised to read the
formal documentation in relation to the Merger once it has been
despatched. It is expected that the Combined Circular and
Prospectus (including the notice of the PHP General Meeting)
together with the relevant form of proxy, will be posted to PHP
Shareholders as soon as is reasonably practicable and in any event
within 28 days of this Announcement, unless otherwise agreed with
the Panel.
The statements contained in this Announcement are made as at the
date of this Announcement, unless some other time is specified in
relation to them. Nothing contained in this Announcement shall be
deemed to be a forecast, projection or estimate of the future
financial performance of MedicX or the MedicX Group or PHP or the
PHP Group except where otherwise stated.
This Announcement does not constitute a prospectus or prospectus
equivalent document. The New PHP Shares to be issued pursuant to
the Merger are not being offered to the public by means of this
Announcement. The Merger will be subject to the applicable
requirements of the Takeover Code, the Panel, the London Stock
Exchange and the UK Listing Authority.
Please be aware that addresses, electronic addresses and certain
other information provided by MedicX Shareholders, persons with
information rights and other relevant persons for the receipt of
communication by MedicX may be provided to PHP during the Offer
Period as required by Section 4 of Appendix 4 of the Takeover Code
to comply with Rule 2.11(c).
Overseas Shareholders
This Announcement has been prepared for the purpose of complying
with Guernsey law, English law, the Takeover Code, the Market Abuse
Regulation and the Disclosure Guidance and Transparency Rules 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 or
Guernsey.
The release, publication or distribution of this Announcement in
jurisdictions other than the United Kingdom or Guernsey may be
restricted by law and/or regulation. Persons who are not resident
in the United Kingdom or Guernsey, or who are subject to other
jurisdictions should inform themselves of, and observe, any
applicable legal or regulatory requirements. In particular, the
ability of persons who are not resident in the United Kingdom or
Guernsey or who are subject to the laws of another jurisdiction to
participate in the Merger or to vote their MedicX Scheme Shares in
respect of the Scheme at the MedicX Court Meeting, or to execute
and deliver Forms of Proxy appointing another to vote at the MedicX
Court Meeting on their behalf, may be affected by the laws of the
relevant jurisdictions in which they are located or to which they
are subject. Any failure to comply with the applicable requirements
may constitute a violation of the laws and/or regulations of any
such jurisdiction. To the fullest extent permitted by applicable
law, the companies and persons involved in the Merger disclaim any
responsibility or liability for the violation of such restrictions
by any person.
Unless otherwise determined by PHP or required by the Takeover
Code and permitted by applicable law and regulation, participation
in the Merger 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 Merger 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
documentation relating to the Merger 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 Merger (including custodians, nominees and trustees) must not
mail or otherwise distribute or send them in, into or from such
jurisdictions as doing so may invalidate any purported vote in
respect of the Merger.
If the Merger is implemented by way of a Takeover Offer (unless
otherwise permitted by applicable law and regulation), the Takeover
Offer may not be made, directly or indirectly, in or into or by use
of the mails or any other means or instrumentality (including,
without limitation, facsimile, e-mail or other electronic
transmission, telex or telephone) of interstate or foreign commerce
of, or any facility of a national, state or other securities
exchange of any Restricted Jurisdiction and the Takeover Offer will
not be capable of acceptance by any such use, means,
instrumentality or facilities or from within any Restricted
Jurisdiction.
The availability of the New PHP Shares under the Merger to
MedicX 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 or
who are subject to other jurisdictions should inform themselves of,
and observe, any applicable legal or regulatory requirements.
Further details in relation to Overseas Shareholders will be
contained in the Scheme Document.
Notice to US investors
The Merger relates to the securities of a Guernsey company with
a listing on the London Stock Exchange and is proposed to be
implemented pursuant to a scheme of arrangement provided for under
the Companies Law of Guernsey. A transaction effected by means of a
scheme of arrangement is not subject to the tender offer rules or
the proxy solicitation rules under the US Exchange Act.
Accordingly, the Scheme is subject to procedural and disclosure
requirements and practices applicable to a scheme of arrangement
involving a target company in Guernsey listed on the London Stock
Exchange, which are different from the disclosure requirements of
the US tender offer and proxy solicitation rules. If in the future
PHP exercises its right to implement the Merger by way of a
Takeover Offer, such Takeover Offer will be made in compliance with
all applicable laws and regulations, including, without limitation,
to the extent applicable, Section 14(e) of the US Exchange Act and
Regulation 14E thereunder, and subject, in the case of
participation by MedicX Shareholders resident in the United States,
to the availability of an exemption (if any) from the registration
requirements of the US Securities Act and of the securities laws of
any state or other jurisdiction of the United States. Such Takeover
Offer would be made by PHP and no one else. In addition to any such
Takeover Offer, PHP, certain affiliated companies and the nominees
or brokers (acting as agents) may make certain purchases of, or
arrangements to purchase, shares in MedicX outside such Takeover
Offer during the period in which such Takeover Offer would remain
open for acceptance. If such purchases or arrangements to purchase
were to be made, they would be made outside the United States and
would comply with applicable law, including the US Exchange Act.
Any information about such purchases will be disclosed as required
in the United Kingdom and Guernsey, will be reported to a
Regulatory Information Service of the UK Listing Authority and will
be available on the London Stock Exchange website:
http://www.londonstockexchange.com/.
The financial information included in this Announcement and
other documentation related to the Merger has been or will have
been prepared in accordance with International Financial Reporting
Standards and thus may not be comparable to financial information
of US companies or companies whose financial statements are
prepared in accordance with generally accepted accounting
principles in the US.
The New PHP Shares to be issued under the Scheme have not been
and will not be registered under the US Securities Act or under any
laws or with any securities regulatory authority of any state or
other jurisdiction of the United States and may only be offered or
sold in the US in reliance on an exemption from the registration
requirements of the US Securities Act. The New PHP Shares are
expected to be issued in reliance upon the exemption from the
registration requirements of the US Securities Act provided by
Section 3(a)(10) thereof. MedicX Shareholders who are or will be
affiliates of PHP or MedicX prior to, or of PHP after, the
Effective Date will be subject to certain US transfer restrictions
relating to the New PHP Shares received pursuant to the Scheme as
will be further described in the Scheme Document.
For the purposes of qualifying for the exemption from the
registration requirements of the US Securities Act afforded by
Section 3(a)(10) thereunder, MedicX will advise the Court through
PHP's counsel that its sanctioning of the Scheme will be relied on
by PHP as an approval of the Scheme following a hearing on the
fairness of the terms and conditions of the Scheme to MedicX
Shareholders.
None of the securities referred to in this Announcement have
been approved or disapproved by the SEC or any US state securities
commission, nor have any such authorities passed judgment upon the
fairness or the merits of the Merger or determined if this
Announcement is accurate or complete. Any representation to the
contrary is a criminal offence in the United States.
US holders of MedicX Shares also should be aware that the
transaction contemplated herein may have tax consequences in the
United States and that such consequences, if any, are not described
herein. US holders of MedicX Shares are urged to consult with
independent professional advisors regarding the legal, tax and
financial consequences of the Merger applicable to them,
It may be difficult for US holders of MedicX Shares to enforce
their rights and claims arising out of the US federal securities
laws since PHP and MedicX are organized in countries other than the
US and some or all of their officers and directors may be residents
of, and some or all of their assets may be located in,
jurisdictions other than the US. US holders of MedicX Shares may
have difficulty effecting service of process within the US upon
those persons or recovering against judgments of US courts,
including judgments based upon the civil liability provisions of
the US federal securities laws. US holders of MedicX Shares may not
be able to sue a non-US company or its officers or directors in a
non-US court for violations of US securities laws. Further, it may
be difficult to compel a non-US company and its affiliates to
subject themselves to a US court's judgment.
Further details in relation to US investors will be contained in
the Scheme Document.
Forward looking statements
This Announcement (including information incorporated by
reference into this Announcement), any oral statements made by PHP
or MedicX in relation to the Merger and other information published
by PHP or MedicX may contain statements about PHP, MedicX and the
Enlarged Group that are or may be forward looking statements. 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", "goals", "believes", "expects",
"aims", "intends", "will", "may", "anticipates", "estimates",
"projects", hopes", "continues", "would", "could", "should" 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, synergies, economic
performance, indebtedness, financial condition, dividend policy,
losses and future prospects; and (ii) business and management
strategies and the expansion and growth of PHP's or MedicX's or the
Enlarged Group's operations and potential synergies resulting from
the Merger.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and/or the
operations of PHP, MedicX or the Enlarged Group and are based on
certain assumptions and assessments made by PHP and MedicX in light
of their experience and their perception of historical trends,
current conditions, future developments and other factors they
believe appropriate. Except as expressly provided in this
Announcement, they have not been reviewed by the auditors of PHP or
MedicX. Although it is believed that the expectations reflected in
such forward looking statements are reasonable, no assurance can be
given that such expectations will prove to have been correct and
you are therefore cautioned not to place reliance on these forward
looking statements which speak only as at the date of this
Announcement. Neither MedicX nor PHP, nor any of their respective
members, directors, officers, employees, advisers and any person
acting on behalf of one or more of them assumes any obligation to
update or correct the information contained in this Announcement
(whether as a result of new information, future events or
otherwise) except as required by applicable law (including as
required by the Takeover Code, the Listing Rules and the Disclosure
Guidance and Transparency Rules).
There are several factors which could cause actual results to
differ materially from those expressed or implied in forward
looking statements. Among the factors that could cause actual
results to differ materially from those described in the forward
looking statements are changes in the global, political, economic,
business, competitive, market and regulatory forces, future
exchange and interest rates, changes in tax rates and future
business acquisitions or disposals. Such statements are qualified
in their entirety by the inherent risks and uncertainties
surrounding future expectations.
No member of PHP or MedicX, nor any of their respective
associates, directors, officers, employees 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.
Quantified Financial Benefits Statement
Statements of estimated cost savings and synergies relate to
future actions and circumstances which, by their nature, involve
risks, uncertainties and contingencies. As a result, the cost
savings and synergies referred to may not be achieved, may be
achieved later or sooner than estimated, or those achieved could be
materially different from those estimated. Neither the Quantified
Financial Benefits Statement nor any other statement in this
Announcement should be construed as a profit forecast (other than
the MedicX Profit Forecast) or interpreted to mean that the
Enlarged Group's earnings in the first full year following
Completion, or in any subsequent period, would necessarily match or
be greater than or be less than those of PHP or MedicX for the
relevant preceding financial period or any other period. For the
purposes of Rule 28 of the Takeover Code, the Quantified Financial
Benefits Statement contained in this Announcement is the
responsibility of PHP and the PHP Directors.
Profit forecasts and estimates
The MedicX Profit Forecast is a profit forecast for the purposes
of Rule 28 of the Takeover Code. The MedicX Profit Forecast is
repeated in Appendix V, together with the confirmations by the
directors of MedicX in the terms required by Rule 28.1(c)(i) of the
Takeover Code, in accordance with Note 2(a) on Rule 28.1 of the
Takeover Code.
Other than the MedicX Profit Forecast, no statement in this
Announcement is intended to constitute a profit forecast or profit
estimate and no statement in this Announcement should be
interpreted to mean that the earnings or future earnings per share
of or dividends or future dividends per share of PHP and/or MedicX
for current or future financial years will necessarily match or
exceed the historical or published earnings or dividends per share
of PHP or MedicX, as appropriate.
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.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in 1 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 Takeover
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 Takeover Code, any person who is, or
becomes, interested in 1 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, save to the extent that these details have previously been
disclosed under Rule 8 of the Takeover Code. A Dealing Disclosure
by a person to whom Rule 8.3(b) of the Takeover 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 Takeover 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 either of them (see Rules 8.1, 8.2 and 8.4
of the Takeover 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 Takeover 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.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover Code, MedicX
announces that, excluding 2,786,259 ordinary shares of no par value
each held in treasury, as at close of business on the Latest
Practicable Date, it has 442,916,140 ordinary shares of no par
value in issue and admitted to trading on the London Stock
Exchange. The International Securities Identification Number (ISIN)
of the MedicX Shares is GG00B1DVQL92.
In accordance with Rule 2.9 of the Takeover Code, PHP announces
that as at close of business on the Latest Practicable Date, it has
771,730,160 ordinary shares of 12.5 pence each in issue and
admitted to issue on the London Stock Exchange. PHP has no ordinary
shares held in Treasury. The ISIN of the PHP Shares is
GB00BYRJ5J14.
Requesting Hard Copy Documents
Pursuant to Rule 30.3 of the Takeover Code, a person so entitled
may request a copy of this Announcement and any information
incorporated into it by reference to another source in hard copy
form. A person may also request that all future documents,
announcements and information to be sent to that person in relation
to the Merger should be in hard copy form. For persons who receive
a copy of this Announcement in electronic form or via a website
notification, a hard copy of this Announcement will not be sent
unless so requested from either (1) PHP by contacting the PHP
Company Secretary at its principal executive office in London
during business hours on +44 (0) 20 7451 7050 or by submitting a
request in writing to the PHP Company Secretary at 5th Floor,
Greener House, 66-68 Haymarket, London SW1Y 4RF; or (2) MedicX by
contacting Link Asset Services on 0371 664 0321 within the United
Kingdom or +44 (0) 371 664 0300 from overseas or by submitting a
request in writing to The Registry, 34 Beckenham Road, Beckenham,
Kent, BR3 4TU or to shareholderenquiries@linkgroup.co.uk.
Publication on website
A copy of this Announcement will be made available, free of
charge subject to certain restrictions relating to persons resident
in Restricted Jurisdictions, at www.phpgroup.co.uk/investors and
http://www.medicxfund.com/investors by no later than 12 noon
(London time) on the Business Day following the date of this
Announcement.
Neither the content of the websites referred to in this
Announcement nor the content of any website accessible from
hyperlinks on PHP's website (or any other website) is incorporated
into, or forms part of, this Announcement.
The Merger is subject to the provisions of the Takeover
Code.
APPIX I
CONDITIONS AND FURTHER TERMS OF THE MERGER
Part A: The Conditions
1. The Merger will be conditional upon the Scheme becoming
unconditional and becoming Effective, subject to the Takeover Code,
by not later than 11.59 pm on the Long-stop Date.
2. The Scheme will be conditional upon:
(a)
i. the approval of the Scheme by a majority in number
representing 75 per cent. or more in value of the MedicX Scheme
Shareholders entitled to vote and present and voting, either in
person or by proxy, at the MedicX Court Meeting and at any separate
class meeting which may be required by the Court or at any
adjournment of any such meeting; and
ii. the MedicX Court Meeting and any separate class meeting
which may be required by the Court or any adjournment of any such
meeting being held on or before the 22nd day after the expected
date of the MedicX Court Meeting, to be set out in the Scheme
Document (or such later date as may be agreed by PHP and MedicX in
writing and the Court may allow);
(b)
i. all resolutions in connection with, or necessary to approve
and implement the Scheme, as set out in the notice of the MedicX
General Meeting, being duly passed by the requisite majority or
majorities at the MedicX General Meeting, or at any adjournment of
that meeting; and
ii. the MedicX General Meeting or any adjournment of that
meeting being held on or before the 22nd day after the expected
date of the MedicX General Meeting, to be set out in the Scheme
Document (or such later date as may be agreed by PHP and MedicX in
writing and the Court may allow); and
(c)
i. the sanction of the Scheme (without modification, or with
such modifications as are agreed by PHP and MedicX) by the Court;
and
ii. the Court Hearing being held on or before the 22nd day after
the expected date of the Court Hearing, to be set out in the Scheme
Document (or such later date as may be agreed by PHP and MedicX in
writing and the Court may allow).
3. In addition, subject as stated in Part B of this Appendix I
and to the requirements of the Panel, the Merger will be
conditional upon the following conditions and, accordingly, the
necessary actions to make the Scheme Effective will only be taken
on the satisfaction or, where relevant, waiver of the following
conditions:
(a) the passing at the PHP General Meeting (or at any
adjournment of that meeting), in each case by the requisite
majority of PHP Shareholders, of such resolution or resolutions to
approve, effect and implement the Merger including: (a) the Merger
Resolution; and (b) the Related Party Resolution;
(b)
i. the FCA having acknowledged to PHP or its agent (and such
acknowledgement not having been withdrawn) that the application for
the admission of the New PHP Shares to the Official List with a
premium listing has been approved and (after satisfaction of any
conditions to which such approval is expressed to be subject
("Listing Conditions")) will become effective as soon as a dealing
notice has been issued by the FCA and any Listing Conditions having
been satisfied; and
ii. the London Stock Exchange having acknowledged to PHP or its
agent (and such acknowledgement not having been withdrawn) that the
New PHP Shares will be admitted to trading on the Main Market.
(c) no Third Party having given notice of a decision to take,
institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference, or having enacted, made or
proposed any statute, regulation, decision, order or change to
published practice and there not continuing to be outstanding any
statute, regulation, decision or order which would or might
reasonably be expected to (in any case which is material in the
context of the Merger):
i. make the Merger, its implementation or the acquisition or the
proposed acquisition by PHP or any member of the Wider PHP Group of
any shares or other securities in, or control or management of,
MedicX or any member of the Wider MedicX Group void, illegal or
unenforceable in any jurisdiction, or otherwise directly or
indirectly restrain, prevent, prohibit, restrict, delay or
otherwise materially adversely interfere with the same or impose
additional conditions or obligations with respect to the Merger (or
its implementation) or such acquisition, or otherwise impede,
challenge or interfere with the Merger (or its implementation) or
such acquisition, or require material adverse amendment to the
terms of the Merger or the acquisition or proposed acquisition of
any MedicX Shares or the acquisition of control or management of
MedicX or any member of the Wider MedicX Group by PHP or any member
of the Wider PHP Group;
ii. materially limit or delay the ability of any member of the
Wider PHP Group or any member of the Wider MedicX Group to acquire
or to hold or to exercise effectively, directly or indirectly, all
or any rights of ownership in respect of shares or other securities
(or the equivalent) in, or to exercise voting or management control
over, any member of the Wider MedicX Group or any member of the
Wider PHP Group, as the case may be, taken as a whole;
iii. require, prevent or materially delay any divestiture or
alter the terms envisaged for any proposed divestiture by any
member of the Wider PHP Group of any shares or other securities in
MedicX or any member of the Wider MedicX Group;
iv. require, prevent or materially delay any divestiture or
alter the terms envisaged for any proposed divestiture by any
member of the Wider PHP Group or by any member of the Wider MedicX
Group of all or any part of their respective businesses, assets or
properties or limit the ability of any of them to conduct all or
any part of their respective businesses or to own or control any of
their respective assets or properties or any part thereof (in any
case to an extent which is or is reasonably likely to be material
in the context of the Wider PHP Group or the Wider MedicX Group, as
the case may be, taken as a whole);
v. require (save as envisaged in the implementation of the
Merger or by Part XVIII of the Companies Law of Guernsey), any
member of the Wider PHP Group or of the Wider MedicX Group to
subscribe for or acquire, or to offer to subscribe for or acquire,
any shares or other securities (or the equivalent) or interest in
any member of the Wider MedicX Group or the Wider PHP Group;
vi. materially limit the ability of any member of the Wider PHP
Group or of the Wider MedicX Group to integrate or co-ordinate its
business, or any part of it, with the businesses or any part of the
businesses of any other member of the Wider PHP Group and/or of the
Wider MedicX Group in each case in a manner which is material in
the context of the Merger, or as the case may be, in the context of
the Wider PHP Group or the Wider MedicX Group, as the case may be,
taken as a whole;
vii. result in any member of the Wider PHP Group or the Wider
MedicX Group ceasing to be able to carry on business under any name
under which it presently does so (in any case to an extent which is
material in the context of the Wider PHP Group or the Wider MedicX
Group, as the case may be, taken as a whole); or
viii. otherwise adversely affect the business, assets, profits,
financial or trading position or prospects of any member of the
Wider PHP Group or of any member of the Wider MedicX Group to an
extent which is adverse to and material in the context of the Wider
PHP Group or the Wider MedicX Group, as the case may be, in either
case, taken as a whole;
and all applicable waiting and other time periods during which
any such Third Party could decide to take, institute, implement or
threaten such actions, proceedings, suit, investigation, enquiry or
reference or take any other step under any applicable legislation
or regulation of any relevant jurisdiction having expired, lapsed
or been terminated (as the case may be);
(d) all material notifications, filings and/or applications
which are necessary having been made, all appropriate waiting and
other time periods (including any extensions of such waiting and
other time periods) under any applicable legislation or regulation
of any relevant jurisdiction having expired, lapsed or terminated
(as appropriate) and all statutory or regulatory obligations in any
relevant jurisdiction having been complied with, in each case in
connection with the Merger or the acquisition or proposed
acquisition of any shares or other securities in, or control of,
MedicX or any other member of the Wider MedicX Group by any member
of the Wider PHP Group or the carrying on by any member of the
Wider MedicX Group of its business;
(e) all Authorisations which are necessary in any relevant
jurisdiction for or in respect of the Merger (or its
implementation) or the acquisition or proposed acquisition of any
shares or other securities in, or control or management of, MedicX
or any other member of the Wider MedicX Group by PHP or any member
of the Wider PHP Group or the carrying on by any member of the
Wider MedicX Group of its business having been obtained, in terms
and in a form reasonably satisfactory to PHP from all appropriate
Third Parties or from any persons or bodies with whom any member of
the Wider PHP Group or any member of the Wider MedicX Group has
entered into contractual arrangements and such Authorisations
together with all authorisations necessary for any member of the
Wider MedicX Group to carry on its business remaining in full force
and effect, and there being no notice or other intimation of any
intention to revoke, suspend, restrict, modify or not to renew any
of the same having been made in connection with the Merger or any
other matter directly, or indirectly, arising from the Merger (or
its implementation), in each case where the absence of such
Authorisation would have a material adverse effect on the Wider
MedicX Group or the Wider PHP Group taken as a whole and all
necessary statutory or regulatory obligations in any relevant
jurisdiction having been complied with;
(f) save as Disclosed, there being no provision of any
arrangement, agreement, lease, licence, permit, franchise or other
instrument to which any member of the Wider MedicX Group, is a
party, or by or to which any such member or any of its assets is or
may be bound, entitled or subject, or any circumstance, which, in
each case as a consequence of the Merger (or its implementation) or
the acquisition or proposed acquisition by PHP or any member of the
Wider PHP Group or otherwise of any shares or other securities (or
the equivalent) in, or control or management of, MedicX or any
other member of the Wider MedicX Group, could reasonably be
expected to result in, in any case to an extent which is or would
be material in the context of the Wider MedicX Group taken as a
whole:
i. any monies borrowed by or any other indebtedness or
liabilities (actual or contingent) of, or any grant available to,
any member of the Wider MedicX Group, being or becoming repayable
or being capable of being declared repayable immediately or prior
to their or its stated maturity or the ability of any member of the
Wider MedicX Group to borrow monies or incur any indebtedness being
withdrawn or inhibited or becoming capable of being withdrawn or
inhibited;
ii. the creation (save in the ordinary and usual course of
business) or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property,
assets or interests of any member of the Wider MedicX Group or any
such mortgage, charge or other security interest (wherever and
whenever created, arising or having arisen) becoming
enforceable;
iii. any such arrangement, agreement, lease, licence, permit,
franchise or instrument, or the rights, liabilities, obligations or
interests of any member of the Wider MedicX Group, thereunder,
being, or becoming capable of being, terminated or adversely
modified or affected or any adverse action being taken or arising
thereunder or any onerous obligation or liability arising
thereunder;
iv. any asset or interest of any member of the Wider MedicX
Group or any asset the use of which is enjoyed by any member of the
Wider MedicX Group being or falling to be disposed of or charged or
ceasing to be available to any member of the Wider MedicX Group or
any right arising under which any such asset or interest could be
required to be disposed of or charged or could cease to be
available to any member of the Wider MedicX Group otherwise than in
the ordinary course of business;
v. any member of the Wider MedicX Group ceasing to be able to
carry on business under any name under which it presently does
so;
vi. the creation or assumption of any liabilities (actual or
contingent) by any member of the Wider MedicX Group, other than in
the ordinary course of business;
vii. the rights, liabilities, obligations or interests of any
member of the Wider MedicX Group under any such arrangement,
agreement, lease, licence, permit, franchise or other instrument or
the interests or business of any such member in or with any other
person, firm, company or body (or any agreements or arrangements
relating to any such interests or business) being terminated,
adversely modified or affected;
viii. the financial or trading position or the value or the
profits of MedicX or of any member of the Wider MedicX Group being
prejudiced or adversely affected;
ix. the creation of any liability (actual or contingent) by any
member of the Wider MedicX Group other than the creation of
liabilities incurred in the ordinary course of business; or
x. any member of the Wider MedicX Group being required to
acquire or repay any shares in and/or indebtedness of any member of
the Wider MedicX Group owed by or owed to any third party;
and no event having occurred which, under any provision of any
such arrangement, agreement, lease, license, permit, franchise or
other instrument to which any member of the Wider MedicX Group is a
party, or by or to which any such member or any of its assets may
be found entitled or subject, could result in any of the events or
circumstances which are referred to in sub-paragraphs (i) to (x) of
this Condition 3(f) in any case to an extent which is or would be
material in the context of the Wider MedicX Group as a whole;
(g) save as Disclosed, no member of the Wider MedicX Group having since 30 September 2018:
i. issued or agreed to issue, or authorised or proposed or
announced its intention to authorise or propose the issue of,
additional shares or securities of any class, or securities
convertible into or exchangeable for, or rights, warrants or
options to subscribe for or acquire, any such shares or convertible
securities (save as between MedicX and its wholly-owned
subsidiaries or between such wholly-owned subsidiaries);
ii. purchased or redeemed or repaid or proposed the purchase,
redemption or repayment of any of its own shares or other
securities (or the equivalent) or reduced or, made or authorised
any other change to any part of its share capital other than
pursuant to the implementation of the Merger;
iii. recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus issue, dividend or other
distribution, whether payable in cash or otherwise save for the
Permitted Dividends and any dividend declared before the Effective
Date by any wholly-owned subsidiary of MedicX to MedicX or any of
their respective wholly-owned subsidiaries;
iv. save for transactions between MedicX and its respective
wholly-owned subsidiaries, or between such wholly-owned
subsidiaries, made, authorised, proposed or announced an intention
to make, propose or authorise any change in its loan capital, in
any such case to an extent which is material in the context of the
Wider MedicX Group taken as a whole;
v. undertaken:
(a) a conversion under Part V of the Companies Law of Guernsey;
(b) an amalgamation under Part VI of the Companies Law of Guernsey;
(c) a migration under Part VII of the Companies Law of Guernsey; or
(d) an arrangement or reconstruction (other than the Scheme)
under Part VIII of the Companies Law of Guernsey;
vi. save for transactions between MedicX and its respective
wholly-owned subsidiaries, or between such wholly-owned
subsidiaries, merged with, demerged or acquired any body corporate,
partnership or business or acquired or disposed of or transferred,
mortgaged or charged or created any security interest over any
material assets or any right, title or interest in any material
assets (including shares in any undertaking and trade investments)
or authorised, proposed or announced the same, in any such case to
an extent which is material in the context of the Wider MedicX
Group taken as a whole;
vii. issued, authorised or proposed or announced an intention to
authorise or propose the issue of, or made any change in or to, any
debentures or, other than trade credit incurred in the ordinary
course of business, incurred or increased any indebtedness or
liability (actual or contingent) except as between MedicX and any
of its wholly-owned subsidiaries, or between such wholly-owned
subsidiaries, which in any case is material in the context of the
Wider MedicX Group taken as a whole;
viii. entered into, varied, authorised, proposed or announced an
intention to enter into or vary any contract, agreement,
transaction, arrangement or commitment (whether in respect of
capital expenditure or otherwise) which:
(a) is of a long term, onerous or unusual nature or magnitude or
which involves or is or is reasonably likely to involve an
obligation of such a nature or magnitude;
(b) restricts or could reasonably be expected to restrict the
business of any member of the Wider MedicX Group; or
(c) is other than in the ordinary course of business,
and which is, in any such case, material in the context of the
Wider MedicX Group taken as a whole;
ix. entered into, implemented, effected or authorised any
merger, demerger, reconstruction, amalgamation, scheme, commitment
or other transaction or arrangement in respect of itself or another
member of the Wider MedicX Group;
x. entered into or varied or made an offer (which remains open
for acceptance) to vary the terms of any contract, agreement,
letter of appointment, commitment or arrangement with any of the
directors of any member of the Wider MedicX Group as appropriate,
save for fee increases and bonuses not resulting in total annual
remuneration of any individual exceeding the immediately preceding
year's remuneration by more than three per cent. or other bonuses
or variations of terms in the ordinary course of business, which
are not material in the context of the Wider MedicX Group taken as
a whole;
xi. other than in respect of any member of the Wider MedicX
Group which is dormant and was solvent at the relevant time, taken
any corporate action or had any step, application, filing in court,
notice or legal proceedings started, served, instituted or
threatened against it or petition presented or order made for its
winding-up (voluntarily or otherwise), dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any
material part of its assets and revenues or any analogous
proceedings in any jurisdiction which in any case is material in
the context of the Wider MedicX Group taken as a whole;
xii. been unable, or admitted in writing that it is unable, to
pay its debts or having stopped or suspended (or threatened to stop
or suspend) payment of its debts generally or having entered into
or taken steps to enter into a moratorium, composition, compromise
or arrangement with its creditors in respect of its debts or ceased
or threatened to cease carrying on all or a substantial part of its
business;
xiii. waived, settled or compromised any claim (other than in
the ordinary and usual course of business) to an extent which is
material in the context of the Wider MedicX Group taken as a
whole;
xiv. terminated or varied the terms of any agreement or
arrangement between any member of the Wider MedicX Group and any
other person in a manner which would or might reasonably be
expected to have a material adverse effect on the financial
position or prospects of the Wider MedicX Group taken as a
whole;
xv. made any alteration to its articles of association other
than as required to implement the Merger;
xvi. put in place any pension schemes for its directors or their
dependants or made or agreed or consented to any change to:
(a) the terms of the trust deeds constituting the pension
schemes (if any) established for its directors or their dependants;
or
(b) the benefits which accrue, or to the pensions which are payable, thereunder; or
(c) the basis on which qualification for, or accrual or
entitlement to, such benefits or pensions are calculated or
determined; or
(d) the basis upon which the liabilities (including pensions) of
such pension schemes are funded or made,
or agreed or consented to any change to the trustees involving
the appointment of a trust corporation; and
xvii. entered into any contract, agreement, commitment or
arrangement or passed any resolution or made any offer (which
remains open for acceptance) or proposed or announced any intention
with respect to any of the transactions, matters or events referred
to in this Condition (g);
(h) since 30 September 2018, save as Disclosed:
i. no adverse change or deterioration having occurred in the
business, assets, financial or trading position or profits or
prospects of any member of the Wider MedicX Group which in any case
is material in the context of the Wider MedicX Group taken as a
whole;
ii. no litigation, arbitration proceedings, prosecution or other
legal proceedings to which any member of the Wider MedicX Group is
or may become a party (whether as plaintiff, defendant or
otherwise) having been threatened, announced, implemented or
instituted by or against or remaining outstanding against or in
respect of any member of the Wider MedicX Group which in any case
is material in the context of the Wider MedicX Group taken as a
whole;
iii. no enquiry or investigation by, or complaint or reference
to, any Third Party having been threatened, announced, implemented,
instituted by or against or remaining outstanding against or in
respect of any member of the Wider MedicX Group which in any such
case might reasonably be expected to be material in the context of
the Wider MedicX Group taken as a whole;
iv. outside of the ordinary course of business, no contingent or
other liability having arisen or become apparent to any member of
the PHP Group or increased which might reasonably be expected to
adversely affect any member of the Wider MedicX Group which is
material in the context of the Wider MedicX Group taken as a
whole;
v. no claim being made and no circumstance having arisen which
might reasonably be expected to lead to a claim being made under
the insurance of any member of the Wider MedicX Group where such
claim would not be covered by such insurance and where such claim
is material in the context of the Wider MedicX Group taken as a
whole; and
vi. no steps having been taken which are reasonably likely to
result in the withdrawal, cancellation or termination or
modification of any licence, permit or consent held by any member
of the Wider MedicX Group which is necessary for the proper
carrying on by such member of its business and which is material in
the context of the Wider MedicX Group;
(i) PHP not having discovered (other than to the extent Disclosed):
i. that any financial or business or other information
concerning the Wider MedicX Group disclosed at any time by or on
behalf of any member of the Wider MedicX Group, whether publicly,
to any member of the Wider PHP Group or otherwise, is materially
misleading or contains any material misrepresentation of fact or
omits to state a fact necessary to make any information contained
therein not materially misleading and which has not subsequently
been corrected before the date of this Announcement (in the case of
information disclosed publicly, by disclosure by or on behalf of
the MedicX Group through the publication of an announcement via a
Regulatory Information Service); or
ii. that any member of the Wider MedicX Group, is subject to any
liability (actual or contingent) which is material in the context
of the Wider MedicX Group taken as a whole and which is not
disclosed in the annual report and accounts of the MedicX Group for
the financial year ended 30 September 2018; or
iii. any information which affects the import of any information
disclosed to PHP at any time by or on behalf of any member of the
Wider MedicX Group to an extent which is material and adverse in
the context of the Wider MedicX Group taken as a whole;
(j) PHP not having discovered that:
i. any past or present member, director, officer or employee of
the Wider MedicX Group is or has at any time engaged in any
activity, practice or conduct which would constitute an offence
under the Bribery Act 2010, the US Foreign Corrupt Practices Act of
1977 or any other applicable anti-corruption legislation or any
person that performs or has performed services for or on behalf of
the Wider MedicX Group is or has at any time engaged in any
activity, practice or conduct in connection with the performance of
such services which would constitute an offence under the Bribery
Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other
applicable anti-corruption legislation; or
ii. any asset of any member of the Wider MedicX Group
constitutes criminal property as defined by section 340(3) of the
Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that
definition); or
iii. any past or present member, director, officer or employee
of the Wider MedicX Group, or any other person for whom any such
person may be liable or responsible, has engaged in any business
with, made any investments in, made any funds or assets available
to or received any funds or assets from: (a) any government, entity
or individual in respect of which European Union persons, or
persons operating in those territories, are prohibited from
engaging in activities or doing business, or from receiving or
making available funds or economic resources, by European Union
laws or regulations, including the economic sanctions administered
by HM Treasury in the United Kingdom; or (b) any government, entity
or individual targeted by any of the economic sanctions of the
United Nations or the European Union or any of its member states;
or
iv. a member of the Wider MedicX Group being engaged in any
transaction which would cause PHP to be in breach of any law or
regulation upon its acquisition of MedicX, including the economic
sanctions of HM Treasury in the United Kingdom, or any government,
entity or individual targeted by any of the economic sanctions of
the United Nations, the European Union or any of its member states;
and
(k) save as Disclosed, PHP not having discovered that:
i. any past or present member of the Wider MedicX Group has
failed to comply with any applicable legislation, regulations or
common law of any jurisdiction or any notice, order or requirement
of any Third Party with regard to the use, treatment, handling,
storage, transport, release, disposal, discharge, presence,
spillage, leak or emission of any waste or hazardous or harmful
substance or any substance likely to impair the environment or harm
human or animal health, or otherwise relating to environmental
matters or the health and safety of any person, or that there has
otherwise been any such use, treatment, handling, storage,
transport, release, disposal, discharge, presence, spillage, leak
or emission (whether or not the same constituted non-compliance by
any person with any legislation, regulations or law and wherever
the same may have taken place) which, in any case, would be
reasonably likely to give rise to any liability (whether actual or
contingent) or cost on the part of any member of the Wider MedicX
Group which in any case is material in the context of the Wider
MedicX Group taken as a whole; or
ii. there is, or is reasonably likely to be, any obligation or
liability, whether actual or contingent, to make good, repair,
reinstate, remedy or clean up any property now or previously owned,
occupied, operated or made use of or controlled by any past or
present member of the Wider MedicX Group or any other property or
controlled waters under any environmental legislation, regulation,
common law, notice, circular, order or other lawful requirement of
any relevant authority or Third Party in any jurisdiction or
otherwise which in any case is material in the context of the Wider
MedicX Group taken as a whole.
Part B: Waiver of Conditions and further terms of the Merger and
the Scheme
1. Subject to the requirements of the Panel or, if required, by
the Court, PHP reserves the right to waive all or any of the
conditions in Part A above in whole or in part save for the
conditions contained in Conditions 1, 2(a)(i), 2(b)(i), 2(c)(i),
3(a) and 3(b) which cannot be waived. Conditions 2(a), 2(b) and
3(a) to 3(k) (inclusive) in Part A above must each be fulfilled by,
or (if capable of waiver) be waived by, no later than 11.59 pm on
the date immediately preceding the date of the Court Hearing (or
such later date as PHP, MedicX, the Panel and, if required, the
Court may allow) failing which the Merger will lapse.
2. The Merger will lapse if the Scheme does not become Effective
by no later than 11.59 pm on the Long-stop Date.
3. PHP shall be under no obligation to waive (if capable of
waiver), to determine to be or remain satisfied or to treat as
fulfilled any of the conditions by a date earlier than the latest
date of the fulfilment of that condition notwithstanding that the
other conditions to the Merger may at such earlier date have been
waived or fulfilled and that there are at such earlier date no
circumstances indicating that any such conditions may not be
capable of fulfilment.
4. The Scheme and the Merger will lapse if there is a CMA Phase
2 Reference before the later of the MedicX Court Meeting and the
MedicX General Meeting. In such event, PHP will not be bound by the
terms of the Scheme.
5. PHP reserves the right to elect to implement the Merger by
way of a Takeover Offer (subject to the Panel's consent) as an
alternative to the Scheme. In such event, such offer will be
implemented on the same terms and conditions (subject to
appropriate amendments, including (without limitation) an
acceptance condition set at 90 per cent. (or such lower percentage
(being more than 50 per cent.) as PHP may decide (subject to the
Panel's consent) of the shares to which such offer relates), so far
as applicable, as those which would apply to the Scheme (the
"Takeover Offer Acceptance Condition"). Further, if sufficient
acceptances of such Takeover Offer are received and/or sufficient
MedicX Shares are otherwise acquired, it is the intention of PHP to
apply Part XVIII of the Companies Law of Guernsey to compulsorily
acquire any outstanding MedicX Shares to which such Takeover Offer
relates.
6. The MedicX Shares will be acquired pursuant to the Merger
fully paid and free from all liens, charges, equitable interests,
security interests, encumbrances, rights of pre-emption and any
other rights and interests of any nature whatsoever and together
with all rights now and hereafter attaching thereto, including
voting rights and the right to receive and retain in full all
dividends and other distributions (if any) declared, or made on or
after the date of this Announcement, save for any Permitted
Dividends.
7. Under Rule 13.5 of the Takeover Code, PHP may only invoke a
condition to the Merger so as to cause the Merger not to proceed,
to lapse or to be withdrawn where the circumstances which give rise
to the right to invoke the condition are of material significance
to PHP in the context of the Merger. The conditions contained in
Condition 2, 3(a) and 3(b) of Part A and the Takeover Offer
Acceptance Condition are not subject to this provision of the
Takeover Code.
8. The Merger and the Scheme will be governed by the laws of
Guernsey and be subject to the jurisdiction of the Court and to the
conditions and further terms set out in this Appendix I and to be
set out in the Scheme Document. The Merger will also be subject to
the applicable requirements of the Companies Law of Guernsey, the
Court (as a result of MedicX being incorporated in Guernsey), the
GFSC (as a result of MedicX being a closed-ended investment company
authorised by the GFSC), the UK Listing Authority, the London Stock
Exchange and the Takeover Code. This Announcement does not
constitute, or form part of, an offer or invitation to purchase
MedicX Shares or any other securities. The availability of the
Merger to persons not resident in the United Kingdom may be
affected by the laws of the relevant jurisdictions. Persons who are
not resident in the United Kingdom should inform themselves about
and observe any applicable requirements. Further details in
relation to Overseas Shareholders will be contained in the Scheme
Document.
9. The Merger is not being made, directly or indirectly, in,
into or from, or by use of the mails of, or by any means of
instrumentality (including, but not limited to, facsimile, e-mail
or other electronic transmission, telex or telephone) of interstate
or foreign commerce of, or of any facility of a national, state or
other securities exchange of, any jurisdiction where to do so would
violate the laws of that jurisdiction.
10. If any dividend (other than any Permitted Dividends) or
other distribution or return of capital is proposed, declared,
made, paid or becomes payable by MedicX in respect of a MedicX
Share on or after the date of this Announcement and with a record
date on or before the Scheme Record Time, PHP reserves the right to
adjust the Merger Ratio accordingly by reference to the amount per
MedicX Share of such dividend, distribution or return of capital
except where the MedicX Share is or will be acquired pursuant to
the Merger on a basis which entitles PHP to receive the dividend
and/or distribution and/or return of capital and to retain it. Any
exercise by PHP of its rights referred to in this Condition shall
be the subject of an Announcement and, for the avoidance of doubt,
shall not be regarded as constituting any revision or variation of
the terms of the Scheme.
11. Fractions of the New PHP Shares will not be allotted or
issued pursuant to the Merger, but entitlements of MedicX Scheme
Shareholders will be rounded down to the nearest whole number of
New PHP Shares and all fractions of New PHP Shares will be
aggregated and sold in the market as soon as practicable after the
Merger becomes Effective. The net proceeds of such sale (after
deduction of all expenses and commissions incurred in connection
with the sale) will be distributed in due proportions to MedicX
Scheme Shareholders who would otherwise have been entitled to such
fractions (rounded down to the nearest penny).
APPIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION
In this Announcement, unless otherwise stated or the context
otherwise requires, the following bases and sources have been
used.
1. All Closing Prices for MedicX Shares and PHP Shares have been
derived from the Daily Official List and represent the Closing
Price of the relevant shares on the relevant date.
2. The value of GBP392.9 million attributed to the issued and to
be issued share capital of MedicX is based upon the 442,916,140
MedicX Shares in issue on the Latest Practicable Date (excluding
treasury shares) and an exchange ratio of 0.77 New PHP Shares for
each MedicX Scheme Share.
3. The financial information relating to MedicX is extracted
from the audited consolidated financial statements of MedicX for
the year ended 30 September 2018.
4. The financial information relating to PHP is extracted from the:
(i) audited consolidated financial statements of the PHP Group
for the year ended 31 December 2017; and
(ii) unaudited consolidated interim financial statements
contained in the interim results of the PHP Group for the period
ended 30 June 2018.
5. Certain figures in this Announcement have been subject to rounding adjustments.
6. The pro-forma loan to value ratio of 48 per cent. is based on
PHP data from its interim results as at 30 June 2018 and
announcements since and MedicX data from its full year results as
at 30 September 2018.
7. The synergy numbers are unaudited. Further information
underlying the Quantified Financial Benefits Statement contained in
this Announcement is provided in Appendix IV.
8. The estimated dividend uplift for MedicX Scheme Shareholders
as a result of the Merger has been calculated by reference to:
(i) MedicX's intended quarterly dividend for the financial year
ending 30 September 2019 of 0.95 pence, as detailed in its reported
30 September 2018 results;
(ii) PHP's first quarterly dividend in 2019 of 1.40 pence, as
detailed in its dividend declaration announcement of 3 January
2019; and
(iii) applying the terms of the Merger, MedicX Scheme
Shareholders will effectively receive 0.77 times the PHP quarterly
dividend, equivalent to 1.078 pence per MedicX Share held, equating
to a 13.5 per cent. uplift on the standalone quarterly MedicX
dividend expected for the financial year ending 30 September
2019.
9. The volume weighted average price of a MedicX Share is
derived from data provided by Bloomberg.
APPIX III
IRREVOCABLE UNDERTAKINGS
PART A - Irrevocable undertakings in respect of MedicX Shares
from MedicX Directors
The following MedicX Directors have given irrevocable
undertakings in respect of their entire beneficial holdings (and
the beneficial holdings which are under their control and those of
their close relatives) of MedicX Shares to vote or procure votes in
favour of the resolutions relating to Scheme at the MedicX
Shareholder Meetings (or in the event that the Merger is
implemented by way of a Takeover Offer, accept or procure the
acceptance of the Takeover Offer), amounting in aggregate to
189,700 MedicX Shares, representing approximately 0.043 per cent.
of MedicX's existing issued ordinary share capital as at the Latest
Practicable Date:
Percentage of issued share capital of MedicX as at the Latest Practicable
Name Number of MedicX Shares Date
--------------- ------------------------ ---------------------------------------------------------------------------
Helen Mahy 52,548 0.012
Laure Duhot 30,090 0.007
John Hearle 46,098 0.010
Steve Le Page 60,964 0.014
These irrevocable undertakings will continue to be binding in
the event that a higher competing offer is made for MedicX.
These irrevocable undertakings will terminate:
-- if the Merger is implemented by way of a Takeover Offer, and
the offer document is not posted to shareholders of MedicX within
the permitted period under the Takeover Code or as otherwise agreed
with the Panel;
-- if the Merger is implemented by way of a Scheme, and:
o the Scheme Document is not posted to shareholders of MedicX
within the permitted period under the Takeover Code or as otherwise
agreed with the Panel; or
o the Scheme or any resolution to be proposed is not approved by
the requisite majority of the shareholders of MedicX at the MedicX
General Meeting or the MedicX Court Meeting;
-- if the Scheme does not become effective or, as applicable,
the Merger lapses or is withdrawn and no new, revised or
replacement Scheme or Takeover Offer is or has been announced in
accordance with Rule 2.7 of the Takeover Code at the same time;
or
-- if any event occurs or becomes known to PHP before despatch
of the Scheme Document (or the offer document in the case of
Takeover Offer) as a result of which the Panel requires or agrees
with PHP that PHP need not make the offer to effect the Merger.
PART B - Irrevocable undertakings in respect of PHP Shares from
PHP Directors
The following PHP Directors have given irrevocable undertakings
in respect of their entire beneficial holdings (and the beneficial
holdings which are under their control and those of their close
relatives) of PHP Shares to vote or procure votes in favour of the
Merger Resolution to be proposed at the PHP General Meeting,
amounting in aggregate to 13,443,043 PHP Shares, representing
approximately 1.742 per cent. of PHP's existing issued ordinary
share capital as at close of business on the Latest Practicable
Date :
Percentage of existing issued
share capital of PHP as
at the Latest Practicable
Name Number of PHP Shares Date
------------------- --------------------- ------------------------------
Steven Owen 73,149 0.009
Richard Howell 128,208 0.017
Harry Hyman 12,836,448 1.663
Dr Stephen Kell 14,182 0.002
Geraldine Kennell 257,951 0.033
Ian Krieger 81,481 0.011
Nick Wiles 51,624 0.007
The following Independent PHP Directors have given irrevocable
undertakings in respect of their entire beneficial holdings (and
the beneficial holdings which are under their control and those of
their close relatives) of PHP Shares to vote or procure votes in
favour of the Related Party Resolution to be proposed at the PHP
General Meeting, amounting in aggregate to 478,387 PHP Shares,
representing approximately 0.0620 per cent. of PHP's existing
issued ordinary share capital as at close of business on the Latest
Practicable Date:
Percentage of existing issued
share capital of PHP as
at the Latest Practicable
Name Number of PHP Shares Date
------------------- --------------------- ------------------------------
Steven Owen 73,149 0.009
Dr Stephen Kell 14,182 0.002
Geraldine Kennell 257,951 0.033
Ian Krieger 81,481 0.011
Nick Wiles 51,624 0.007
These irrevocable undertakings will terminate if:
-- the Merger lapses or is withdrawn in accordance with its
terms and PHP publicly confirms that it does not intend to proceed
with the Merger;
-- the Scheme does not become effective by 11:59 pm on the Long-stop Date; or
-- the directors of MedicX revoke their recommendation of the Merger.
Harry Hyman and Richard Howell have each undertaken not to vote,
and to procure that their close relatives and the registered
holders of any shares in respect of which they are the beneficial
owner will not vote, on the Related Party Resolution.
PART C - Irrevocable undertakings in respect of PHP Shares and
MedicX Shares from Investec Wealth & Investment
Investec Wealth & Investment, in its capacity as
discretionary investment manager in respect of certain shares in
PHP and MedicX, has given irrevocable undertakings:
-- to vote or procure votes in favour of the resolutions to be
proposed at the PHP General Meeting in respect of 37.32 million PHP
Shares, representing approximately 4.836 per cent. of the ordinary
share capital of PHP in issue as at close of business on the Latest
Practicable Date; and
-- to vote or procure votes in favour of the resolutions
relating to the Scheme at the MedicX Shareholder Meetings (or in
the event that the Merger is implemented by way of a Takeover
Offer, accept or procure acceptance of the Takeover Offer) in
respect of 26.26 million MedicX Shares, representing approximately
5.929 per cent. of the ordinary share capital of MedicX in issue as
at close of business on the Latest Practicable Date.
These irrevocable undertakings will terminate:
-- if the Merger is implemented by way of a Takeover Offer, and
the offer document is not posted to shareholders of MedicX within
the permitted period under the Takeover Code or as otherwise agreed
with the Panel;
-- if the Merger is implemented by way of a Scheme and:
o the Scheme Document is not posted to shareholders of MedicX
within the permitted period under the Takeover Code or as otherwise
agreed with the Panel; or
o the Scheme or any resolution to be proposed is not approved by
the requisite majority of the shareholders of MedicX at the MedicX
General Meeting or the MedicX Court Meeting;
-- if the Scheme does not become effective prior to 11.59 pm on the Long-stop Date;
-- if the Scheme does not become effective or, as applicable,
the Merger lapses or is withdrawn and no new, revised or
replacement Scheme or Takeover Offer is or has been announced in
accordance with Rule 2.7 of the Takeover Code at the same time;
or
-- if a firm intention to make an offer (in accordance with the
Takeover Code) for the entire issued and to be issued share capital
of MedicX is announced by a person, other than PHP (a "Competing
Offer"), where the value of the consideration for the Competing
Offer exceeds the value of the consideration offered pursuant to
the Merger.
APPIX IV
QUANTIFIED FINANCIAL BENEFITS STATEMENT
PART A - QUANTIFIED FINANCIAL BENEFITS STATEMENT
Paragraph 2 of this Announcement contains statements of
estimated cost savings and synergies expected to arise from the
Merger (together, the "Quantified Financial Benefits
Statement").
A copy of the Quantified Financial Benefits Statement is set out
below:
"The PHP Directors, having reviewed and analysed the potential
synergies of the Enlarged Group, as well as taking into account
factors they can influence, believe that the Enlarged Group can
deliver shareholder value through expected realisation of
approximately GBP4.0 million of recurring cost synergies from the
end of the first year following the Effective Date, reducing to
GBP3.5 million of recurring cost synergies from the sixth year
following the Effective Date.
The cost synergies will be realised principally from:
i) Management fee savings: Unification of property management
under Nexus delivering approximately GBP3.0 million of cost savings
per annum derived from GBP2.5 million of lower management fees
charged on the MedicX investment properties and a GBP0.5 million
rebate given by Nexus for the management of the investment
properties in the first five years following the Effective Date;
and
ii) Administration and direct property cost savings:
Rationalisation of duplicated listing, administration and
operational expenses and reducing direct property costs through
procurement and scale benefits, delivering an estimated GBP1.0
million of run rate cost savings per annum by the end of the first
full year of operation.
The PHP Directors expect the management fee savings to be
achieved from the Effective Date, with the administration and
direct property cost savings delivered progressively through the
first year, resulting in a first year synergy of GBP3.8 million,
rising to the GBP4.0 million run rate by the end of the first year
following the Effective Date and GBP3.5 million run rate from the
sixth year following the Effective Date.
In order to achieve the management fee savings, the Enlarged
Group will incur a one-off contractual termination payment of
approximately GBP10 million payable to Octopus Healthcare, the
current MedicX investment adviser, on termination of the MedicX
Investment Management Agreement. This payment will fall due within
the first year following the Effective Date. The PHP Directors
expect that any costs incurred in the realisation of the other cost
synergies will be immaterial.
The identified cost synergies will accrue as a direct result of
the Merger and would not be achieved on a standalone basis. The
estimated cost synergies referred to above reflect both the
beneficial elements and the relevant costs.
The PHP Directors do not expect any material dis-synergies to
arise in connection with the Merger.
These statements relating to identified cost savings and
estimated savings relate to future actions or circumstances which
by their nature involve risks, uncertainties and contingencies. As
a consequence, the identified synergies and estimated savings
referred to may not be achieved, may be achieved later or sooner
than estimated, or those achieved could be materially different
from those estimated."
Bases of belief and principal assumptions
Following commencement of discussions regarding the Merger, a
team of Nexus staff (the "Synergy Team") was established to
evaluate and assess the potential synergies available arising from
the Merger.
The team, which comprises senior Nexus personnel, has worked to
identify, challenge and quantify potential synergies. The
assessment and quantification of the potential synergies have been
informed by Nexus management's industry experience and
knowledge.
In preparing the Quantified Financial Benefits Statement,
Octopus has shared certain operating and financial information to
facilitate a detailed analysis in support of evaluating the
potential synergies available from creation of the Enlarged Group.
The Synergy Team has performed a bottom-up analysis of costs
included in the Octopus financial information and has sought to
include in the synergy analysis those costs which the team believe
will be either reduced or eliminated from within the Enlarged
Group.
In general, the synergy assumptions related to the
administration and direct property synergies have in turn been risk
adjusted, exercising a degree of prudence in the calculation of the
estimated synergy benefits set out above. The management fee
savings are based on the terms of the Deed of Variation.
The cost bases used as the basis for the quantified financial
benefits exercise are the Octopus full year budgeted expenses for
the financial year ended 30 September 2019, the Nexus full year
budgeted expenses for the financial year ended 31 December 2019 and
the independent valuation of MedicX's UK and the Republic of
Ireland property portfolios as at 30 September 2018.
Attainment of the management fee savings is conditional upon the
Deed of Variation being approved by the Independent PHP
Shareholders and the terms of the Advisory Agreement remaining as
amended (effected by the Deed of Variation) as set out in more
detail in paragraph 3 of this Announcement.
The PHP Directors have, in addition, made the following
assumptions:
o The value of MedicX's property portfolio remaining at or above
the 30 September 2018 independent valuation of GBP806.7
million.
o PHP retains its status as a UK-REIT in the future.
o There will be no material impact on the underlying operations
of either PHP or MedicX or their ability to continue to conduct
their business.
o There will be no material change to macroeconomic, political,
regulatory or legal conditions in the markets or regions in which
PHP and MedicX operate that will materially impact on the
implementation of the proposed cost savings.
o There will be no change in tax legislation or tax rates or
other legislation in the UK or the Republic of Ireland that could
materially impact the ability to achieve any benefits.
Reports
As required by Rule 28.1(a) of the Takeover Code, Deloitte, as
reporting accountants to PHP, and Numis and Peel Hunt, as financial
advisers to PHP, have provided the opinions required under that
Rule. Copies of these reports are included at Parts B and C of this
Appendix IV. Each of Deloitte, Numis and Peel Hunt has given and
not withdrawn its consent to the publication of its report in this
Announcement in the form and context in which it is included.
Notes
These statements are not intended as a profit forecast and
should not be interpreted as such. These statements of estimated
synergies relate to future actions and circumstances which, by
their nature, involve risks, uncertainties and contingencies. As a
result, the estimated synergies referred to may not be achieved, or
may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. Neither the
Quantified Financial Benefits Statement nor any other statement in
this Announcement should be construed as a profit forecast or
interpreted to mean that PHP's earnings in the first full year
following the Effective Date, or in any subsequent period, will
necessarily match or be greater than or be less than those of PHP
or MedicX for the relevant preceding financial period or any other
period.
Due to the scale of the Enlarged Group, there may be additional
changes to the Enlarged Group's operations. As a result, and given
the fact that the changes relate to the future, the resulting
synergies may be materially greater or less than those
estimated.
PART B - REPORT FROM DELOITTE
The Board of Directors
Primary Health Properties PLC
5th Floor, Greener House
66-68 Haymarket
London SW1Y 4RF
Numis Securities Limited
10 Paternoster Square
London EC4M 7LT
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
24 January 2019
Dear Sirs
Recommended All-Share Merger of Primary Health Properties plc
("PHP") and MedicX Fund Limited ("MedicX")
We report on the statement made by the directors of PHP (the
"Directors") of estimated synergy benefits set out in Part A of
Appendix IV to the announcement issued pursuant to Rule 2.7 of the
Takeover Code dated 24 January 2019 (the "Announcement") issued by
PHP (the "Quantified Financial Benefits Statement" or the
"Statement"). The Statement has been made in the context of the
disclosures within Part A setting out, inter alia, the basis of the
Directors' belief (identifying the principal assumptions and
sources of information) supporting the Statement and their
analysis, explanation and quantification of the constituent
elements.
Responsibilities
It is the responsibility of the Directors to prepare the
Statement in accordance with Rule 28 of the City Code on Takeovers
and Mergers (the "Takeover Code").
It is our responsibility to form our opinion, as required by
Rule 28.1(a) of the Takeover Code, as to whether the Statement has
been properly compiled on the basis stated and to report that
opinion to you.
This report is given solely for the purposes of complying with
Rule 28.1(a)(i) of the Takeover Code and for no other purpose.
Therefore, to the fullest extent permitted by law we do not assume
any other responsibility to any person for any loss suffered by any
such person as a result of, arising out of, or in connection with
this report or our statement, required by and given solely for the
purposes of complying with Rule 23.2 of the Takeover Code,
consenting to its inclusion in the Announcement.
Basis of opinion
We conducted our work in accordance with the Standards for
Investment Reporting issued by the Auditing Practices Board in the
United Kingdom.
Our work included considering whether the Statement has been
accurately computed based upon the disclosed bases of belief
(including the principal assumptions). Whilst the bases of belief
(and the principal assumptions) upon which the Statement is based
are solely the responsibility of the Directors, we considered
whether anything came to our attention to indicate that any of the
bases of belief (or principal assumptions) adopted by the Directors
which, in our opinion, are necessary for a proper understanding of
the Statement have not been disclosed or if any basis of belief (or
principal assumption) made by the Directors appears to us to be
unrealistic. Our work did not involve any independent examination
of any of the financial or other information underlying the
Statement.
We planned and performed our work so as to obtain the
information and explanations we considered necessary in order to
provide us with reasonable assurance that the Quantified Financial
Benefits Statement has been properly compiled on the basis
stated.
Since the Statement (and the principal assumptions on which it
is based) relates to the future, the actual synergy benefits
achieved are likely to be different from those anticipated in the
Statement and the differences may be material. Accordingly, we can
express no opinion as to the achievability of the synergy benefits
identified by the Directors in the Statement.
Our work has not been carried out in accordance with auditing or
other standards and practices generally accepted in jurisdictions
outside the United Kingdom, including the United States of America,
and accordingly should not be relied upon as if it had been carried
out in accordance with those standards and practices. We have not
consented to the inclusion of this report and our opinion in any
registration statement filed with the SEC under the US Securities
Act of 1933 (either directly or by incorporation by reference) or
in any offering document enabling an offering of securities in the
United States (whether under Rule 144A or otherwise). We therefore
accept no responsibility to, and deny any liability to, any person
using this report and opinion in connection with any offering of
securities inside the United States of America or who makes a claim
on the basis they had acted in reliance on the protections afforded
by United States of America law and regulation.
Opinion
In our opinion, based on the foregoing, the Quantified Financial
Benefits Statement has been properly compiled on the basis
stated.
Yours faithfully
Deloitte LLP
Deloitte LLP is a limited liability partnership registered in
England and Wales with registered number OC303675 and its
registered office at 1 New Street Square, London EC4A 3HQ, United
Kingdom. Deloitte LLP is the United Kingdom affiliate of Deloitte
NWE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK
private company limited by guarantee ("DTTL"). DTTL and each of its
member firms are legally separate and independent entities. DTTL
and Deloitte NWE LLP do not provide services to clients.
PART C - REPORTS FROM NUMIS AND PEEL HUNT
The Board of Directors
Primary Health Properties PLC
5th Floor Greener House
66-68 Haymarket
London SW1Y 4RF
24 January 2019
Dear Sirs
Recommended All-Share Merger of Primary Health Properties PLC
("PHP") and MedicX Fund Limited ("MedicX") - Quantified Financial
Benefits Statement made by PHP
We refer to the Quantified Financial Benefits Statement, the
bases of belief thereof and the notes thereto (together, the
"Statement") made by PHP as set out in Part A of Appendix IV to the
announcement dated 24 January 2019 of which this letter forms part
(the "Announcement"), for which the board of directors of PHP (the
"PHP Board") are solely responsible under Rule 28.1(a)(ii) of the
City Code on Takeovers and Mergers (the "Code").
We have discussed the Statement (including the assumptions and
sources of information referred to therein), with the PHP Board and
those officers and employees of PHP who developed the underlying
plans as well as with Deloitte LLP. The Statement is subject to
uncertainty as described in the Announcement and our work did not
involve an independent examination of any of the financial or other
information underlying the Statement.
We have also reviewed the work carried out by Deloitte LLP and
have discussed with them the opinion set out in Part B of Appendix
IV to the Announcement addressed to yourselves and ourselves on
this matter and the accounting policies and bases of calculation
for the Statement.
We have relied upon the accuracy and completeness of all the
financial and other information provided to us by, or on behalf of,
PHP, or otherwise discussed with or reviewed by us, and we have
assumed such accuracy and completeness for the purposes of
providing this letter.
We do not express any opinion as to the achievability of the
quantified financial benefits identified by the PHP Board.
This letter is provided to you solely in connection with Rule
28.1(a)(ii) of the Code and for no other purpose. We accept no
responsibility to PHP or its shareholders or any person (including,
without limitation, the board and shareholders of MedicX) other
than the PHP Board in respect of the contents of this letter. Each
of us is acting exclusively as financial adviser to PHP and no one
else in connection with the transaction between PHP and MedicX
referred to in the Announcement and it was solely for the purpose
of complying with Rule 28.1(a)(ii) of the Code that PHP requested
us to prepare this letter relating to the Statement. No person
other than the PHP Board can rely on the contents of, or the work
undertaken in connection with, this letter, and to the fullest
extent permitted by law, we exclude all liability (whether in
contract, tort or otherwise) to any other person, in respect of
this letter, its contents, or the work undertaken in connection
with this letter, or any of the results or conclusions that can be
derived from this letter or any written or oral information
provided in connection with this letter, and any such liability is
expressly disclaimed except to the extent that such liability
cannot be excluded by law.
On the basis of the foregoing, we consider that the Statement,
for which you as the PHP Board are solely responsible, for the
purposes of the Code has been prepared with due care and
consideration.
Yours faithfully
Numis Securities Limited and Peel Hunt LLP
APPIX V
MEDICX PROFIT FORECAST
On 11 December 2018, MedicX released its results for the year
ended 30 September 2018. Included in the results announcement,
annual report and annual results presentation was the following
guidance for the financial year ending 30 September 2019, which for
the purposes of Rule 28.1(c) of the Takeover Code constitutes an
ordinary course profit forecast pursuant to Note 2(a) on Rule 28.1
of the Takeover Code:
"Going forward, the Company intends to continue to pay
shareholders the dividend on a quarterly basis, in March, June,
September and December of each financial year and on a growing
covered basis. Subject to unforeseen circumstances and based on the
current performance, the Directors are targeting dividends of 3.80p
per share for the financial year ended 30 September 2019".
The MedicX Directors confirm that the MedicX Profit Forecast
remains valid and confirm that the MedicX Profit Forecast has been
properly compiled on the basis of the assumptions stated and that
the basis of accounting used is consistent with MedicX's accounting
policies.
The MedicX Profit Forecast does not take into account any impact
of the Merger.
The MedicX Directors prepared the MedicX Profit Forecast on the
basis of the following assumptions, any of which could turn out to
be incorrect and therefore affect whether the MedicX Profit
Forecast is achieved:
Factors outside the influence or control of the MedicX Board
a) there will be no material change in the political and / or
economic environment that would materially affect MedicX;
b) there will be no material change to the NHS Premises Cost
Directions or GP entitlement to rent reimbursements;
c) there will be no material change in market conditions in
relation to available acquisition opportunities or the competitive
environment;
d) there will be no material change in legislation or regulatory
requirements impacting on MedicX's operations or its accounting
policies;
e) there will be no material litigation in relation to any of MedicX's properties;
f) there will be no business disruptions that materially affect
MedicX or its properties, including natural disasters, acts of
terrorism, cyber-attack and / or technological issues;
g) there will be no material changes to the Euro: Pounds
Sterling foreign exchange rate of EUR1.12: GBP1 (observed on 1
October 2018);
h) there will be no significant one-off events that would have a
material impact on the operating results or financial position of
MedicX's business; and
i) there will be no material changes to MedicX's obligations to tenants.
Factors within the influence or control of the MedicX Board
a) there will be no adverse new amendments to the MedicX
Investment Management Agreement from MedicX's perspective;
b) there will be no additional significant acquisitions,
disposals, developments, partnership or joint venture agreements
being entered into by MedicX which would have a materially dilutive
effect on MedicX's earnings in the financial year ending 30
September 2019;
c) there will be no material change in the dividend or capital policies of MedicX; and
d) there will be no material change in the investment policy or investment objective of MedicX.
APPIX VI
DEFINITIONS
The following definitions apply throughout this Announcement
unless the context requires otherwise:
Admission means admission of the New PHP Shares to the premium
listing segment of the Official List and to trading on the Main
Market;
Adviser Engagement Committee means the established committee of
PHP responsible for reviewing the terms of the Advisory Agreement
and the performance of Nexus;
Advisory Agreement means the amended and restated advisory
agreement dated 25 September 2013 between (1) Nexus, (2) PHP and
(3) JO Hambro Capital Management Limited as amended by deeds of
variation dated 27 January 2014, 19 April 2017, 26 July 2017, 12
December 2018 and 24 January 2019 including, where the context
requires, as amended by: (a) the Amendment Deed; and (b) subject to
the passing of the Related Party Resolution and Completion, the
Deed of Variation;
Amendment Deed means the deed of variation to the Advisory
Agreement dated 24 January 2019 between (1) Nexus and (2) PHP;
Announcement means this announcement made pursuant to Rule 2.7
of the Takeover Code, including its Appendices;
Appendices means the appendices to this Announcement and the
Appendix has a corresponding meaning;
Authorisations means authorisations, orders, grants,
recognitions, determinations, certificates, confirmations,
consents, licences, clearances, provisions, permissions and
approvals;
Business Day means a day, (other than a Saturday, Sunday, public
or bank holiday) on which banks are generally open for business in
London and Guernsey;
Canaccord means Canaccord Genuity London;
Closing Price means the closing middle market quotation of a
share derived from the Daily Official List of the London Stock
Exchange;
CMA means the UK Competition and Markets Authority (or any
successor body or bodies carrying out the same functions in the
United Kingdom from time to time);
CMA Phase 2 Reference means a reference pursuant to sections 22,
33, 45 or 62 of the Enterprise Act 2002 (as amended) of the Merger
to the chair of the CMA for the constitution of a group under
Schedule 4 to the Enterprise and Regulatory Reform Act 2013 (as
amended);
Combined Circular and Prospectus means the combined circular and
prospectus to be published by PHP and to be sent to PHP
Shareholders and MedicX Shareholders outlining, amongst other
things, the Merger and containing the notice convening the PHP
General Meeting and information on PHP, the Enlarged Group and the
New PHP Shares;
Companies Act means the Companies Act 2006 (as amended);
Companies Law of Guernsey means The Companies (Guernsey) Law,
2008 (as amended);
Completion means the Merger becoming Effective;
Conditions means the conditions to the Merger set out in Part A
of Appendix I;
Confidentiality Agreement means the confidentiality agreement
entered into between PHP and MedicX dated 22 August 2018 as amended
by an amendment deed entered into by the same parties dated 7
December 2018;
Court means the Royal Court of Guernsey;
Court Hearing means the Court hearing at which MedicX will seek
an order sanctioning the Scheme;
CREST the computerised settlement system (as defined in the
CREST Regulations) operated by Euroclear UK & Ireland Limited
which facilitates the transfer of title to shares in uncertificated
form;
CREST Regulations means the Uncertificated Securities (Guernsey)
Regulations, 2009, including (i) any enactment or subordinate
legislation which amends or supersedes those regulations and (ii)
any applicable rules made under those regulations or any such
enactment or subordinate legislation for the time being in
force;
Daily Official List means the daily official list of the London
Stock Exchange;
Dealing Disclosure means an announcement pursuant to Rule 8 of
the Takeover Code containing details of dealings in the relevant
securities of a party to an offer;
Deed of Variation means the deed of variation to the Advisory
Agreement dated 24 January 2019 between (1) Nexus and (2) PHP which
is conditional on: (a) the approval of the Independent PHP
Shareholders at the PHP General Meeting; and (b) Completion;
Deloitte means Deloitte LLP;
Disclosed means the information disclosed by or on behalf of
MedicX: (i) in the annual report and accounts of MedicX for the
financial year ended 30 September 2018; (ii) in any other public
announcement made in accordance with the Disclosure Guidance and
Transparency Rules or the Listing Rules by MedicX before the date
of the Announcement; (iii) in the Announcement; or (iv) as
otherwise fairly disclosed in writing by or on behalf of MedicX to
PHP (or its officers, employees, agents or advisers) before the
date of the Announcement;
Disclosure Guidance and Transparency Rules means the disclosure
rules and transparency rules made by the FCA pursuant to section
73A of FSMA;
DPS means dividends per share;
Effective means:
(a) if the Merger is implemented by way of the Scheme, the
Scheme having become effective pursuant to its terms; or
(b) if the Merger is implemented by way of a Takeover Offer, the
Takeover Offer having been declared or become unconditional in all
respects in accordance with the requirements of the Takeover
Code;
Effective Date means the date on which the Merger becomes
Effective;
Enlarged Company means PHP immediately following the Merger
becoming Effective;
Enlarged Group means PHP and its subsidiaries, including MedicX
following completion of the Proposals;
EPRA means European Public Real Estate Association;
EPRA Cost Ratio means the ratio of net overheads and operating
expenses against gross rental income (with both amounts excluding
ground rents payable and net overheads and operating expenses
relating to all administrative and operating expenses, net of any
service fees, recharges or other income specifically intended to
cover overhead and property expenses);
EPRA NAV means a NAV calculated in accordance with the
guidelines issued by EPRA from time to time;
EPS means earnings per share;
Evercore means Evercore Partners International LLP;
FCA means the Financial Conduct Authority;
Forms of Proxy means the form of proxy in connection with each
of the MedicX Court Meeting and the MedicX General Meeting, which
shall accompany the Scheme Document;
FSMA means the Financial Services and Markets Act 200 (as
amended from time to time);
GFSC means the Guernsey Financial Services Commission;
GP means general practitioner;
Guernsey means the Island of Guernsey;
HSE means the Health Service Executive in the Republic of
Ireland;
Independent PHP Directors means Steven Owen, Stephen Kell,
Geraldine Kennell, Ian Krieger, Peter Cole and Nick Wiles;
Independent PHP Shareholders means the PHP Shareholders other
than Harry Hyman, Anita Hyman, Nexus Central Management Services
Limited, Nexus Group Holdings Limited, Richard Howell and Fiona
Howell and each of their associates;
Latest Practicable Date means 23 January 2019, being the latest
practicable date before the date of this Announcement;
Liberum means Liberum Capital Limited;
Listing Rules means the listing rules, made by the FCA under
Part 6 of FSMA, as amended from time to time;
London Stock Exchange means London Stock Exchange plc;
Long-stop Date means 31 August 2019, or such later date (if any)
as PHP and MedicX may agree, with the consent of the Panel, and (if
required) the Court may allow;
Main Market means the Main Market of the London Stock
Exchange;
Market Abuse Regulation means the Market Abuse Regulation (EU)
(No 596/2014);
MedicX means MedicX Fund Limited, a non-cellular company
incorporated under the laws of Guernsey with registration number
45397;
MedicX Board or the Board of MedicX means the board of directors
of MedicX as at the date of this Announcement;
MedicX Court Meeting means the meeting or meetings of the MedicX
Scheme Shareholders to be convened by order of the Court pursuant
to section 107 of the Companies Law of Guernsey for the purpose of
considering and, if thought fit, approving the Scheme (with or
without amendment approved or imposed by the Court and agreed to by
PHP and MedicX) including any adjournment, postponement or
reconvention of any such meeting, notice of which shall be
contained in the Scheme Document;
MedicX Directors means the directors of MedicX as at the date of
this Announcement;
MedicX General Meeting means the general meeting of the MedicX
Shareholders (including any adjournment thereof) to be convened for
the purpose of considering, and if thought fit, approving the
shareholder resolutions necessary to enable MedicX to implement the
Merger, notice of which shall be contained in the Scheme
Document;
MedicX Group means MedicX and its subsidiary undertakings and,
where the context permits, each of them;
MedicX Investment Management Agreement means the investment
advisory and management agreement dated 29 September 2017 between
(1) Octopus Healthcare, (2) MedicX and (3) Octopus AIF Management
Limited, as amended by a deed of amendment dated 10 December
2018;
MedicX Profit Forecast means the profit forecast of MedicX as
set out in Appendix V;
MedicX Scheme Shareholder means the holders of MedicX Scheme
Shares from time to time;
MedicX Scheme Shares means the MedicX Shares:
(a) in issue at the date of the Scheme Document;
(b) issued after the date of the Scheme Document and before the Voting Record Time; and
(c) issued at or after the Voting Record Time and before the
Scheme Record Time, either on terms that the original or any
subsequent holders of such shares are to be bound by the Scheme or
in respect of which their holders are, or shall have agreed in
writing to be, bound by the Scheme,
and, in each case, remaining in issue at the Scheme Record Time
but excluding any MedicX Shares held as treasury shares at any
relevant date or time and any MedicX Shares registered in the name
of or beneficially owned by PHP or its nominees or any other member
of the PHP Group at any relevant date or time;
MedicX Shareholder Meetings means, together, the MedicX Court
Meeting and the MedicX General Meeting;
MedicX Shareholders means the registered holders of MedicX
Shares from time to time;
MedicX Shares means the ordinary shares of no par value each in
the capital of MedicX;
Merger means the direct or indirect acquisition of the entire
issued and to be issued share capital of MedicX by PHP (other than
MedicX Shares already held by the PHP Group) to be implemented by
way of the Scheme or (should PHP so elect, subject to the consent
of the Panel (where necessary)) by way of a Takeover Offer;
Merger Ratio means the ratio of 0.77 New PHP Shares for each
MedicX Scheme Share;
Merger Resolution means the resolution to be proposed at the PHP
General Meeting to approve the Merger and the allotment of the New
PHP Shares;
Net Asset Value or NAV means:
(a) in relation to PHP or the Enlarged Group, the value of the
assets of the PHP Group or the Enlarged Group, as applicable, less
its liabilities, determined in accordance with the accounting
principles adopted by the PHP Group or the Enlarged Group, as
applicable, from time to time or, as the context requires, the net
asset value per ordinary share calculated in accordance with PHP's
accounting policies;
(b) in relation to MedicX, the value of the assets of the MedicX
Group less its liabilities, determined in accordance with the
accounting principles adopted by the MedicX Group, as applicable,
from time to time or, as the context requires, the net asset value
per ordinary share calculated in accordance with MedicX's
accounting policies;
New PHP Shares means the PHP Shares proposed to be issued
credited as fully paid pursuant to the Merger;
NHS means the National Health Service;
NHS Premises Cost Directions means The National Health Service
(General Medical Services - Premises Costs) Directions 2013;
Nexus means Nexus Tradeco Limited, a private limited company
incorporated under the laws of England and Wales with registration
number 07685933;
Numis means Numis Securities Limited;
OAIFM means Octopus AIF Management Limited, a private limited
company incorporated under the laws of England and Wales with
registration number 08802172;
Octopus means Octopus Capital Limited, a private limited company
incorporated under the laws of England and Wales with registration
number 03981143;
Octopus Group means Octopus and its subsidiary undertakings and,
where the context permits, each of them;
Octopus Healthcare means Octopus Healthcare Adviser Limited, a
private limited company incorporated under the laws of England and
Wales with registration number 5857926;
Offer Period means the period commencing on 24 January 2019 and
ending on (i) the earlier of the date on which the Scheme becomes
Effective and/or the date on which the Scheme lapses or is
withdrawn (or such other date as the Panel may decide) or (ii) the
earlier of the date on which the Takeover Offer has become or has
been declared unconditional as to acceptances and/or the date on
which the Takeover Offer lapses or is withdrawn (or such other date
as the Panel may decide), in each case other than where such
lapsing or withdrawal is a result of PHP exercising its right to
implement the Merger by way of a Takeover Offer;
Official List means the official list maintained by the FCA
pursuant to Part 6 of FSMA;
Opening Position Disclosure means an announcement containing
details of interests or short positions in, or rights to subscribe
for, any relevant securities of a party to the offer if the person
concerned has such a position, as defined in Rule 8 of the Takeover
Code;
Overseas Shareholders means MedicX Shareholders who have a
registered address in a jurisdiction outside the UK or Guernsey, or
whom PHP reasonably believes to be citizens, residents or nationals
of a jurisdiction outside the UK or Guernsey;
Panel means the UK Panel on Takeovers and Mergers;
Peel Hunt means Peel Hunt LLP;
Permitted Dividend means any dividend in respect of MedicX
Shares declared in respect of any calendar quarter which ends
before the Effective Date by MedicX subject to an agreed maximum
amount of 0.95 pence per MedicX Share per quarter;
PHP means Primary Health Properties PLC, a public limited
company incorporated under the laws of England and Wales with
registration number 03033634;
PHP Board or the Board of PHP means the board of directors of
PHP as at the date of this Announcement;
PHP Directors means the directors of the PHP as at the date of
this Announcement;
PHP General Meeting means the general meeting of PHP to be
convened by the PHP Board and expected to be held on or around late
February 2019;
PHP Group means PHP and its subsidiary undertakings and, where
the context permits, each of them;
PHP Shares means the ordinary shares of nominal value 12.5 pence
each in the capital of PHP;
PHP Shareholders means the holders of PHP Shares;
Proposals means the Merger, the issue and allotment of the New
PHP Shares in connection with the Merger, the Admission and the
approval of the Related Party Transactions;
Quantified Financial Benefits Statement means the statement
described as such and set out in Appendix IV;
Regulatory Information Service means a regulatory information
service as defined in the FCA's Handbook of rules and guidance as
amended from time to time;
Related Party Resolution means the resolution to the be proposed
at the PHP General Meeting approving the Related Party
Transactions;
Related Party Transactions means the Deed of Variation and the
TUPE Deed, each of which are conditional on: (a) the approval of
the Independent PHP Shareholders at the PHP General Meeting and;
(b) Completion;
Restricted Jurisdiction means 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 PHP or MedicX regards
as unduly onerous;
Restricted Overseas Person means a person (including an
individual, partnership, unincorporated syndicate, limited
liability company, unincorporated organisation, trust, trustee,
executor, administrator or other legal representative) in, or
resident in, or any person whom PHP believes to be in, or resident
in, a Restricted Jurisdiction (or any custodian, nominee or trustee
for such persons) and person in any other jurisdiction (other than
persons in the UK) whom PHP is advised to treat as a restricted
overseas person in order to observe the laws of such jurisdiction
or to avoid the requirement to comply with any governmental or
other consent or any registration, filing or other formality which
PHP regards as unduly onerous;
Scheme means a Court-sanctioned scheme of arrangement between
MedicX and MedicX Scheme Shareholders in connection with the Merger
under Part VIII of the Companies Law of Guernsey;
Scheme Document means the document to be dispatched to MedicX
Shareholders including, among other things, the Scheme, an
explanatory statement in compliance with Part VIII of the Companies
Law of Guernsey and the notices convening the MedicX Court Meeting
and the MedicX General Meeting;
Scheme Record Time means the time and date specified in the
Scheme Document by reference to which the entitlements of MedicX
Scheme Shareholders under the Scheme will be determined, expected
to be 6.00 pm on the Business Day before the Scheme becomes
Effective;
SEC means the US Securities and Exchange Commission;
Significant Interest means, in relation to an undertaking, a
direct or indirect interest of 20 per cent. or more of: (i) the
total voting rights conferred by the equity share capital (as
defined in section 548 of the Companies Act) of such undertaking or
(ii) the relevant partnership interest;
Takeover Code means the City Code on Takeovers and Mergers;
Takeover Offer means, if the Merger is implemented by way of a
takeover offer (which shall be an offer for the purposes of section
337 of the Companies Law of Guernsey), the offer to be made by or
on behalf of PHP, or an associated undertaking thereof, to acquire
the entire issued and to be issued ordinary share capital of MedicX
including, where the context admits, any subsequent revision,
variation, extension or renewal of such offer;
Taurus means Taurus London;
Third Party means any government, government department or
governmental, quasi-governmental, supranational, statutory,
regulatory, environmental or investigative body or association,
institution or agency (including, without limitation, any trade
agency and the UK Gambling Commission) or authority (including,
without limitation, any anti-trust or merger control authority),
any court or professional or environmental body or any other person
or body whatsoever in any relevant jurisdiction;
Transitional Services Agreement means the termination and
transitional support agreement dated the date of this Announcement
between (1) MedicX, (2) Octopus Healthcare, (3) Octopus AIF
Management Limited and (4) Nexus;
TUPE means the Transfer of Undertakings (Protection of
Employment) Regulations 2006, as amended from time to time;
TUPE Deed means the deed in respect of the obligations of Nexus
under TUPE arising on termination of the MedicX Investment
Management Agreement dated 24 January 2019 between (1) Nexus and
(2) PHP and which is conditional on: (a) the approval of the
Independent PHP Shareholders at the PHP General Meeting; and (b)
Completion;
UK or United Kingdom means the United Kingdom of Great Britain
and Northern Ireland;
UK Listing Authority means the FCA as the authority for listing
in the UK when it is exercising its powers under Part 6 of FSMA as
amended;
UK-REIT means a UK Real Estate Investment Trust under Part 12 of
the Corporation Tax Act 2010;
US or the United States means the United States of America, its
territories and possessions, any state of the United States of
America and the District of Columbia;
US Exchange Act means the US Securities Exchange Act of 1934, as
amended;
US Securities Act means the United States Securities Act of
1933, as amended;
Voting Record Time means the time and date specified in the
Scheme Document by reference to which entitlement to vote at the
MedicX Court Meeting will be determined, expected to be 6.00pm on
the day two days prior to the MedicX Court Meeting or any
adjournment thereof (as the case may be);
Wider MedicX Group means MedicX and its subsidiaries, subsidiary
undertakings, associated undertakings and any other body corporate,
partnership, joint venture or person in which MedicX and all such
undertakings (aggregating their interests) have a Significant
Interest; and
Wider PHP Group means PHP and its parent undertakings and its
and such parent undertakings' subsidiary undertakings and
associated undertakings and any other body corporate partnership,
joint venture or person in which PHP and all such undertakings
(aggregating their interests) have a Significant Interest (other
than any member of the Wider MedicX Group).
For the purposes of this Announcement, "subsidiary", "subsidiary
undertaking", "undertaking" and "associated undertaking" have the
respective meanings given by the Companies Act.
All references to GBP, pence, Sterling, Pounds sterling, p or
GBP are to the lawful currency of the United Kingdom.
All references to statutory provision or law or to any order or
regulation shall be construed as a reference to that provision,
law, order or regulation as extended, modified, replaced or
re-enacted from time to time and all statutory instruments,
regulations and orders from time to time made thereunder or
deriving validity therefrom.
All the times referred to in this Announcement are London times
unless otherwise stated. References to the singular include the
plural and vice versa.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCBIMFTMBATMML
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