Fusion Corporate Partners

Summary of the announcement by Cilantro Acquisitions Limited (a company formed at the direction of funds managed and advised by Cinven Limited and being “Cilantro Acquisitions”) and the Independent Directors of Spice plc (“Spice”)

• Full statement
• Cilantro Acq. Ltd – Form 8 (OPD) (Spice PLC)

Summary

• The board of directors of Cilantro Acquisitions Limited (a company formed at the direction of funds managed and advised by Cinven Limited and being “Cilantro Acquisitions”) and the Independent Directors of Spice plc (“Spice”) are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition by Cilantro Acquisitions of the entire issued and to be issued ordinary share capital of Spice. It is intended that the Acquisition is implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Act.
• Under the terms of the Acquisition, Spice Shareholders will receive 70 pence in cash for each Spice Share, valuing Spice’s existing issued and to be issued ordinary share capital at approximately £251.1 million. The price of 70 pence for each Spice Share represents:

■ a premium of approximately 40.7 per cent. to the Closing Price of 49.75 pence per Spice Share on 14 June 2010, being the last business day before Spice’s announcement that it had received an approach from Cinven;

■ a premium of approximately 10.7 per cent. to the Closing Price of 63.25 pence per Spice Share on 1 September 2010, being the last business day before Spice’s announcement that it had received a possible offer from Cinven; and

■ a premium of approximately 5.3 per cent. to the Closing Price of 66.5 pence per Spice Share on 24 September 2010, being the last business day before this announcement.

• Cilantro Acquisitions has received irrevocable undertakings (including from all of the Spice Directors who are also Spice Shareholders) to vote in favour of the Scheme at the Court Meeting (or otherwise be bound by the Scheme) and the Special Resolution to be proposed at the General Meeting in respect of 89,419,260 Spice Shares representing approximately 25.40 per cent. of the existing issued ordinary share capital of Spice.
• In addition, Cilantro Acquisitions has received a non-binding letter of intent from a Spice Shareholder indicating its current intention to vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting in respect of 10,965,717 Spice Shares representing approximately 3.11 per cent. of the existing issued ordinary share capital of Spice.
• The Independent Directors, who have been so advised by Hawkpoint, consider the terms of the Acquisition to be fair and reasonable.  In providing its advice, Hawkpoint has taken into account the commercial assessment of the Independent Directors.  Accordingly, the Independent Directors intend unanimously to recommend to Spice Shareholders to vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting.  The Independent Directors (other than Martin Towers) who are also Spice Shareholders have given irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting. Martin Towers has undertaken to be bound by the Scheme and has irrevocably undertaken to vote in favour of the Special Resolution to be proposed at the General Meeting but he will not vote on the resolution to approve the Scheme at the Court Meeting for the reason set out in paragraph 10 below.
• Further, the Executive Directors are fully supportive of the Acquisition and have irrevocably undertaken to vote in favour of the Special Resolution to be proposed at the General Meeting and to be bound by the Scheme.
• In order to become effective, the Acquisition must, among other things, be approved by the requisite majorities of the Spice Shareholders present (in person or by proxy) and entitled to vote at the Court Meeting and the General Meeting.
• It is expected that the Scheme Document will be posted on or around 11 October 2010 and that the Court Meeting and General Meeting will be held on or around 4 November 2010. Subject to the satisfaction or waiver of the relevant Conditions, the Scheme will become effective in December 2010.

Commenting on the Acquisition, Pascal Heberling, a director of Cilantro Acquisitions, said:

“We are delighted to be backing Spice as it looks to build on its strong market position serving its customers in the utility and energy sectors. In addition to Cinven’s sector expertise, Spice will also benefit from significant additional funds which will enhance its ability to grow organically and through acquisitions, as well as accelerate the development of its international capabilities.”

Commenting on the Acquisition, Martin Towers, Chief Executive of Spice, said:

“This offer is good for customers, employees and shareholders. Cinven is a highly credible institution with substantial funds at its disposal. As an investor, Cinven will take a long term perspective on our business with a view to supporting continued delivery of excellent service levels to our customers and opportunities for our employees. At the same time, the offer represents an attractive combination of value and certainty for Spice Shareholders.”

UK, Morley, Leeds

Buyout company Cinven last week said Britain’s Spice Plc had rejected a takeover bid that values the provider of engineering and support services to utility companies at almost 200 million pounds ($309.3 million). Cinven issued a statement saying that it had proposed an indicative price of 56 pence per share in cash for Spice and that it was considering making an offer for the company. “This approach was rejected by the board of Spice and there are currently no discussions taking place between Cinven and Spice,” the private equity firm said.

Shares in Spice reached a high last week of 56.75p, a gain of of 13 percent in the week. Spice shares are currently trading at 54.25p (22nd June, 11.28am).The share price has moved from a low of 27.5p on 26 March this year.

THE SPICE RESPONSE TO THE CINVEN ANNOUNCEMENT
 
The Board of Spice notes the announcement issued today by Cinven Limited (“Cinven”) in relation to its interest in a possible offer for Spice.

We believe this approach significantly undervalues Spice, and the Board has not entered into discussions with Cinven, or any other party, in relation to a potential offer for Spice.

Spice has recently appointed Martin Towers as Chief Executive on a permanent basis and has communicated a clear set of objectives to enhance value for shareholders in the short term.  We’ve made excellent progress in executing these objectives, including the recent disposals of the Telecoms and Gas businesses, reducing the level of indebtedness and identifying specific restructuring and reorganisation actions to continue to drive cost out of the Group.  The strategic review in relation to the Facilities business is ongoing. The outcome of this review is expected to result in the Group’s core operations being focused on markets which have strong underlying regulatory and environmental drivers.  These actions leave the Group well positioned for the new financial year and beyond.

The Board believes that the approach from Cinven is opportunistic and significantly undervalues the Company. Spice is trading in line with the Board’s expectations, and our priority remains enhancing shareholder value.  The Board is confident that Spice can deliver significant value to shareholders over the medium term.

 The Group expects to announce its results for the year to end April 2010 on 6 July 2010.

Location: UK, Morley, Leeds

Ref: F231109-503

The Fusion Team have completed over 70 digital and media transactions for its private, corporate and private equity clients. For more information contact pkelly@fusioncorp.co.uk or visit our website
 
ACQUISITION 
FDN Database Reference:  F231109-285
 
Acquirer:  Lyceum Capital
ACQ Web:  http://www.lyceumcapital.co.uk
Location:  United Kingdom, London
Region:  Europe
Description:  Private Equity
Category:  Private Equity
Contact 1:  Daniel Adler, Partner
Contact 2:  David Harland,  Partner 
 
Vendor:  McKinnon & Clarke
Vendor Web:  http://www.mckinnon-clarke.co.uk
Location:  United Kingdom, Fife, Scotland
Region:  Europe
Description:  European energy procurement and compliance specialists.
Category: Energy, Procurement
Contact 1:  Sandy McKinnon, Founder
Contact 2:  Simon Northrop, CEO
  
Aprox. Value:  £22,000,000
 
Details:  Lyceum Capital has taken a significant majority stake in McKinnon & Clarke. The company employs 87 people in Scotland and a further 286 across an international network of offices. The growth plan will focus on new opportunities in international markets and aims to treble the £22.7 million turnover during the next few years. Sandy McKinnon will retain a minority share in the business and CEO, Simon Northrop, will continue to lead the company. Daniel Adler and David Harland from Lyceum Capital will join the board. Debt funding was provided by HSBC.
 
Link: Press Release
 
 Other deals in the sector

• John Hall Associates  
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A FUSION DEAL
Completed in September 2007

Fusion Corporate Partners is pleased to announce the sale of Euromoney Institutional Investor Plc owned Energy Information Centre Ltd to Broadfern Partners for a total consideration of £4.7M.

EIC is the leader in the provision of wholesale and retail market intelligence, outsourced procurement and risk management strategies to the oil & gas, electricity and water industries. EIC was acquired by Euromoney as part of its acquisition of Metal Bulletin Plc in 2006, and although it is a strongly performing business it is not a close fit with Euromoney’s current portfolio and long term strategy.

Fusion has a long relationship with Euromoney, having been involved a number of transactions with them over the years, and we are pleased to have completed a successful divestiture which will also give a boost to a strong business.

Mark Eisenstadt meisenstadt@fusioncorp.co.uk  led the deal for Fusion.   Fusion acted exclusively for Euromoney.