REG - Mission Group PLC Brave Bison Grp PLC - Response to Press Speculation & Possible Offer

Brave BisonAnnouncement

13/05/2024 07:00

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RNS Number : 0734O  Mission Group PLC (The)  13 May 2024

FOR IMMEDIATE RELEASE

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO
MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO CERTAINTY THAT ANY
OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER MAY BE MADE

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

13 May 2024

The MISSION Group plc

("MISSION", the "Company" or the "Group")

RESPONSE TO RECENT PRESS SPECULATION AND POSSIBLE OFFER ANNOUNCEMENT BY BRAVE
BISON GROUP PLC

MISSION Group plc (AIM: TMG), notes the recent press speculation and the
announcement released on 12 May 2024 by Brave Bison Group plc ("Brave Bison")
in accordance with Rule 2.4 of the City Code on Takeovers and Mergers (the
"Code") and confirms that on 29 April 2024, it received an unsolicited
conditional proposal regarding a possible offer by Brave Bison  for the
entire issued and to be issued share capital of MISSION.  Such offer
comprised an all-share offer at an exchange ratio of 11.5 Brave Bison shares
for each ordinary share in MISSION (the "Possible Offer"). Based on the terms
of the Possible Offer and the closing market prices of MISSION and Brave Bison
shares on 29 April 2024, being the last trading day prior to receipt of the
Possible Offer, the Possible Offer valued each MISSION share at approximately
29 pence(1).

On 8 May 2024, the Board of MISSION, following consultation with its financial
and legal advisers, unanimously rejected the Possible Offer which it believes
to be opportunistic and significantly undervalues the Group and its prospects.
Moreover, it is dilutive to MISSION's shareholders as it does not reflect the
relevant contributions of each party to the proposed combined group. In that
regard, the Board of MISSION would like to bring shareholders' attention to
the following points:

·    The terms of the Possible Offer represent a see-through value of
approximately 29.04 pence per MISSION share(1). Were the Possible Offer to be
implemented on its indicative terms, this would result in MISSION's
shareholders holding approximately 45 per cent. of the proposed combined
group.

·   The Board believes that the Possible Offer and resultant approximate
45 per cent. holding of MISSION's shareholders in the proposed combined group
does not fully reflect the inherent value in MISSION which, post the impact of
the 23 October 2023 trading update has been steadily improving reflected in a
62.1 per cent. increase in the MISSION share price since 23 October 2023(3).

·     Moreover, the Board believes that the Possible Offer significantly
undervalues the contribution of MISSION to the proposed combined group. Based
on the respective net revenue, adjusted EBITDA and adjusted pre-tax profit
contributions of MISSION and Brave Bison as set out in their respective
results for their financial years ending 31 December 2023, MISSION would
contribute approximately 81 per cent. of revenues, approximately 71 per cent.
of adjusted EBITDA and approximately 54 per cent. of adjusted pre-tax profits
to the proposed combined group(2). The proposed holding of approximately 45
per cent. of MISSION's shareholders in the proposed combined group does not
reflect that contribution.

·      MISSION's shareholders holding of approximately 45 per cent. of
the proposed combined group is also before the impact of an additional equity
fundraising of at least £10 million which Brave Bison has indicated to
MISSION they are considering in order to accelerate debt repayment and
strengthen the balance sheet of the proposed combined group.  While the Board
of MISSION understands such fundraising is not a condition to the Possible
Offer, any such equity fundraising could further dilute MISSION's
shareholders' interest in the proposed combined group.

·   The terms of the Possible Offer do not reflect, in terms of Brave
Bison's proposed Board composition, the significant contribution of MISSION to
the proposed combined group as they currently envisage only one additional
Non-Executive Director from MISSION will join the board of the proposed
combined group.

·   The Board of MISSION do not believe the Possible Offer is
transformational for MISSION and its offering to its clients. The proposed
combined group would have increased scale and some additional capabilities,
but these do not offset the dilutive impact to MISSION's shareholders of only
holding approximately 45 per cent. of the proposed combined group.

·   The Possible Offer is earnings dilutive for MISSION's shareholders.
Brave Bison anticipate that MISSION's shareholders would enjoy more value from
the combination based on a re-rating of the proposed combined group.  There
is no certainty of a re-rating.

·      As previously announced on 17 January 2024, the Board of MISSION
has set out how it expects to realise value for MISSION's shareholders through
its standalone strategy and execution of the Group's Value Restoration Plan,
which is now well underway.

·    The Board continues to work closely with NatWest, the Company's
lender, and was pleased to announce a refinancing arrangement on 28 March
2024, which extended facilities through to 5 April 2026. This provides the
flexibility the Company needs to deliver on its Value Restoration Plan and
reduce its leverage.

·    The announcement by Brave Bison on 12 May 2024 in relation to the
Possible Offer stated that MISSION's outstanding debts and certain liabilities
totalled approximately £30 million as at 31 December 2023, comprising bank
loans of £20.0 million, acquisition obligations of £5.5 million and HMRC
Time to Pay agreement of £4.3 million. The Board of MISSION wishes to draw
MISSION's shareholders attention to the fact that the above numbers exclude
MISSION's cash balances and therefore the outstanding debts (net of cash
balances) and certain liabilities totalled approximately £25.2 million as at
31 December 2023(4) and that its outstanding debts (net of cash balances) and
certain liabilities totalled approximately £26.8 million as at 30 April
2024(5). MISSION also notes that certain of its acquisition obligations can be
settled in MISSION shares.

·   In addition, the Board of MISSION continues to review the Group's
options to reduce its debt position and is considering the disposal of certain
assets within its portfolio to reduce its leverage further. The Board of
MISSION remains confident that during the remainder of the year, it will
deliver on its plan to reduce leverage.

The Board of MISSION is open to proposals that it believes would enhance
shareholder value and deliver benefits to MISSION's shareholders. The Board of
MISSION does not consider the terms of the Possible Offer to meet those
criteria.

Shareholders are urged to take no action at this time.

This announcement has been made by MISSION without the agreement or approval
of Brave Bison.

There can be no certainty either that an offer will be made nor as to the
terms on which any offer might be made.

In accordance with Rule 2.6(a) of the Code, Brave Bison must, by no later than
5.00 p.m. (London time) on 9 June 2024, either announce a firm intention to
make an offer for MISSION in accordance with Rule 2.7 of the Code, or
announce that it does not intend to make an offer, in which case the
announcement will be treated as a statement to which Rule 2.8 of the Code
applies. The deadline can be extended with the consent of the Takeover Panel
in accordance with Rule 2.6(c) of the Code.

The attention of shareholders is drawn to the disclosure requirements of Rule
8 of the Code, which are summarised below.

Footnotes:

1              The valuation of approximately 29.04 pence per
MISSON share and the approximate 45 per cent. ownership for MISSION's
shareholders in the proposed combined group, is based on (i) an exchange ratio
of 11.5 Brave Bison shares for each ordinary share in MISSION, (ii) a Brave
Bison closing mid-market share price of 2.525 pence (as at 29 April 2024,
being the last trading day prior to the receipt of the Possible Offer), (iii)
an issued share capital of MISSION being 92,238,119 shares and (iv) an issued
share capital of Brave Bison being 1,288,147,280 shares.

2          The contribution of MISSION to the proposed combined group
is based on the following information:

 Revenue                      £ million   %
 MISSION (see Note 2(a))      86.3        80.5
 Brave Bison (see Note 2(b))  20.9        19.5
 Pro forma                    107.2       100.0
 Adjusted EBITDA
 MISSION (see Note 2(a))      10.6        71.3
 Brave Bison (see Note 2(b))  4.3         28.7
 Pro forma                    14.9        100.0
 Adjusted profit before tax
 MISSION (see Note 2(a))      4.2         53.6
 Brave Bison (see Note 2(b))  3.6         46.4
 Pro forma                    7.8         100.0

 

 

(a)  for the year ended 31 December 2023, MISSION had reported net revenue of
£86.3 million from continuing operations (turnover of £195.4 million less
cost of sales of £109.1 million), headline EBITDA of £10.6 million (headline
operating profit (continuing operations) of £6.5 million, depreciation of
owned tangible assets of £1.2 million, depreciation expense on right of use
assets of £2.6 million and amortisation of other intangible assets of £0.4
million) and headline pre-tax profits of £4.2 million (continuing
operations).  This financial information relating to the Company has been
extracted or derived (without any adjustment) from the Company's final results
for the year ended 31 December 2023;

(b) for the year ended 31 December 2023, Brave Bison reported net revenue of
£20.9 million (turnover/billings of £35.7 million less cost of sales of
£14.8 million), adjusted EBITDA of £4.3 million and adjusted pre-tax profits
of £3.6 million. This financial information relating to Brave Bison has been
extracted or derived (without any adjustment) from Brave Bison's final results
for the year ended 31 December 2023.;

3          The closing mid-market price for a MISSION share on 23
October 2023 was 14.0 pence, and

 on 10 May 2024 was 22.7 pence.

4          The statements regarding MISSION's outstanding debts (net
of cash balances) and certain liabilities totalling approximately £25.2
million as at 31 December 2023 and comprised of net debt of £15.4 million,
acquisition obligations of £5.5 million and HMRC Time to Pay agreement of
£4.3 million have been extracted or derived (without any adjustment) from
MISSION's final results for the year ended 31 December 2023.

5          The statements regarding MISSION's outstanding debts (net
of cash balances) and certain liabilities totalling approximately £26.8
million as at 30 April 2024 and comprised of net bank debt of £22.2 million,
acquisition obligations of £4.1 million and HMRC Time to Pay agreement of
£0.5 million have been extracted from MISSION's unaudited internal financial
information.

 

ENDS

 

ENQUIRIES:

 David Morgan, Non-Executive Chair

 James Clifton, Chief Executive Officer

 Giles Lee, Chief Financial Officer                                           Via Houston

 The MISSION Group plc

 Simon Bridges / Julie Langley / Andrew Potts / Harry Rees
 Canaccord Genuity Limited (Financial Adviser, Nominated Adviser and Broker)  020 7523 8000

 Kate Hoare / Alexander Clelland / India Spencer
 HOUSTON (Financial PR and Investor Relations)                                0204 529 0549

 

Canaccord Genuity Limited, which is authorised and regulated in the United
Kingdom by the FCA, is acting as financial adviser and corporate broker
exclusively for MISSION and for no one else in connection with the Possible
Offer and will not regard any other person as its client in relation to the
matters referred to in this announcement and will not be responsible to anyone
other than MISSION for providing the protections afforded to clients of
Canaccord Genuity Limited, nor for providing advice in relation to the
Possible Offer or any other matter referred to in this announcement.

The person responsible for arranging the release of this announcement on
behalf of MISSION is James Clifton.

Publication of this announcement

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available on the Company's website at https://www.themission.co.uk/
(https://www.themission.co.uk/) by no later than 12 noon (London time) on the
business day following the date of this announcement. The content of the
website referred to in this announcement is not incorporated into and does not
form part of this announcement.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% 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 (as defined in the Code) 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) 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 (as defined in the Code).

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) 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.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

Details of the offeree and Bidder 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 Bidder 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 Code, MISSION confirms that as at the date
of this announcement, it has 92,238,119 ordinary shares of £0.10 each in
issue and admitted to trading on AIM, the market operated by the London Stock
Exchange. MISSION holds no ordinary shares in treasury. The total number of
voting rights in MISSION is currently 92,238,119. The International Securities
Identification Number for MISSION ordinary shares is GB00B11FD453.

The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse (Amendment) (EU Exit)
Regulations 2019. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.

 

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