3rd Mar 2005 07:02
Huntsworth PLC03 March 2005 3 March 2005 Not for release or publication in or into Canada, Australia or Japan PROPOSED MERGER OF HUNTSWORTH PLC AND INCEPTA GROUP PLC TO CREATE A MAJOR INTERNATIONAL MARKETING AND COMMUNICATIONS GROUP 3 March 2005 The Boards of Huntsworth PLC ("Huntsworth") and Incepta Group plc ("Incepta")are pleased to announce that they have agreed the terms of an all-share merger(the "Merger"), to create an international marketing and communications groupwith public relations at its core (the "Group"). The marketing and communications sector has experienced significantconsolidation in recent years. As a consequence there has been a polarisationbetween the large businesses offering international scale and breadth of serviceand smaller niche players. Both Huntsworth's and Incepta's Boards believe thata greater critical mass and international presence will substantially improvethe Group's ability to attract and retain large clients and highly regardedindustry talent. Against this background, the combination of Huntsworth andIncepta brings together outstanding brands, complementary geographical fit and ablue chip international client base. BENEFITS OF THE MERGER The Boards of Huntsworth and Incepta have held discussions about a possiblemerger over the course of the last year. They believe that the Merger willcreate significant strategic, operational and financial benefits for clients,staff and shareholders, which will include: • delivering enhanced revenues from existing multinational clients through increased international presence; • accelerating future growth through the cross marketing of the Group's brands and services to each company's existing clients; • increasing the scale of the business and its international reach to attract and retain larger clients; • attracting and retaining highly regarded industry talent; • creating a larger capitalised company with a stronger financial position and a more liquid market in the company's shares; and • estimated annualised pre-tax cost savings of at least £2.5 million achievable in the first full financial year following completion of the Merger. The Merger will generate significant scale, both in terms of geographic reachand sector expertise. Huntsworth's European public relations operations, with afocus in the UK, Austria, Belgium, France, Germany, Ireland, Spain andSwitzerland, complement Incepta's businesses in the UK, Belgium, France,Germany, Holland, Italy, Spain and Sweden. In the US, Huntsworth's presence inChicago, Los Angeles, New York and Sacramento is complementary to Incepta'spositioning in Austin, Boston, Chicago, New York and San Francisco.Huntsworth's satellite operations in Asia (Hong Kong and Singapore) will bestrengthened by Incepta's established operations in Beijing, Dubai, Hong Kong,Mumbai, Shanghai and Singapore. At a sector level, the Merger brings togetherboth companies' strength in financial and corporate public relations, publicaffairs, consumer goods and healthcare. STRATEGIC REVIEW As part of the Merger process, the board of the Group will undertake a thoroughreview of the activities of the combined business in order to ensure the Groupdelivers a focused range of services to its existing and potential clientswithin an efficient operational structure. The Board proposes to announce theresults of the strategic review before the end of the 2005 financial year. BOARD Following the completion of the Merger, Lord Chadlington will become ExecutiveChairman of the Group, Richard Nichols will become Chief Executive and RogerSelman will be Finance Director. The Board of Huntsworth has received assurances from Lord Chadlington that hewill remain committed to the Group on a full time basis until at least the endof 2008. Roger Selman will see through the integration of the two groups andthe implementation of the strategic review. It is then intended that when a newFinance Director has been appointed, he will leave the board. The NominationCommittee will search for Roger Selman's successor at the earliest appropriateopportunity. Rt Hon Francis Maude and Jon Foulds will be Joint Deputy Chairmen and, tocomplete the Board, Huntsworth and Incepta have each nominated a further twoNon-Executive Directors, with all other existing directors resigning. Inceptahas nominated Robert Alcock and Charles Good whilst Huntsworth has nominatedAnthony Brooke and Eugene Beard. It is intended that a new Senior Independent Non-Executive director will beappointed to the Board as Deputy Chairman within one year to succeed Rt. HonFrancis Maude and Jon Foulds who will then both retire from the Board. MERGER SUMMARY The Group will have strong brands in marketing and communications, operatingfrom some 125 offices in 23 countries. Based on Closing Prices as at 2 March 2005, the last trading day before thisAnnouncement, Huntsworth and Incepta's aggregate market capitalisation wasapproximately £195.4 million. Based on the current issued share capital of the two companies, HuntsworthShareholders will hold approximately 32.8 per cent. and Incepta Shareholderswill hold approximately 67.2 per cent. of the issued share capital of thecombined Group. A resolution to change the name of the Group will be put to shareholders as soonas practicable after the completion of the Merger. The Directors of Incepta unanimously recommend that Incepta Shareholders acceptthe Merger Offer, as they have irrevocably undertaken to do in respect of theirown beneficial holdings of, in aggregate, 3,198,999 Incepta Shares, representingapproximately 1.59 per cent. of Incepta's existing issued share capital. Indoing so, the Directors of Incepta have taken financial advice from LongAcre.In providing its financial advice to the Directors of Incepta, LongAcre hastaken into account the commercial assessments of the Directors of Incepta. The Directors of Huntsworth are of the opinion that the Merger Offer is in thebest interests of Huntsworth Shareholders as a whole and that the terms are fairand reasonable. In reaching that opinion, the Directors of Huntsworth havetaken financial advice from Bridgewell and Numis. In providing their financialadvice to the Directors of Huntsworth, Bridgewell and Numis have taken intoaccount the commercial assessments of the Directors of Huntsworth. The Merger is subject to, amongst other things, approval by HuntsworthShareholders and Incepta has received irrevocable undertakings to vote in favourof the resolutions to be put to Huntsworth Shareholders to approve the Mergerfrom the Directors of Huntsworth in respect of 10,935,194 Huntsworth Shares inaggregate, representing approximately 3.57 per cent. of Huntsworth's existingissued ordinary share capital. Commenting on today's Announcement, Lord Chadlington, Chief Executive ofHuntsworth, said: "We are delighted to announce our merger with Incepta, a well respectedinternational marketing and communications group. This transaction representsan exciting opportunity to create one of the world's leading public relationsfocused marketing and communications companies. We are confident that theMerger will create significant benefits and exciting opportunities for clients,staff and shareholders of both companies." Commenting on today's Announcement, Richard Nichols, Chief Executive of Incepta,said: "We believe Huntsworth is a compelling partner for Incepta and our merger willcreate a Group with real international scale, outstanding brands and a blue chipclient base. In our discussions over the last year it has been obvious howcomplementary our businesses are and that a merger would further our ability toattract and retain people of the highest quality, with all the benefits thatwill bring for our stakeholders." This summary should be read in conjunction with the full text of the followingAnnouncement. Appendix III to the following Announcement contains definitionsof certain expressions used in this summary and the following Announcement. A presentation to analysts will be held today, 3 March 2005, at 9:30 a.m. at TheLondon Stock Exchange, 10 Paternoster Square, London EC4M 7LS. ENQUIRIESHuntsworth PLC 020 7408 2232 Incepta Group plc 020 7282 2800Lord Chadlington Richard Nichols Bridgewell (Lead Financial Adviser) 020 7003 3000 LongAcre (Financial Adviser) 020 7759 4600Andrew Tuckey Jonathan Goodwin John Craven Zeph Sequeira Numis (Joint Financial Adviser and Broker) 020 7776 1500 Collins Stewart (Joint Broker) 020 7523 8350Jag Mundi Chris WellsRichard Hall Mark Connelly The Global Consulting Group (PR Adviser) 020 7796 4133 Investec (Joint Broker) 020 7597 5970Jonathan Shillington David Currie Erik Anderson Citigate Dewe Rogerson (PR Adviser) 020 7638 9571 Patrick Toyne Sewell Fiona Bradshaw This Announcement does not constitute an offer or an invitation to purchase anysecurities. The laws of the relevant jurisdictions may affect the availabilityof the Merger Offer to persons not resident in the United Kingdom. Persons whoare not resident in the United Kingdom, or who are subject to the laws of anyjurisdiction other than the United Kingdom, should inform themselves about, andobserve, any applicable requirements. Further details in relation to overseasshareholders will be contained in the Offer Document. Bridgewell, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting only for Huntsworth and no-one else inconnection with the Merger Offer and will not regard any other person as itsclient or be responsible to any person other than Huntsworth for providing theprotections afforded to clients of Bridgewell, nor for giving advice in relationto the Merger Offer. Numis, which is authorised and regulated in the United Kingdom by the FinancialServices Authority, is acting only for Huntsworth and no-one else in connectionwith the Merger Offer and will not regard any other person as its client or beresponsible to any person other than Huntsworth for providing the protectionsafforded to clients of Numis, nor for giving advice in relation to the MergerOffer. LongAcre, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting only for Incepta and no-one else inconnection with the Merger Offer and will not regard any other person as itsclient or be responsible to any person other than Incepta for providing theprotections afforded to clients of LongAcre, nor for giving advice in relationto the Merger Offer. Collins Stewart, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting only for Incepta and no-one else inconnection with the Merger Offer and will not regard any other person as itsclient or be responsible to any person other than Incepta for providing theprotections afforded to clients of Collins Stewart, nor for giving advice inrelation to the Merger Offer. Investec, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting only for Incepta and no-one else inconnection with the Merger Offer and will not regard any other person as itsclient or be responsible to any person other than Incepta for providing theprotections afforded to clients of Investec, nor for giving advice in relationto the Merger Offer. This Announcement does not constitute, or form part of, any offer for, or anysolicitation of any offer for, securities. Any acceptance or other response tothe Merger Offer should be made only on the basis of information referred to inthe Offer Document which Huntsworth intends to despatch shortly to InceptaShareholders and, for information only, to holders of options under the InceptaShare Option Schemes. The Merger Offer will not be made, directly or indirectly, in or into, or by useof the mails of, or by any means or instrumentality (including, withoutlimitation, telephonically or electronically) of interstate or foreign commerceof, or any facility of a national securities exchange of, Canada, Australia orJapan and will not be capable of acceptance by any such use, means,instrumentality or facility. Accordingly, neither this Announcement nor theOffer Document nor the accompanying Form of Acceptance is being, and must notbe, mailed or otherwise forwarded, transmitted, distributed or sent in, into orfrom Canada, Australia or Japan. Doing so may render invalid any purportedacceptance of the Merger Offer. All Incepta Shareholders or other persons(including nominees, trustees or custodians) who would or otherwise intend to,or may have a contractual or legal obligation to, forward this Announcement orthe Offer Document or the accompanying Form of Acceptance to any jurisdictionoutside the United Kingdom, should refrain from doing so and seek appropriateprofessional advice before taking any action. The New Huntsworth Shares to be issued in connection with the Merger have notbeen, and will not be, registered under or offered in compliance with applicablesecurities laws of any state, province, territory or jurisdiction of Canada,Australia or Japan and no regulatory clearances in respect of the New HuntsworthShares have been, or will be, applied for in any jurisdiction other than the UK. Accordingly, unless an exemption under the relevant securities laws isapplicable, the New Huntsworth Shares are not being, and may not be, offered,sold, resold, delivered or distributed, directly or indirectly, in or into,Canada, Australia or Japan or to, or for the account or benefit of, any personresident in Canada, Australia or Japan. The New Huntsworth Shares to be issued in connection with the Merger have notbeen, and will not be, registered under the US Securities Act or under thesecurities laws of any jurisdiction of the United States. The New HuntsworthShares are intended to be made available within the United States in connectionwith the Merger pursuant to an exemption from the registration requirements ofthe US Securities Act provided by Rule 802 thereunder and an exemption from theUS tender offer rules provided by Rule 14d-1(c) under the US Securities ExchangeAct. This Merger Offer relates to the securities of two non-US companies. TheMerger Offer is subject to disclosure requirements of the United Kingdom whichare different from those of the United States. Financial statements included inthe document, if any, have been prepared in accordance with foreign accountingstandards that may not be comparable to the financial statements of UnitedStates companies. It may be difficult for US persons to enforce their rightsand any claim that they may have arising under the US federal securities laws,as Huntsworth and Incepta are located in the United Kingdom and some or all oftheir respective officers and directors are residents of the United Kingdom orother non-US countries. US persons may not be able to sue a foreign company orits officers or directors in a foreign court for violations of US securitieslaws. It may be difficult to compel a foreign company and its affiliates tosubject themselves to a US court's judgment. You should be aware thatHuntsworth may purchase securities of Incepta otherwise than under the MergerOffer, such as in open market or privately negotiated purchases. This Announcement contains a number of forward-looking statements relating toHuntsworth, Incepta and the Group with respect to, among others, the following:financial condition; results of operations; the business of the Group; futurebenefits of the Merger; and management plans and objectives. Huntsworth andIncepta consider any statements that are not historical facts as "forward-looking statements". They involve a number of risks and uncertaintiesthat could cause actual results to differ materially from those suggested by theforward-looking statements. Important factors that could cause actual results todiffer materially from estimates or forecasts contained in the forward-lookingstatements include, among others, the following possibilities: future revenuesare lower than expected; costs or difficulties relating to the integration ofthe businesses of Huntsworth and Incepta, or of other future acquisitions, aregreater than expected; expected cost savings from the Merger or from otherfuture acquisitions are not fully realised or realised within the expected timeframe; competitive pressures in the industry increase; general economicconditions or conditions affecting the relevant industries, whetherinternationally or in the places Huntsworth and Incepta do business, are lessfavourable than expected, and/or conditions in the securities market are lessfavourable than expected. The expected operational cost savings and financial synergies referred to inthis Announcement have been calculated on the basis of the existing cost andoperating structures of the companies and by reference to current prices and thecurrent regulatory environment. These statements of estimated cost savingsrelate to future actions and circumstances which, by their nature, involverisks, uncertainties and other factors. Because of this, the cost savingsreferred to may not be achieved, or those achieved could be materially differentfrom those estimated. This statement should not be interpreted to mean that theearnings per share in the first full financial year following the Merger, or inany subsequent period, would necessarily match or be greater than those for therelevant preceding financial period. The Directors of Huntsworth accept responsibility for the information containedin this summary Announcement (in respect of the paragraph headed "Benefits ofthe Merger" and the paragraph headed "Board", jointly with the Directors ofIncepta) other than information relating to the recommendation of the InceptaBoard under the paragraph headed "Merger Summary" and information relating tothe Directors of Incepta. To the best of the knowledge and belief of theDirectors of Huntsworth (who have taken all reasonable care to ensure that suchis the case), the information contained in this summary Announcement for whichthey accept responsibility is in accordance with the facts and does not omitanything likely to affect the import of such information. The Directors of Incepta accept responsibility for the information contained inthis summary Announcement in the paragraph headed "Benefits of the Merger"(jointly with the Directors of Huntsworth), the paragraph headed "Board"(jointly with the Directors of Huntsworth), information relating to therecommendation of the Incepta Board under the paragraph headed "Merger Summary"and information relating to the Directors of Incepta. To the best of theknowledge and belief of the Directors of Incepta (who have taken all reasonablecare to ensure that such is the case), the information contained in this summaryAnnouncement for which they accept responsibility is in accordance with thefacts and does not omit anything likely to affect the import of suchinformation. Not for release or publication in or into Canada, Australia or Japan PROPOSED MERGER OF HUNTSWORTH PLC AND INCEPTA GROUP PLC TO CREATE A MAJOR INTERNATIONAL MARKETING AND COMMUNICATIONS GROUP 3 March 2005 1. Introduction The Boards of Huntsworth and Incepta announce that they have agreed the terms ofan all-share merger, to create an international marketing and communicationsgroup with public relations at its core. The Directors of Incepta unanimously recommend that Incepta Shareholders acceptthe Merger Offer, as they have irrevocably undertaken to do in respect of theirown beneficial holdings of, in aggregate, 3,198,999 Incepta Shares, representingapproximately 1.59 per cent. of Incepta's existing issued share capital. Indoing so, the Directors of Incepta have taken financial advice from LongAcre.In providing its financial advice to the Directors of Incepta, LongAcre hastaken into account the commercial assessments of the Directors of Incepta. The Directors of Huntsworth are of the opinion that the Merger Offer is in thebest interests of Huntsworth Shareholders as a whole and that the terms are fairand reasonable. In reaching that opinion, the Directors of Huntsworth havetaken financial advice from Bridgewell and Numis. In providing their financialadvice to the Directors of Huntsworth, Bridgewell and Numis have taken intoaccount the commercial assessments of the Directors of Huntsworth. It is intended to implement the Merger by means of a recommended share for shareoffer to be made by Bridgewell on behalf of Huntsworth, for the whole of theissued and to be issued share capital of Incepta. Under the terms of the MergerOffer, Huntsworth Shareholders will retain their shares in Huntsworth andIncepta Shareholders will receive: for every 100 Incepta Shares 313.654 New Huntsworth Shares and so in proportion to any other number of Incepta Shares held. Based on thecurrent issued share capital of the two companies, Huntsworth Shareholders willhold approximately 32.8 per cent., and Incepta Shareholders will holdapproximately 67.2 per cent., of the issued share capital of the Group. The terms of the Merger reflect the recent relative market capitalisations ofthe two companies. At the close of business on 2 March 2005, the last tradingday before this Announcement, the market capitalisations of Huntsworth andIncepta were £65.9 million and £129.5 million respectively. On this basis, theaggregate market capitalisation of the Group would be approximately £195.4million. Bridgewell is acting as lead financial adviser to Huntsworth and Numis is actingas joint financial adviser and corporate broker. LongAcre is acting asfinancial adviser to Incepta and Collins Stewart and Investec are acting asjoint corporate brokers. 2. Background to and benefits of the Merger The marketing and communications sector has experienced significantconsolidation in recent years. As a consequence there has been a polarisationbetween large businesses offering international scale and breadth of service andsmaller niche players. Both Huntsworth and Incepta share a consistentphilosophy in seeking to provide a seamless global service for multinationalclients while also being able to deliver a focused service for nationalbusinesses. Both Huntsworth's and Incepta's Boards believe that a largercritical mass and international presence will substantially improve the Group'sability to attract and retain large clients and highly regarded industry talent. Against this background, the combination of Huntsworth and Incepta bringstogether outstanding brands, complementary geographical fit and a blue chipinternational client base. The Boards of Huntsworth and Incepta have helddiscussions about a possible merger over the course of the last year and believethat the Merger will create significant strategic, operational and financialbenefits for clients, staff and shareholders. Huntsworth's strategy has been to target five key sectors, namely consumer,financial, public affairs, integrated healthcare and technology, and to build oracquire strong brands. Incepta pursues a focused strategy consistent with thatof Huntsworth and has market leading brands across many of these sectors. Aspart of the merger process, the Board of the Group will undertake a thoroughreview of the activities of the combined business in order to ensure the Groupdelivers a focused range of services to its existing and potential clientsconsistent with this shared strategy, and does so within an efficientoperational structure. The merger will generate significant scale, both in terms of geographic reachand sector expertise. Huntsworth's European public relations operations, with afocus in the UK, Austria, Belgium, France, Germany, Ireland, Spain andSwitzerland, complement Incepta's businesses in the UK, Belgium, France,Germany, Holland, Italy, Spain and Sweden. In the US, Huntsworth's presence inChicago, Los Angeles, New York and Sacramento is complementary to Incepta'spositioning in Austin, Boston, Chicago, New York and San Francisco.Huntsworth's satellite operations in Asia (Hong Kong and Singapore) will bestrengthened by Incepta's established operations in Beijing, Dubai, Hong Kong,Mumbai, Shanghai and Singapore. At a sector level, it brings together bothcompanies' strengths in financial and corporate public relations, publicaffairs, consumer goods and healthcare. The Group will have strong leading brands in marketing and communications,operating in 125 offices in 23 countries. It will have particular strengths inthe consumer, financial, public affairs, integrated healthcare and technologysectors. On the basis of client instructions received by Huntsworth and Inceptaover the past year, the Group's client list will include 58 FTSE 100 companies,142 Fortune 500 companies and 143 FTSE Eurofirst companies. BENEFITS OF THE MERGER i. Delivering further revenues from existing multinational clients through increased international presence Both Huntsworth and Incepta bring an excellent base of clients to the Group,with some of the largest and best known worldwide brands. Building off thesestrong existing relationships, the Group expects to be able to deliver furtherrevenues from its clients through extending the service offering to coverworldwide projects and developing relationships in under-serviced geographies. ii. Accelerating future growth through the cross marketing of the Group's brands and services to each company's existing clients Huntsworth and Incepta offer largely complementary marketing services deliveredby outstanding brands. Both companies have long term and strong relationshipswith many of their clients. The Group intends to build on these relationshipsand cross market the Group's brands and services. iii. Increasing the scale and international reach of the business to attract and retain larger clients Clients increasingly expect high levels of consistent service on aninternational basis. Both Huntsworth and Incepta have outstanding brands andhighly regarded staff, but on a stand alone basis often lack the critical massand international reach to compete effectively with the very largest operatorsin the marketing and communications services sectors. The Boards of Incepta andHuntsworth believe that the complementary geographical fit of the twobusinesses, combined with a focused strategic approach, will enable the Group toattract new, large clients who seek the very best service on an internationalbasis. This is most evident across the Group's European operations whereTrimedia will deliver wider coverage to the Citigate brand in Austria andSwitzerland, while Citigate will provide Trimedia with extended reach acrossSweden, Holland, Belgium, Spain and Italy. iv. Attracting and retaining highly regarded industry talent The Boards of Incepta and Huntsworth recognise that the Group's people are keyto the success of the business. In a competitive market place, the Group willbe better positioned to offer existing and new employees exciting andchallenging positions in a dynamic global business. In addition, the Group'sclear strategic focus will continue to attract staff from more general marketingservices groups. Both Huntsworth and Incepta have strong reputations for theexcellence of their staff and the Boards believe that prospects for existing andnew staff will be significantly enhanced by the Merger. v. Creating a larger capitalised company with a strong financial position and a more liquid market in its shares Based on Closing Prices as at 2 March 2005, the last trading day before thisAnnouncement, the aggregate market capitalisation of Incepta and Huntsworth wasapproximately £195.4 million. Were the Group to have a similar or larger marketcapitalisation it would be likely to have enhanced share liquidity. Huntsworth has agreed new £85 million bank facilities to replace the existingIncepta £9.5 million and £82.5 million facilities in the event that thoseexisting facilities are cancelled (which may, inter alia, occur as a result ofthe change of control of Incepta upon the Merger Offer becoming or beingdeclared unconditional in all respects). In addition, Huntsworth has agreedcertain amendments to its existing £15 million facility, such amendments tobecome effective when the Merger Offer becomes or is declared unconditional inall respects. The new facilities permit Huntsworth to waive down the conditionrelating to acceptances under the Merger Offer contained in paragraph (A) ofPart A of Appendix 1 to this Announcement, provided it has received the priorconsent of the lenders under those facilities. Following the Merger, the Group will have pro forma net debt of approximately£68.3 million (based on Huntsworth's net debt of approximately £2.8 million at30 June 2004 and Incepta's net debt of approximately £65.5 million at 31 August2004). The Directors believe that will result in an acceptable level of gearingfor the Group in view of the comfortable interest coverage ratios going forward. Given the cash generative nature of the Group, net debt is expected to continueto reduce. vi. Cost savings Shareholders will benefit from the creation of a more efficient group withestimated annualised pre-tax cost savings of at least £2.5 million, principallyfrom the elimination of duplicated central costs, achievable in the first fullfinancial year following completion of the Merger. As a consequence of the cost savings outlined above, the Directors believe that,based on the exchange ratio of the Merger, the Merger will be earnings enhancingfor both Huntsworth and Incepta Shareholders for the financial year ending 31December 2006. However, this should not be interpreted to mean that earningsper share will necessarily match or be greater than in previous financialperiods. In addition to the above cost savings, the Directors of Huntsworth and Inceptabelieve that, following completion of the Merger and as a consequence of thestrategic review by the Group's Board outlined above, there will be theopportunity to identify further cost savings and areas for revenue enhancementin the medium term. 3. Details of the Merger The Merger is expected to be implemented by way of an offer by Bridgewell onbehalf of Huntsworth for the whole of the issued and to be issued share capitalof Incepta. Under the terms of the Merger Offer, existing HuntsworthShareholders will retain their Huntsworth Shares and Incepta Shareholders willreceive: for every 100 Incepta Shares 313.654 New Huntsworth Shares and so in proportion to any other number of Incepta Shares held. The conditions and certain terms of the Merger Offer are set out in Appendix Ito this Announcement. The conditions include the approval of the Merger byHuntsworth Shareholders by way of ordinary resolutions to be proposed at theExtraordinary General Meeting. The Merger Offer will extend to all Incepta Shares unconditionally allotted orissued and fully paid on the date of the Merger Offer (excluding any treasuryshares except to the extent these cease to be held as treasury shares beforesuch date as Huntsworth may determine) and any Incepta Shares which areunconditionally allotted or issued and fully paid (including pursuant to theexercise of options under the Incepta Share Option Schemes) whilst the MergerOffer remains open for acceptance or by such earlier date as Huntsworth may,subject to the City Code, decide, not being earlier than the date on which theMerger Offer becomes unconditional as to acceptances. Full acceptance of the Merger Offer (assuming full exercise of in the moneyIncepta Options which are capable of exercise immediately following the Merger)would involve the issue of 661,915,118 New Huntsworth Shares (representingapproximately 68.3 per cent. of the enlarged issued share capital of the Group). The directors intend to consolidate the share capital of the Group after thecompletion of the Merger, and further details will be put to shareholders atthat time. It is anticipated that shareholder approval for the shareconsolidation will be sought at the next annual general meeting of Huntsworth. As fractions of New Huntsworth Shares will not be allotted or issued to personsaccepting the Merger Offer, fractional entitlements to New Huntsworth Shareswill be aggregated and sold in the market and the net proceeds of sale will beretained for the benefit of the Group. The Incepta Shares will be acquired pursuant to the Merger Offer fully paid andfree from all liens, charges, equitable interests, encumbrances and rights ofpre-emption and any other interests of any nature whatsoever and together withall rights now or hereafter attaching thereto including voting rights and theright to receive all dividends or other distributions declared made or paidafter the date of the Merger Offer, save for the right to receive the specialdividend of 1.05 pence (net) per share referred to in paragraph 12 below. The New Huntsworth Shares will be issued credited as fully paid and will rankpari passu in all respects with existing Huntsworth Shares and will be entitledto all dividends and other distributions declared, made or paid after the dateof the Merger Offer, save that they will not carry the right to receive thespecial dividend of 0.1 pence (net) per share referred to in paragraph 12 below. 4. Irrevocable undertakings to accept the Merger Offer Huntsworth has received irrevocable undertakings to accept the Merger Offer fromthe directors of Incepta in respect of 3,198,999 Incepta Shares in aggregate,representing approximately 1.59 per cent. of Incepta's existing issued ordinaryshare capital. These irrevocable undertakings will only cease to be binding inthe event that the Merger Offer lapses or is withdrawn or if the Merger Offer isrevised or varied in such a manner which represents a diminution in value orwhich results in a lower number of New Huntsworth Shares being offered inexchange for Incepta Shares. The Merger is subject to, amongst other things, approval by HuntsworthShareholders and Incepta has received irrevocable undertakings to vote in favourof the resolutions to be put to Huntsworth Shareholders to approve the Mergerfrom the directors of Huntsworth in respect of 10,935,194 Huntsworth Shares inaggregate, representing approximately 3.57 per cent. of Huntsworth's existingissued ordinary share capital. 5. Change of name A resolution to change the name of the Group will be put to shareholders as soonas practicable after the completion of the Merger. 6. Board of Directors The Board of the Group will be drawn from both companies. The ExecutiveDirectors of the Group will be as follows: Executive Chairman Lord Chadlington Chief Executive Richard Nichols Finance Director Roger Selman Bringing about the full benefits of a merger of two service businesses is acomplex and demanding task requiring the skills, experience and detailedknowledge of their respective companies of both Lord Chadlington and RichardNichols. In light of this, and taking account of their complementary skills andexperience, the Boards of both companies concluded that a board structure forthe Group involving both an executive chairman and a chief executive would beappropriate. The necessary checks and balances will be enforced by the Board ofthe Group, which will also be strengthened by the appointment of a new SeniorIndependent Director within the first calendar year following completion of theMerger. Lord Chadlington will assume ultimate responsibility for performance toshareholders. He will take specific responsibility for strategic focus, Groupmargins and the management of the Board. Richard Nichols will assumeresponsibility for Group revenues and profitability, implementation of Groupstrategy, synergies and the day to day management of the Group. The Board of Huntsworth has received assurances from Lord Chadlington that hewill remain committed to the Group on a full time basis until at least the endof 2008. Roger Selman will see through the integration of the two groups andthe implementation of the strategic review. It is then intended that when a newFinance Director has been appointed, he will leave the board. The NominationCommittee will search for Roger Selman's successor at the earliest appropriateopportunity. Rt. Hon Francis Maude and Jon Foulds will be Non-Executive Joint DeputyChairmen. Jon Foulds will become the Senior Independent Non-Executive Directorand Rt. Hon Francis Maude will become the Chairman of the Nomination Committeefor the new Board. It is intended that a new Senior Independent Non-Executive Director will beappointed to the Group's Board as Deputy Chairman within one calendar year tosucceed Rt. Hon Francis Maude and Jon Foulds, who will then both retire from theBoard. To complete the Board, Huntsworth and Incepta have each nominated two furtherNon-Executive Directors, with all other existing directors resigning. Inceptahas nominated Robert Alcock and Charles Good whilst Huntsworth has nominatedAnthony Brooke and Eugene Beard. The Nomination Committee will review the Board of the Group with a view tostrengthening the composition of its non-executive directors. The Board willultimately comprise between six and eight directors. Anthony Carlisle, in addition to his client responsibilities, will be the SeniorAdviser to the Executive Chairman on the development of the worldwide financialand corporate communications practice, enabling the Board to have access to hisunique experience of this field. The Board will appoint an executive committee, comprising Lord Chadlington,Richard Nichols and other senior managers drawn from the Group. This committeewill be responsible for the day to day execution of the Group's strategy. 7. Information on Huntsworth Huntsworth is one of the UK's leading public relations focused marketingservices groups with 46 offices in 11 countries worldwide. It owns a portfolioof companies comprising public relations expertise in the consumer, financial,public affairs and technology sectors, together with a broad based, integratedoffering in healthcare communications and a team of brand identity and designexperts. The current management team joined Huntsworth in late 2000 and has sinceimplemented a new strategy and completely restructured the group. That strategyis unchanged today. In June 2001 Huntsworth successfully completed a £12.8 million fundraising via aplacing and open offer. The proceeds were used to make several simultaneousacquisitions (PBC Marketing, Woodside Communications and Stephanie Churchill PR)and also to reduce group indebtedness. Harrison Cowley was acquired in August2001 to complement Huntsworth's strong public relations offering. In 2002 the company continued its growth strategy, acquiring, in conjunctionwith a £5.4 million fundraising, Global Consulting Group and Elizabeth HindmarchPublic Relations in November. Further acquisitions followed in 2003, includingHatch-group and Haslimann Taylor. In April 2004 Huntsworth completed a third placing and open offer to raise £21.9million, in order to finance the substantial acquisitions of Trimedia Group, amulti-disciplinary public relations and communications group, and GraylingGroup, an international group of public relations, public affairs and eventsmanagement companies. Also in 2004, the company acquired a 60 per cent. stakein Hudson Sandler, a UK-based financial public relations company, as well asmaking a number of further acquisitions, including VB Communications, AvenueHealthcare Knowledge Management, Ergo Communications and Rose & Kindel. On 2 March 2005, the last business day prior to this Announcement, Huntsworth'smarket capitalisation was approximately £65.9 million and the closing middlemarket price of a Huntsworth Share was 21.5 pence. In the year ended 31December 2003 Huntsworth had revenues from continuing operations ofapproximately £22.1 million, operating profits (before goodwill amortisation,exceptional items and discontinued operations) of approximately £2.3 million,profit before tax (before goodwill amortisation, exceptional items anddiscontinued operations) of approximately £1.8 million and net assets ofapproximately £16.3 million. 8. Information on Incepta Incepta is an international marketing and communications group with over 2,000employees operating out of 79 offices across 20 countries, its principalactivities being marketing services, public relations and specialistadvertising. Incepta offers its clients an integrated range of marketing andcommunications services from high value advisory to effective implementation inthe world's leading financial and business centres. The financial and corporate communications division comprises financial publicrelations and investor relations, public affairs and corporate public relations,all trading under the Citigate name. The marketing services division offers services including promotional marketing,direct marketing, design and branding, market intelligence, consumer publicrelations, sponsorship, face-to-face communications, branded launches, eventmanagement and on-line communications. The specialist advertising division comprises full service agencies specialisingin corporate and financial advertising. The Incepta Group's culture and core set of values is focused on generating agenuine business environment in which its group companies' creativity andpassion can thrive. On 2 March 2005, the last business day prior to this Announcement, Incepta'smarket capitalisation was approximately £129.5 million and the closing middlemarket price of an Incepta Share was 64.5 pence. In the year ended 29 February2004 Incepta had gross income of approximately £154.0 million, operating profits(before goodwill amortisation, fixed asset impairments and exceptional items) ofapproximately £14.6 million, profit before tax (before goodwill amortisation,fixed asset impairments and exceptional items) of approximately £11.6 millionand net assets of approximately £236.6 million. 9. Current trading i. Huntsworth On 25 January 2005, Huntsworth announced that the company had had a verysatisfactory 2004 and expected the final results to be comfortably in line withmarket expectations. A good second half, including exceptionally strong tradingin the last two months of the year, had given the Huntsworth Group the momentumto achieve significant further progress in 2005. Recent trading success was ledby Trimedia, Grayling and the Healthcare Group. In the second half of 2004,Huntsworth won net new business of some £6 million, including mandates fromFerrero Rocher, Straken, Volvo and Wales World Nation. Since 31 December 2004,trading of the Huntsworth Group has been in line with management's expectations. ii. Incepta On 31 January 2005 Incepta announced continued stabilisation in its markets,although the general lack of visibility on the short term environment remained.The strengthening in underlying revenues and operating profitability (pregoodwill and exceptional items), compared with the prior year, continued acrossIncepta's Financial & Corporate Communications businesses and most of itsMarketing Services agencies. In the fourth quarter of the financial year ended29 February 2004, however, there was continued underperformance in Park Avenue,its UK events business, and a more difficult trading environment in the GermanSpecialist Advertising business. The trading performance for the year has broadly met Incepta's expectations,save for the notable exceptions of Park Avenue and the German SpecialistAdvertising business. Incepta continues to benefit from solid cash generation,lower debt (as compared with the half year) and will also benefit from a lowercorporate tax charge. The recent upturn in the outlook for corporate activity gives Incepta confidencethat the Citigate Financial & Corporate Communications businesses will continueto build upon the growth that Incepta expects them to deliver in the currentfinancial year. In addition, cost reduction actions have been taken in respectof the Marketing Services division, and in particular the events businesseswhich the Incepta Board believes will underpin their growth going forward. 10. Management and employees The Boards of Huntsworth and Incepta attribute great importance to the expertiseof their respective management teams and employees. The management teams ofHuntsworth and Incepta will be combined in order to obtain the maximum benefitfrom their skills and experience. The Boards of Huntsworth and Incepta have confirmed to each other that,following the Merger Offer becoming or being declared unconditional in allrespects, the existing employment rights, including pension rights, of allemployees of both the Huntsworth and Incepta groups will be fully safeguarded. The Group also intends to establish new long-term incentive arrangements foremployees. The terms of such arrangements have not yet been determined and willbe reviewed once the Merger Offer has been declared unconditional. 11. Incepta Share Option Schemes Huntsworth intends to make appropriate proposals to holders of options in theIncepta Share Option Schemes once the Merger Offer becomes or is declaredunconditional in all respects. It is also intended that, subject to schemerules and the practicalities of compliance with appropriate securities lawrequirements, existing employees of Incepta will be allowed to roll over intoequivalent options over Huntsworth Shares except for options granted under theCitigate Communications Group Scheme, the Dewe Rogerson Share Scheme, theInternational Sharesave Scheme and options granted under Incepta discretionaryschemes with an exercise price in excess of 85 pence. The basis and terms ofsuch arrangements are still to be agreed (but they will not extend tojurisdictions into which the Merger Offer is not being made) and Inceptaoptionholders will be informed of the proposals to be made in respect of thesearrangements in due course. 12. Dividends and year end Huntsworth Shareholders on the register at the close of business on 18 March2005 will receive a special dividend of 0.1 pence (net) per share in respect ofthe year ended 31 December 2004, and there will be no further dividendsproposed, declared or paid by Huntsworth in respect of that year. InceptaShareholders on the register at close of business on 18 March 2005 will receivea special dividend of 1.05 pence (net) per share in respect of the year ended 28February 2005, and there will be no further dividends proposed, declared or paidby Incepta in respect of that year. It is currently intended that the Group will have a 31 December accounting yearend and that it will pay an interim dividend in November and a final dividend inJune. The Board currently intends to maintain the dividend for the financialyear ending 31 December 2005 at a level of at least 0.3 pence. Over time theBoard will seek to adopt a progressive dividend policy, whilst maintainingsufficient capital for its strategic goals. The New Huntsworth Shares will rankpari passu for any dividend declared by the Group after the date on which theMerger becomes unconditional, save that they will not carry the right to receivethe special dividend of 0.1 pence (net) per share payable to existing HuntsworthShareholders referred to above. 13. Inducement fees Incepta and Huntsworth have entered into an agreement under which: • Incepta has agreed to pay £1.275 million (inclusive of VAT) toHuntsworth in the event that: (A) as a consequence of an announcement (whether or noton a pre-conditional basis) by any third party of a firm intention to make anoffer pursuant to Rule 2.5 of the Code in relation to an independent competingtransaction relating to Incepta, the Merger Offer is not made (with the consentof the Panel), lapses or is (subject to the provisions of the Code) withdrawn;or (B) the Incepta Directors withdraw or adversely modifytheir approval or recommendation of the Merger Offer or agree or resolve to takesuch actions, other than in circumstances where (i) there has occurred anon-disclosed material adverse change or deterioration in the business, assets,financial or trading position of Huntsworth (in each case which is material inthe context of the Merger) since the date to which the last audited financialstatements of Huntsworth were prepared but prior to the date of such withdrawal,modification, agreement or resolution, or (ii) Huntsworth has, with the consentof the Panel, reduced the Merger Offer to below the level set out in thisAnnouncement or has, with the consent of the Panel, otherwise modified the termsof the Merger Offer in a manner adverse to Incepta Shareholders; and • Huntsworth has agreed to pay £0.650 million (inclusive of VAT) toIncepta in the event that: (A) as a consequence of an announcement (whether or noton a pre-conditional basis) by any third party of a firm intention to make anoffer pursuant to Rule 2.5 of the Code in relation to an independent competingtransaction relating to Huntsworth, the Merger Offer is not made (with theconsent of the Panel), lapses or is (subject to the provisions of the Code)withdrawn; or (B) (i) the Huntsworth Directors withdraw or adverselymodify their recommendation to vote in favour of the shareholder resolutionsnecessary to effect the Merger or agree or resolve to take such actions, otherthan in circumstances where there has occurred a non-disclosed material adversechange or deterioration in the business, assets, financial or trading positionof Incepta (in each case which is material in the context of the Merger) sincethe date to which the last audited financial statements of Incepta were preparedbut prior to the date of such withdrawal, modification, agreement or resolution,and (ii) Huntsworth Shareholders do not vote in favour of the shareholderresolutions necessary to effect the Merger. Under the terms of the agreement, only one such fee will become payable, on thefirst to occur of the events set out above. Any subsequent occurrence of any ofthe events set out above will not cause any further fee to become payable. 14. Offer Document and Listing Particulars The Offer Document and Listing Particulars, setting out details of the MergerOffer and enclosing the Form of Acceptance, will be despatched to InceptaShareholders shortly and in any event within twenty-eight days of the date ofthis Announcement unless agreed otherwise with the Panel. 15. Extraordinary General Meeting Given the size of the proposed Merger Offer in relation to the current size ofHuntsworth, in accordance with the Listing Rules it will be necessary forHuntsworth Shareholders to approve the Merger Offer and to authorise an increasein the share capital of Huntsworth and the allotment of the New HuntsworthShares. An Extraordinary General Meeting will be convened for this purpose.The Circular containing the notice of Extraordinary General Meeting togetherwith the Listing Particulars will be sent to Huntsworth Shareholders shortly. Incepta has received irrevocable undertakings to vote in favour of theresolutions to be put to Huntsworth Shareholders to approve the Merger from thedirectors of Huntsworth in respect of 10,935,194 Huntsworth Shares in aggregate,representing approximately 3.57 per cent. of Huntsworth's existing issuedordinary share capital. 16. Delisting and compulsory acquisition If the Merger Offer becomes or is declared unconditional in all respects,Huntsworth intends to procure the making of an application by Incepta to delistthe Incepta Shares from the Official List and to cancel trading of InceptaShares on the London Stock Exchange's market for listed securities. It isanticipated that cancellation of listing and trading will take effect no earlierthan 20 business days after the Merger Offer becomes or is declaredunconditional in all respects. Delisting would significantly reduce theliquidity and marketability of any Incepta Shares not assented to the MergerOffer at that time. If Huntsworth receives acceptances under the Merger Offer in respect of, and/orotherwise acquires, 90 per cent. or more of the Incepta Shares to which theMerger Offer relates, Huntsworth will exercise its rights pursuant to theprovisions of sections 428 to 430F (inclusive) of the Companies Act to acquirecompulsorily the remaining Incepta Shares in respect of which the Merger Offerhas not been accepted. 17. Securities in issue As at 7:00 a.m. on 2 March 2005, being the last business day prior to thisAnnouncement, Huntsworth had 306,606,475 ordinary shares of 10 pence each inissue (ISIN number GB0004327226) and Incepta had 200,699,095 ordinary shares of5 pence each in issue (ISIN number GB0033303172). 18. Listing, dealings and settlement Applications will be made to the UK Listing Authority for the New HuntsworthShares to be admitted to the Official List and to the London Stock Exchange forthe New Huntsworth Shares to be admitted to trading on the London StockExchange's market for listed securities. It is expected that Admission willbecome effective and that dealings for normal settlement in the New HuntsworthShares will commence on the London Stock Exchange at 8.00 a.m. on the firstdealing day following the date on which the Merger Offer becomes or is declaredunconditional in all respects (subject only to the condition relating toAdmission contained in paragraph (E) of Part A of Appendix I to thisAnnouncement). 19. General Neither Huntsworth, nor any of its directors, nor, so far as Huntsworth isaware, any person deemed to be acting in concert with it, owns or controls anyIncepta Shares or has any option to acquire any Incepta Shares, or has enteredinto any derivative referenced to securities of Incepta which remainsoutstanding. The Merger Offer will be on the terms and subject to the conditions set outherein and in Appendix I and to be set out in the Offer Document and Form ofAcceptance. It is intended that the Offer Document (including a letter ofrecommendation from the Chairman of Incepta), Forms of Acceptance and ListingParticulars will be despatched shortly to Incepta Shareholders and in any eventwithin twenty-eight days of the date of this Announcement unless agreedotherwise with the Panel. Listing Particulars and a Circular explaining theMerger Offer and convening an Extraordinary General Meeting to seek approval forthe Merger Offer, to increase the authorised share capital of Huntsworth and toauthorise the Directors of Huntsworth to issue the New Huntsworth Shares willalso be despatched to Huntsworth Shareholders shortly. 20. Recommendation The Directors of Incepta, who have been so advised by LongAcre, consider theterms of the Merger Offer to be fair and reasonable. In providing its financialadvice to the Directors of Incepta, LongAcre has taken into account thecommercial assessments of the Directors of Incepta. Accordingly, the Incepta Board intends unanimously to recommend that InceptaShareholders accept the Merger Offer as each of the Incepta Directors haveundertaken to do in respect of their own beneficial holdings amounting to3,198,999 Incepta Shares, representing approximately 1.59 per cent. of Incepta'sexisting issued share capital. The Directors of Huntsworth are of the opinion that the Merger Offer is in thebest interests of Huntsworth Shareholders as a whole and that the terms are fairand reasonable. In reaching that opinion, the Directors of Huntsworth havetaken financial advice from Bridgewell and Numis. In providing their financialadvice to the Directors of Huntsworth, Bridgewell and Numis have taken intoaccount the commercial assessments of the Directors of Huntsworth. Accordingly, the Board of Huntsworth intends unanimously to recommend thatHuntsworth Shareholders vote in favour of the resolutions to be proposed at theExtraordinary General Meeting as they have undertaken to do in respect of theirown beneficial holdings amounting to 10,935,194 Huntsworth Shares representingapproximately 3.57 per cent. of Huntsworth's existing issued share capital. ENQUIRIESHuntsworth PLC 020 7408 2232 Incepta Group plc 020 7282 2800Lord Chadlington Richard Nichols Bridgewell (Lead Financial Adviser) 020 7003 3000 LongAcre (Financial Adviser) 020 7759 4600Andrew Tuckey Jonathan Goodwin John Craven Zeph Sequeira Numis (Joint Financial Adviser and Broker) 020 7776 1500 Collins Stewart (Joint Broker) 020 7523 8350Jag Mundi Chris WellsRichard Hall Mark Connelly The Global Consulting Group (PR Adviser) 020 7796 4133 Investec (Joint Broker) 020 7597 5970Jonathan Shillington David Currie Erik Anderson Citigate Dewe Rogerson (PR Adviser) 020 7638 9571 Patrick Toyne Sewell Fiona Bradshaw This Announcement does not constitute an offer or an invitation to purchase anysecurities. The laws of the relevant jurisdictions may affect the availabilityRelated Shares:
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