19th Jun 2007 07:03
Babcock International Group PLC19 June 2007 EMBARGOED UNTIL 7:00 AM NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ORFROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION 19 June 2007 BABCOCK INTERNATIONAL GROUP PLC FINAL RECOMMENDED MANDATORY CASH OFFER BY BABCOCK INTERNATIONAL GROUP PLC FOR INTERNATIONAL NUCLEAR SOLUTIONS PLC Summary - Babcock has today entered into option agreements with major shareholders of INS to acquire 18.8 per cent. of the existing issued share capital of INS at 63 pence per INS Share. As a result, together with the 24.5 per cent. stake in INS acquired on 26 January 2007, Babcock has acquired or has the option to acquire 43.3 per cent. of the existing issued share capital of INS. - Babcock has, in addition, received irrevocable commitments to accept the Final Cash Offer from the directors of INS in respect of a further 0.4 per cent. of the existing issued share capital of INS. - Accordingly, the Board of Babcock hereby makes a final recommended mandatory cash offer under the provisions of Rule 9 of the City Code of 63 pence per INS Share to acquire the existing issued share capital of INS not already owned by the Babcock Group. - The Final Cash Offer is final and will not be increased. - The Final Cash Offer replaces the Scheme announced on 4 April 2007, which will lapse. - The background to the Final Cash Offer is as follows: - On 4 April 2007, Babcock announced a recommended proposal to acquire, for 63 pence per INS Share in cash, the existing issued share capital of INS not already owned by the Babcock Group by means of the Scheme. The circular containing the Scheme was posted to INS Shareholders on 20 April 2007. - The Court Meeting and the INS EGM were convened on 14 May 2007. A majority of those shareholders voting supported an acquisition of INS by the Babcock Group; however, based on the proxy votes received at that time, the Scheme would not have been approved. This was principally due to the stance taken by a small number of shareholders who had acquired material voting interests (following the announcement of the Scheme) and the indications by a number of other large shareholders that they did not intend to participate in the vote. - Given the importance of ensuring that the outcome of the Court Meeting and the INS EGM fairly reflected the wishes of INS Shareholders, the INS Directors agreed to propose motions at the Court Meeting and the INS EGM for their respective adjournments. Such motions were duly passed. - In order to allow all INS Shareholders the opportunity for a cash exit at 63 pence per INS Share, Babcock has determined to offer to acquire for cash the existing issued share capital of INS not already owned by the Babcock Group at 63 pence per INS Share. In view of this, the Board of INS intends not to reconvene the Court Meeting and the INS EGM and accordingly the Scheme will lapse. - The Final Cash Offer values the existing issued share capital of INS at approximately £39.3 million and represents a premium of approximately 46.6 per cent. to the average Closing Price of 43.0 pence per INS Share over the six month period from 18 July 2006 to 17 January 2007, the last Business Day prior to the announcement of an approach regarding a possible offer for INS. - The INS Directors, who have been so advised by Rothschild and Grant Thornton, consider the terms of the Final Cash Offer to be fair and reasonable. Grant Thornton is acting as the independent financial adviser to INS in relation to Rule 3 of the City Code. Rothschild is acting as financial adviser to INS. Rothschild has a corporate debt advisory relationship with Babcock and, as a consequence, with respect to the Final Cash Offer, is not an independent adviser in accordance with Rule 3 of the City Code. In providing their advice to the directors of INS, Rothschild and Grant Thornton have taken into account the commercial assessments of the INS Directors. Accordingly, the INS Directors unanimously recommend that INS Shareholders accept the Final Cash Offer, as they have irrevocably undertaken to do in respect of their own beneficial holdings, amounting to, in aggregate, 253,904 INS Shares, representing approximately 0.4 per cent. of the existing issued share capital of INS. - Babcock has acquired or has the option to acquire 43.3 per cent. of the existing issued share capital of INS, comprising approximately 24.5 per cent. of the existing issued share capital of INS that it acquired on 26 January 2007 and approximately 18.8 per cent. of the existing issued share capital of INS over which it has a call option and a put obligation. - Babcock has also received irrevocable undertakings to accept the Final Cash Offer from the INS Directors in respect of 0.4 per cent. of the existing issued share capital of INS. Commenting on the Final Cash Offer, Gordon Campbell, Chairman of Babcock, said: "Given that a majority of shareholders who voted for the Scheme supported anacquisition of INS by the Babcock Group, we are pleased to be able to putforward our 63 pence per share offer to allow all INS Shareholders a cash exitat a significant premium to the average share price over the six month periodprior to the announcement of an approach." Appendix I sets out the Condition and further terms of the Final Cash Offer. Appendix II sets out the bases and sources of information from which thefinancial calculations used in this Announcement have been derived. Appendix III contains the definitions of terms used in this Announcement(including this summary). This summary should be read in conjunction with the full text of thisAnnouncement. Enquiries:Babcock Telephone: +44 (0) 20 7291 5000Gordon CampbellPeter RogersBill Tame Hawkpoint (financial adviser to Babcock) Telephone: +44 (0) 20 7665 4500Paul Baines JPMorgan Cazenove (broker to Babcock) Telephone: +44 (0) 20 7588 2828Dermot McKechnie Financial Dynamics (Babcock PR enquiries) Telephone: +44 (0) 020 7269 7121Susanne Walker INS Telephone: +44 (0) 161 222 5500Chris BrownTony Moore Rothschild (financial adviser to INS) Telephone: +44 (0) 161 827 3800Greg Cant Grant Thornton (Rule 3 adviser to INS) Telephone: +44 (0) 161 834 5414Ali Sharifi College Hill (INS PR enquiries) Telephone: +44 (0) 20 7457 2020Matthew Smallwood The availability of the Final Cash Offer and the release, publication ordistribution of this Announcement to persons who are not resident in the UnitedKingdom may be affected by the laws of the relevant jurisdictions in which theyare located. Persons who are not resident in the United Kingdom should informthemselves of, and observe, any applicable requirements. Any failure to complywith such applicable requirements may constitute a violation of the securitieslaws of any such jurisdictions. This Announcement has been prepared for thepurposes of complying with English law and the City Code and the informationdisclosed may not be the same as that which would have been disclosed if thisAnnouncement had been prepared in accordance with the laws of jurisdictionsoutside the United Kingdom. The Final Cash Offer is not being made, directly or indirectly, in or into, orby the use of the mails of, or by any means or instrumentality (including,without limitation, telephonically or electronically) of interstate or foreigncommerce of, or any facilities of a national state or other securities exchangeof, a Restricted Jurisdiction and the Final Cash Offer is not capable ofacceptance by any such use, means, instrumentality or facilities, or from withina Restricted Jurisdiction subject to certain exceptions. Accordingly, copies ofthis Announcement, the Offer Document and the Form of Acceptance and any otherrelated document are not being, and must not be, directly or indirectly, mailedor otherwise forwarded, distributed, transmitted or sent in or into or from aRestricted Jurisdiction and persons receiving this Announcement, the OfferDocument, the Form of Acceptance and any other related document (includingcustodians, nominees and trustees) must not mail or otherwise distribute or sendthem in, into or from such jurisdictions as doing so may invalidate anypurported acceptance of the Final Cash Offer. The availability of the Final CashOffer to persons who are not resident in the United Kingdom may be affected bythe laws of their relevant jurisdiction. Such persons should inform themselvesabout and observe any applicable legal or regulatory requirements of theirjurisdiction. Hawkpoint, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Babcock and no one elsein connection with the Final Cash Offer and will not be responsible to anyoneother than Babcock for providing the protections afforded to clients ofHawkpoint nor for providing advice in relation to the Final Cash Offer, thecontent of this Announcement or any matter referred to herein. JPMorgan Cazenove, which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting exclusively for Babcock and no oneelse in connection with the Final Cash Offer and will not be responsible toanyone other than Babcock for providing the protections afforded to clients ofJPMorgan Cazenove nor for providing advice in relation to the Final Cash Offer,the content of this Announcement or any matter referred to herein. Rothschild, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for INS and no one else inconnection with the Final Cash Offer and will not be responsible to anyone otherthan INS for providing the protections afforded to clients of Rothschild nor forproviding advice in relation to the Final Cash Offer, the content of thisAnnouncement or any matter referred to herein. Grant Thornton, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for INS and no one else inconnection with the Final Cash Offer and will not be responsible to anyone otherthan INS for providing the protections afforded to clients of Grant Thornton norfor providing advice in relation to the Final Cash Offer, the content of thisAnnouncement or any matter referred to herein. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Announcement contains certain forward-looking statements with respect tothe financial condition, results of operations and business of INS and certainplans and objectives of the boards of INS and Babcock with respect thereto.These forward-looking statements can be identified by the fact that they do notrelate only to historical or current facts. Forward-looking statements often usewords such as "anticipate", "target", "expect", "estimate", "intend", "plan","goal", "believe", "will", "may", "should", "would", "could", or other words ofsimilar meaning. These statements are based on assumptions and assessments madeby the boards of INS and Babcock in light of their experience and theirperception of historical trends, current conditions, expected futuredevelopments and other factors they believe appropriate. By their nature,forward-looking statements involve risk and uncertainty, because they relate toevents and depend on circumstances that will occur in the future and the factorsdescribed in the context of such forward-looking statements in this Announcementcould cause actual results and developments to differ materially from thoseexpressed in or implied by such forward-looking statements. Although INS andBabcock believe that the expectations reflected in such forward-lookingstatements are reasonable, INS and Babcock can give no assurance that suchexpectations will prove to have been correct and INS and Babcock thereforecaution you not to place undue reliance on these forward-looking statementswhich speak only as at the date of this Announcement. DEALING DISCLOSURE REQUIREMENTS Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,"interested" (directly or indirectly) in one per cent. or more of any class of"relevant securities" of INS, all "dealings" in any "relevant securities" ofthat company (including by means of an option in respect of, or a derivativereferenced to, any such "relevant securities") must be publicly disclosed by nolater than 3.30 p.m. (London time) on the London business day following the dateof the relevant transaction. This requirement will continue until the date onwhich the Final Cash Offer becomes or is declared unconditional in all respectsor lapses or is otherwise withdrawn or on which the "offer period" otherwiseends. If two or more persons act together pursuant to an agreement orunderstanding, whether formal or informal, to acquire an "interest" in "relevantsecurities" of INS, they will be deemed to be a single person for the purpose ofRule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of INS by Babcock or INS, or by any of their respective"associates", must be disclosed by no later than 12.00 noon (London time) on theLondon business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Panel's website at www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel. If you are in any doubt as to the application of Rule 8 to you, please contactan independent financial adviser authorised under the Financial Services andMarkets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk orcontact the Panel on telephone number +44 (0) 20 7638 0129; fax number +44 (0)20 7236 7013. EMBARGOED UNTIL 7:00 AM NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ORFROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION 19 June 2007 BABCOCK INTERNATIONAL GROUP PLC FINAL RECOMMENDED MANDATORY CASH OFFER BY BABCOCK INTERNATIONAL GROUP PLC FOR INTERNATIONAL NUCLEAR SOLUTIONS PLC 1. Introduction Babcock has today entered into option agreements with major shareholders of INSto acquire 18.8 per cent. of the existing issued share capital of INS at 63pence per INS Share. As a result, together with the 24.5 per cent. stake in INSacquired on 26 January 2007, Babcock has acquired or has an option to acquire43.3 per cent. of the existing issued share capital of INS. Babcock has, inaddition, received irrevocable commitments to accept the Final Cash Offer fromthe directors of INS in respect of a further 0.4 per cent. of the existingissued share capital of INS. Accordingly, the Board of Babcock hereby makes a final recommended mandatorycash offer under the provisions of Rule 9 of the City Code of 63 pence per INSShare to acquire the existing issued share capital of INS not already owned bythe Babcock Group. The Final Cash Offer is final and will not be increased. The Final Cash Offer replaces the Scheme announced on 4 April 2007, which willlapse. 2. Background to the Final Cash Offer On 4 April 2007, Babcock announced a recommended proposal to acquire, for 63pence per INS Share in cash, the existing issued share capital of INS notalready owned by the Babcock Group to be implemented by means of the Scheme. Thecircular containing the Scheme was posted to INS Shareholders on 20 April 2007. The Court Meeting and the INS EGM were convened on 14 May 2007. A majority ofthose shareholders voting supported an acquisition of INS by the Babcock Group;however, based on the proxy votes received at that time, the Scheme would nothave been approved. This was principally due to the stance taken by a smallnumber of shareholders who had acquired material voting interests (following theannouncement of the Scheme) and the indications by a number of other largeshareholders that they did not intend to participate in the vote. Given the importance of ensuring that the outcome of the Court Meeting and theINS EGM fairly reflected the wishes of INS Shareholders, the INS Directorsagreed to propose motions at the Court Meeting and the INS EGM for theirrespective adjournments. Such motions were duly passed. In order to allow all INS Shareholders the opportunity for a cash exit at 63pence per INS Share, Babcock has determined to offer to acquire for cash theexisting issued share capital of INS not already owned by the Babcock Group at63 pence per INS Share. In view of this, the Board of INS intends not toreconvene the Court Meeting and the INS EGM and accordingly the Scheme willlapse. 3. Terms of the Final Cash Offer Babcock hereby offers to acquire, on the terms contained in the Offer Documentand, in respect of certificated shares, the Form of Acceptance, the INS Shares,issued and to be issued, not already owned by Babcock on the following basis: for each INS Share 63.0 pence in cash The Final Cash Offer values each INS Share at 63.0 pence and the existing issuedshare capital of INS at approximately £39.3 million and represents a premium ofapproximately 46.6 per cent. to the average Closing Price of 43.0 pence per INSShare over the six month period from 18 July 2006 to 17 January 2007, the lastBusiness Day prior to the announcement of an approach regarding a possible offerfor INS. 4. Recommendation When the Scheme was announced on 4 April 2007, the INS Directors, who had beenso advised by Rothschild and Grant Thornton, considered the terms of the Schemeto be fair and reasonable and accordingly recommended INS Shareholders to votein favour of the Scheme. The INS Directors, who have been so advised byRothschild and Grant Thornton, continue to believe the terms of the Final CashOffer to be fair and reasonable for the reasons set out in the announcementdated 4 April 2007 and the Scheme Document. Grant Thornton is acting as theindependent financial adviser to INS in relation to Rule 3 of the City Code.Rothschild is acting as financial adviser to INS. Rothschild has a corporatedebt advisory relationship with Babcock and, as a consequence, with respect tothe Final Cash Offer, is not an independent adviser in accordance with Rule 3 ofthe City Code. In providing their advice to the directors of INS, Rothschild andGrant Thornton have taken into account the commercial assessments of the INSDirectors. Accordingly, the INS Directors unanimously recommend that INSShareholders accept the Final Cash Offer, as they have irrevocably undertaken todo in respect of their own beneficial holdings, amounting to, in aggregate,253,904 INS Shares, representing approximately 0.4 per cent. of the existingissued share capital of INS. 5. Disclosure of interests in INS relevant securities As at the date of this Announcement Babcock has acquired or has the option toacquire 26,996,901 INS Shares, representing approximately 43.3 per cent. of theexisting issued share capital of INS. This interest is comprised of 15,273,875 INS Shares (representing approximately24.5 per cent. of the existing issued share capital of INS) acquired on 26January 2007 and 11,723,026 INS Shares (representing approximately 18.8 percent. of the existing issued share capital of INS) in respect of which it hasentered into option arrangements. Under the option arrangements, conditionalupon service of a notice following this Announcement, Babcock has the right torequire the holders of such shares to sell and the holders of such shares havethe right to require Babcock to purchase the shares subject to thesearrangements at the price of 63 pence per INS Share. Save for these interests and the interest arising by virtue of the irrevocableundertakings referred to below, neither Babcock, nor any of the directors ofBabcock, nor so far as Babcock is aware, any person acting in concert withBabcock, has any interest in or right to subscribe for INS relevant securities. 6. Irrevocable undertakings Babcock has received irrevocable undertakings to accept the Final Cash Offerfrom the directors of INS in respect of, in aggregate, 253,904 INS Shares(representing approximately 0.4 per cent. of the existing issued share capitalof INS). These undertakings will remain binding even if a higher competing offer for INSis made. They will cease to be binding only if the Final Cash Offer lapses. 7. Information on Babcock The Babcock Group is an asset management business, managing fixed infrastructureand mobile assets. Babcock integrates labour, technical capabilities, systemsand supply chain partners to meet the outsourcing needs of customers. The company has five operating divisions which are technical services, defence,networks, engineering and plant services, and rail. Overseas operations arebased in Africa and North America. For the year ended 31 March 2007, Babcock reported revenue of £988.3 million(2006: £836.7 million), operating profit (pre amortisation of acquiredintangibles and exceptionals) of £68.3 million (2006: £49.9 million) and profitbefore tax (pre amortisation of acquired intangibles and exceptionals) of £62.5million (2006: £44.6 million). Babcock's shares are quoted on the London Stock Exchange in the support servicessector. 8. Current trading and prospects for Babcock On 10 May 2007, Babcock announced its preliminary results for the financial yearended 31 March 2007. In those results, Peter Rogers, Chief Executive of Babcock,made the following comments on current trading: "Our financial results were pleasing, with continued double-digit sales growth,underlying profit before tax up by 40 per cent. and underlying earnings pershare increasing by 36 per cent. This is the fifth successive year ofdouble-digit growth. This has been another good year for Babcock with continuinggrowth in core businesses and the successful integration of Alstec and ABBPowerlines, each of which has performed better than our planning assumptions.The potential addition of INS to our nuclear portfolio will further strengthenour position in the nuclear and nuclear decommissioning areas. We believe the combined strength of Babcock and DML will yield significantstrategic and financial benefits to the Ministry of Defence in line with theobjectives set out in the Defence Industrial Strategy, whilst creatingsignificant value for Babcock's shareholders. The outlook for Babcock remainspositive with our markets remaining good and our ability to deliver tocustomers' requirements will continue to ensure that we benefit from thestrength of these markets." 9. Reasons for the Final Cash Offer and future plans for INS The Babcock Group has identified the civil nuclear decommissioning market asboth a growth opportunity and an industry consistent with the Babcock Group'sskills, capabilities and experience and signalled its intention of developingits core capabilities with the acquisition of Alstec in May 2006. The acquisition of INS continues, broadens and deepens this strategy by bringingto the Babcock Group an important new set of customers and capabilities whichwill allow the Babcock Group to bid for a wider range of opportunities in anexpanding market. Babcock intends to utilise the skills and capabilities of INSemployees as an integral part of the wider Babcock Group in bidding for moresignificant roles on contracts and framework agreements. 10. Financing the Final Cash Offer The consideration payable under the Final Cash Offer will be funded fromBabcock's existing banking facilities. Hawkpoint, financial adviser to Babcock, has confirmed that it is satisfied thatthe necessary financial resources are available to Babcock to satisfy the cashconsideration due under the Final Cash Offer in full. The maximum cashconsideration payable by Babcock to INS Shareholders (assuming all options areexercised in full) under the terms of the Final Cash Offer is approximately£30.4 million. 11. Information on INS INS successfully completed the demerger of INS Innovation Limited from RoboticTechnology Systems PLC and was admitted to trading on AIM on 31 May 2006. INS is a specialist provider of nuclear engineering and consultancy services inthe UK and is focused on providing services and solutions to the nuclearindustry from the initial front end design and development to eventualcommissioning and providing support to the customers' ongoing operations. INS operates throughout all stages of the project life cycle, providingprofessional engineering services for design and project implementation. Theseservices include procurement inspection and project management enabling theCompany to take projects from inception through all phases of projectimplementation to site installation and commissioning. The Company's main areas of expertise include: - support to the commercial operating facilities associated with fuel fabrication and spent fuel reprocessing activities; - waste and nuclear materials handling; - plant asset care and maintenance of redundant facilities; - new build activities covering existing facilities as well as new build required to support accelerated clean-up; - decommissioning; and - supply and integration of special purpose plant and equipment. For the year ended 31 December 2006, INS reported turnover of £31.7 million(2005: £24.6 million), operating profit before exceptional items of £2.5 million(2005: £2.2 million) and profit before tax of £1.7 million (2005: £2.3 million). 12. Current trading and prospects for INS On 27 March 2007, INS issued the following announcement: "Following the successful admission of International Nuclear Solutions plc("INS") to the AIM market on 31st May 2006, I am pleased to be able to presentthe Group's first set of annual accounts as an independent public company. Turnover at £31.7 million increased by 29 per cent. in 2006 compared with theprevious year, with the commencement of several significant new contracts,notably the SPRS and B29 projects at Sellafield. Operating profit beforeexceptional items was 11.9 per cent. higher than 2005 at £2.5 million, beforeexceptional administrative costs of £0.8 million (2005 - £nil) relating to thedemerger from Robotic Technology Systems PLC (RTS) and subsequent admission toAIM. Profit after tax and exceptional items was £1.0m, compared with £1.9million in 2005. INS produced a strong cash performance in 2006, with £5.9 million cash inflowfrom operating activities, an increase in net funds of £2.4 million, and closingcash balances of £2.7 million. Our order book, which stood at £11.4 million at the end of June, grew to £12.7million by the end of 2006, and currently stands at £12.9 million. Our totalheadcount at the end of 2006 stood at 274. This is an increase of 23 per cent.in permanent staff, and 21 per cent. in total from the position at the start ofthe year. A new project office has been opened at Birchwood in Warrington, andwe have also relocated our Greengarth office to new premises at the West LakesScience Park at Sellafield. Outlook Our strong opening order book, and the increasing activity levels in the nuclearindustry, give us confidence that the Group will continue to progress in 2007.The NDA has announced that there is a small increase in funding in its 2007budget. We are aware that there will be a reduction in operating revenues to theNDA in future years as a result of the closure of two Magnox stations at the endof 2006. This may in the course of time affect the funding available to the NDAin future years. However, we view the future with confidence given theincreasing overall demand for nuclear decommissioning expertise." Since 27 March 2007, trading has generally been in line with INS Directors'expectations. 13. The effect of the Final Cash Offer on INS Directors, management andemployees Babcock has confirmed to the INS Directors that, following the Final Cash Offerbecoming or being declared unconditional in all respects, the existingemployment rights, terms and conditions of all the employees of the INS Groupwill be safeguarded. The Non-executive Directors of INS expect to resign from the Board of INS uponthe Final Cash Offer becoming or being declared unconditional in all respects. 14. INS Share Schemes Upon the Final Cash Offer becoming or being declared unconditional in allrespects, Babcock has agreed to make the following proposals to holders ofoptions under the INS Share Schemes: (a) options granted under the INS 2006 Enterprise Management Incentive Scheme will become exercisable in full for a limited period when the Final Cash Offer becomes unconditional and holders of options will be able to accept the Final Cash Offer in respect of the resulting shares; and (b) option holders under the INS 2006 Savings-Related Share Option Scheme may exercise their options to the extent of their savings at the time of exercise, together with any accrued interest due, for a limited period when the Final Cash Offer becomes unconditional and will be able to accept the Final Cash Offer in respect of the resulting shares. Upon the Final Cash Offer becoming or being declared unconditional in allrespects, Babcock will write to all participants in the INS Share Schemes toprovide them with further details of these arrangements. 15. Overseas Shareholders The availability of the Final Cash Offer to persons resident in, or citizens of,jurisdictions outside the United Kingdom may be affected by the laws of therelevant jurisdictions. Persons who are not resident in the United Kingdomshould inform themselves about and observe any applicable requirements. It isthe responsibility of each Overseas Shareholder to satisfy themselves as to thefull observance of the laws of the relevant jurisdiction in connectiontherewith, including the obtaining of any governmental exchange control or otherconsents which may be required or compliance with other necessary formalitieswhich are required to be observed and the payment of any issue, transfer orother taxes due in such jurisdiction. Any failure to comply with such applicablerequirements may constitute a violation of the securities laws of any suchjurisdictions. This Announcement has been prepared for the purposes of complying with Englishlaw and the City Code and the information disclosed may be different from thatwhich would have been disclosed if this Announcement had been prepared inaccordance with the laws of jurisdictions outside England and Wales. 16. Implementation Agreement INS and Babcock entered into an Implementation Agreement dated 3 April 2007,under the terms of which the parties agreed, amongst other things, to co-operateon certain matters relating to the Final Cash Offer. Details of theImplementation Agreement are set out in the Scheme Document. Included in the Implementation Agreement is an inducement fee agreement. Theinducement fee, which amounts to circa £0.4 million, representing one per cent.of the value of the Final Cash Offer, is payable to Babcock if following thisAnnouncement: (a) the INS Directors withdraw or modify their approval or recommendation of the Final Cash Offer, or approve the announcement of or recommend any Competing Proposal; or (b) the Final Cash Offer lapses in accordance with its terms and prior thereto a Competing Proposal for the Company has been announced, and in either case such Competing Proposal or any other Competing Proposalsubsequently becomes or is declared unconditional in all respects. 17. Compulsory acquisition, de-listing and re-registration If Babcock receives acceptances of the Final Cash Offer in respect of, and/orotherwise acquires, 90 per cent. or more of the INS Shares to which the FinalCash Offer relates, Babcock intends to exercise its rights pursuant to theprovisions of the Companies Act to acquire compulsorily the remaining INS Sharesto which the Final Cash Offer relates on the same terms as the Final Cash Offer. Assuming the Final Cash Offer becomes or is declared unconditional in allrespects and subject to any applicable requirements of the London StockExchange, Babcock intends to procure the making of an application by INS to theLondon Stock Exchange for the cancellation of admission of the INS Shares fromAIM. If this cancellation occurs, it will significantly reduce the liquidity andmarketability of any INS Shares not assented to the Final Cash Offer. It isanticipated that the cancellation of admission to trading on AIM will takeeffect no earlier than the expiry of 20 Business Days after the date upon whichthe Final Cash Offer becomes or is declared unconditional in all respects. The AIM Rules normally require the consent of at least 75 per cent. of the votescast by a company's shareholders at an extraordinary general meeting for thecancellation of admission of its shares to trading on AIM. However, the LondonStock Exchange has indicated that, provided Babcock is the owner of not lessthan 75 per cent. of the existing issued ordinary share capital of INS beforethe proposed date of cancellation, and provided that INS formally seeksderogation from this requirement, the passing of such a resolution will not berequired. In connection with the cancellation of listing, Babcock intends thatINS withdraw from CREST. It is currently intended that, following the Final Cash Offer becoming or beingdeclared unconditional in all respects and after the cancellation of admissionof the INS Shares from AIM, INS will be re-registered as a private company underthe relevant provisions of the Companies Act. 18. Dealing disclosure requirements Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,"interested" (directly or indirectly) in one per cent. or more of any class of"relevant securities" of INS, all "dealings" in any "relevant securities" ofthat company (including by means of an option in respect of, or a derivativereferenced to, any such "relevant securities") must be publicly disclosed by nolater than 3.30 p.m. (London time) on the London business day following the dateof the relevant transaction. This requirement will continue until the date onwhich the Final Cash Offer becomes or is declared unconditional in all respectsor lapses or is otherwise withdrawn or on which the "offer period" otherwiseends. If two or more persons act together pursuant to an agreement orunderstanding, whether formal or informal, to acquire an "interest" in "relevantsecurities" of INS, they will be deemed to be a single person for the purpose ofRule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of INS by Babcock or INS, or by any of their respective"associates", must be disclosed by no later than 12.00 noon (London time) on theLondon business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Panel's website at www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel. If you are in any doubt as to the application of Rule 8 to you, please contactan independent financial adviser authorised under the Financial Services andMarkets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk orcontact the Panel on telephone number +44 (0) 20 7638 0129; fax number +44 (0)20 7236 7013. 19. The Final Cash Offer and posting of documents to INS Shareholders The Final Cash Offer is being made, by means of this Announcement and the OfferDocument, on the terms contained in the Offer Document and, in respect ofcertificated INS Shares, the accompanying Form of Acceptance (including theCondition and the further terms set out in Appendix I of the Offer Document andthis Announcement). Copies of the Offer Document and the Form of Acceptance willbe available for inspection at the offices of Ashurst, 5 Appold Street, London,EC2A 2HA from the time of this Announcement. The Final Cash Offer (on the termsset out in the Offer Document) is open for acceptance from that time. INSShareholders are advised to read the Offer Document and, as appropriate, to seekfinancial advice before accepting the Final Cash Offer. The Offer Document containing the Condition and the further terms of the FinalCash Offer and the Form of Acceptance will be despatched to INS Shareholderslater today. 20. General As at 7.00 a.m. (London time) on 18 June 2007 (the last business day prior tothe date of this Announcement), INS had 62,335,374 shares of one pence in issue(ISIN number GB00B12QZ964). EnquiriesBabcock Telephone: +44 (0) 20 7291 5000Gordon CampbellPeter RogersBill Tame Hawkpoint (financial adviser to Babcock) Telephone: +44 (0) 20 7665 4500Paul Baines JPMorgan Cazenove (broker to Babcock) Telephone: +44 (0) 20 7588 2828Dermot McKechnie Financial Dynamics (Babcock PR enquiries) Telephone: +44 (0) 020 7269 7121Susanne Walker INS Telephone: +44 (0) 161 222 5500Chris BrownTony Moore Rothschild (financial adviser to INS) Telephone: +44 (0) 161 827 3800Greg Cant Grant Thornton (Rule 3 financial adviser to Telephone: +44 (0) 161 834 5414INS)Ali Sharifi College Hill (INS PR enquiries) Telephone: +44 (0) 20 7457 2020Matthew Smallwood The availability of the Final Cash Offer and the release, publication ordistribution of this Announcement to persons who are not resident in the UnitedKingdom may be affected by the laws of the relevant jurisdictions in which theyare located. Persons who are not resident in the United Kingdom should informthemselves of, and observe, any applicable requirements. Any failure to complywith such applicable requirements may constitute a violation of the securitieslaws of any such jurisdictions. This Announcement has been prepared for thepurposes of complying with English law and the City Code and the informationdisclosed may not be the same as that which would have been disclosed if thisAnnouncement had been prepared in accordance with the laws of jurisdictionsoutside the United Kingdom. The Final Cash Offer is not being made, directly or indirectly, in or into, orby the use of the mails of, or by any means or instrumentality (including,without limitation, telephonically or electronically) of interstate or foreigncommerce of, or any facilities of a national state or other securities exchangeof, a Restricted Jurisdiction and the Final Cash Offer is not capable ofacceptance by any such use, means, instrumentality or facilities, or from withina Restricted Jurisdiction subject to certain exceptions. Accordingly, copies ofthis Announcement, the Offer Document and the Form of Acceptance and any otherrelated document are not being, and must not be, directly or indirectly, mailedor otherwise forwarded, distributed, transmitted or sent in or into or from aRestricted Jurisdiction and persons receiving this Announcement, the OfferDocument, the Form of Acceptance and any other related document (includingcustodians, nominees and trustees) must not mail or otherwise distribute or sendthem in, into or from such jurisdictions as doing so may invalidate anypurported acceptance of the Final Cash Offer. The availability of the Final CashOffer to persons who are not resident in the United Kingdom may be affected bythe laws of their relevant jurisdiction. Such persons should inform themselvesabout and observe any applicable legal or regulatory requirements of theirjurisdiction. Hawkpoint, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Babcock and no one elsein connection with the Final Cash Offer and will not be responsible to anyoneother than Babcock for providing the protections afforded to clients ofHawkpoint nor for providing advice in relation to the Final Cash Offer, thecontent of this Announcement or any matter referred to herein. JPMorgan Cazenove, which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting exclusively for Babcock and no oneelse in connection with the Final Cash Offer and will not be responsible toanyone other than Babcock for providing the protections afforded to clients ofJPMorgan Cazenove nor for providing advice in relation to the Final Cash Offer,the content of this Announcement or any matter referred to herein. Rothschild, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for INS and no one else inconnection with the Final Cash Offer and will not be responsible to anyone otherthan INS for providing the protections afforded to clients of Rothschild nor forproviding advice in relation to the Final Cash Offer, the content of thisAnnouncement or any matter referred to herein. Grant Thornton, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for INS and no one else inconnection with the Final Cash Offer and will not be responsible to anyone otherthan INS for providing the protections afforded to clients of Grant Thornton norfor providing advice in relation to the Final Cash Offer, the content of thisAnnouncement or any matter referred to herein. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Announcement contains certain forward-looking statements with respect tothe financial condition, results of operations and business of INS and certainplans and objectives of the boards of INS and Babcock with respect thereto.These forward-looking statements can be identified by the fact that they do notrelate only to historical or current facts. Forward-looking statements often usewords such as "anticipate", "target", "expect", "estimate", "intend", "plan","goal", "believe", "will", "may", "should", "would", "could", or other words ofsimilar meaning. These statements are based on assumptions and assessments madeby the boards of INS and Babcock in light of their experience and theirperception of historical trends, current conditions, expected futuredevelopments and other factors they believe appropriate. By their nature,forward-looking statements involve risk and uncertainty, because they relate toevents and depend on circumstances that will occur in the future and the factorsdescribed in the context of such forward-looking statements in this Announcementcould cause actual results and developments to differ materially from thoseexpressed in or implied by such forward-looking statements. Although INS andBabcock believe that the expectations reflected in such forward-lookingstatements are reasonable, INS and Babcock can give no assurance that suchexpectations will prove to have been correct and INS and Babcock thereforecaution you not to place undue reliance on these forward-looking statementswhich speak only as at the date of this Announcement. 21. Appendices Appendix I sets out the Condition and further terms of the Final Cash Offer. Appendix II sets out the bases and sources of information from which thefinancial calculations used in this Announcement have been derived. Appendix III contains the definitions of terms used in this Announcement. Appendix I THE CONDITION AND FURTHER TERMS OF THE FINAL CASH OFFER 1. ACCEPTANCE CONDITION 1.1 The Final Cash Offer is subject to valid acceptances being received (andnot, where permitted, withdrawn) by 3.00 p.m. on 10 July 2007 (or such latertime(s) and/or date(s) as Babcock and INS may, subject to the Code, decide) inrespect of such number of INS Shares which, together with the INS Sharesacquired or agreed to be acquired by Babcock or parties acting in concert withit, will result in Babcock and any party acting in concert with it holding INSShares which together carry more than 50 per cent. of the voting rights normallyexercisable at general meetings of INS including for this purpose, to the extent(if any) required by the Panel, any voting rights attaching to INS Shares whichare unconditionally allotted or issued before the Final Cash Offer becomes or isdeclared unconditional whether pursuant to the exercise of conversion orsubscription rights or otherwise. This is the only condition of the Final CashOffer. 1.2 If the Final Cash Offer lapses, the Final Cash Offer will cease to becapable of further acceptance and INS Shareholders accepting the Final CashOffer and Babcock will cease to be bound by forms of acceptance submitted on orbefore the time when the Final Cash Offer lapses. 2. CERTAIN TERMS OF THE FINAL CASH OFFER 2.1 The Final Cash Offer extends to all INS Shares other than the INS Sharesalready held by Babcock. 2.2 The Final Cash Offer is made on the terms set out in this Announcement andthe Offer Document and, in respect of certificated INS Shares, in the Form ofAcceptance. 2.3 The attention of the holders of INS Shares not resident in the UnitedKingdom is drawn to the relevant provisions of the Offer Document which will bedespatched on behalf of Babcock later today. The Final Cash Offer and any acceptances under it are governed by English lawand are subject to the jurisdiction of the Courts of England. Appendix II BASES AND SOURCES OF INFORMATION Save as otherwise stated, the following constitute the bases and sources ofcertain information referred to in this Announcement: 1. Information relating to INS has been extracted from the AIM admissiondocument, dated 5 May 2006, and from INS's annual report and accounts for theyear ended 31 December 2006; information relating to Babcock has been extractedfrom the relevant published audited reports and accounts of Babcock. 2. The value of the existing issued share capital of INS is based on 62,335,374INS Shares in issue at 18 June 2007 being the latest practicable day prior tothis Announcement. 3. The maximum cash consideration payable under the Final Cash Offer is based on47,061,499 INS Shares (being those INS Shares in issue not already owned byBabcock) and no more than 1,250,826 "in the money" employee share optionsoutstanding over INS Shares at the date of this Announcement and which areexpected to become exercisable as a consequence of the Final Cash Offer. 4. Unless otherwise stated, all prices quoted for shares are closing mid-marketprices and are derived from the Daily Official List of the London StockExchange. Appendix III DEFINITIONS The following definitions apply throughout this Announcement unless the contextrequires otherwise. "ABB ABB South Africa (Pty) (acquired by Babcock in June 2006);Powerlines""AIM" AIM, a market operated by the London Stock Exchange;"AIM Rules" the rules for companies published by the London Stock Exchange relating to AIM;"Alstec" Alstec Group (acquired by Babcock in May 2006);"Announcement" this announcement;"Babcock" Babcock International Group PLC, a public limited company incorporated in England and Wales with registered number 02342138;"Babcock Group" Babcock and its subsidiary undertakings and, where the context permits, each of them;"Board of the full board of directors of Babcock as of the date of thisBabcock" Announcement;"Board of INS" the full board of directors of INS as of the date of this Announcement;"Business Day" a day (excluding Saturdays, Sundays and UK public holidays) on which banks in London are generally open for business in the City of London;"the Code" or the City Code on Takeovers and Mergers;"City Code""Closing Price" the closing middle market quotation of an INS Share as derived from the Daily Official List;"Companies Act" the Companies Act 1985, as amended or replaced in whole or in part by any corresponding provisions in the Companies Act 2006 (where such provisions have come into effect at the date of this Announcement);"Competing a proposed offer, tender offer, merger, acquisition, scheme ofProposal" arrangement, recapitalisation or other combination (including a transaction involving a dual listed company structure) relating to any direct or indirect acquisition or purchase of 50 per cent. or more of the INS Shares or a material amount (as defined in note 2 of Rule 21.1 of the City Code) of the business and assets of INS and its subsidiaries proposed by any third party;"Condition" the condition to the Final Cash Offer which is set out in Appendix I to this Announcement;"connected has the meaning given to it in section 346 of the Companies Act;person""Court" the High Court of Justice in England and Wales;"Court Meeting" the meeting of the INS Shareholders convened pursuant to an order of the Court pursuant to section 425 of the Companies Act for the purpose of considering and, if thought fit, approving the Scheme (with or without modification), and any adjustment thereof;"CREST" the system for the paperless settlement of trades in securities and the holding of uncertificated securities generated by CRESTCo in accordance with the Uncertificated Securities Regulations 2001 (SI 2001 No.3755);"CRESTCo" CRESTCo Limited;"Daily Official the Daily Official List of the London Stock Exchange;List""DML" Devonport Management Limited (conditionally acquired by Babcock in May 2007);"Final Cash the final recommended mandatory cash offer of 63 pence per INSOffer" Share by Babcock for the entire issued and to be issued share capital of INS not already owned by Babcock on the terms and Condition set out in this Announcement and in the Offer Document and, in respect of certificated INS Shares, in the Form of Acceptance including, where the context permits, any subsequent revision, variation, extension or renewal thereof;"Form of the form of acceptance and authority for use by INS ShareholdersAcceptance" in connection with the Final Cash Offer;"Grant Grant Thornton Corporate Finance, the corporate finance divisionThornton" of Grant Thornton UK LLP;"Hawkpoint" Hawkpoint Partners Limited;"holder" a registered holder, including any person entitled by transmission;"INS" or "the International Nuclear Solutions PLC, a public limited companyCompany" incorporated in England and Wales with registered number 5738079 or, where the context requires, INS Innovation Limited;"INS Directors" Christopher John Brown, Anthony Moore, Geoffrey John Mellor, Stephen Joseph McGowan and John Gordon Ridings, who are directors of INS;"INS EGM" the extraordinary general meeting of INS Shareholders (and any adjournment thereof) convened in connection with the Scheme;"INS Group" INS and its subsidiary undertakings and, where the context permits, each of them;"INS the holders of INS Shares;Shareholders""INS Share the INS 2006 Enterprise Management Incentive Scheme and the INSSchemes" 2006 Savings-Related Share Option Scheme;"INS Shares" the shares of one pence each in the capital of INS and "INS Share" means any one of them;"Implementation the Implementation Agreement dated 3 April 2007 between INS andAgreement" Babcock pursuant to which the parties have agreed to co-operate on certain matters relating to the Final Cash Offer;"JPMorgan JPMorgan Cazenove Limited;Cazenove""London Stock London Stock Exchange plc;Exchange""Meetings" the Court Meeting and/or the INS EGM as the case may be;"NDA" the Nuclear Decommissioning Authority;"Non-executive each of Christopher John Brown and John Gordon Ridings;Directors""Offer the document to be posted to shareholders setting out the termsDocument" and Condition of the Final Cash Offer;"Overseas INS Shareholders (or nominees of, or custodians or trustees forShareholders" INS Shareholders) not resident in or citizens of the United Kingdom;"Panel" the Panel on Takeovers and Mergers;"Restricted the United States of America, Canada, Japan or Australia;Jurisdiction""RTS" Robotic Technology Systems PLC;"Rothschild" NM Rothschild & Sons Limited;"Scheme" or the proposed scheme of arrangement under section 425 of the"scheme of Companies Act between INS and INS Shareholders, with or subjectarrangement" to any modification, addition thereto or condition approved or imposed by the Court and agreed to by INS and Babcock;"Scheme the document, posted to INS Shareholders and others on 20 AprilDocument" 2007, containing, inter alia, the Scheme and the notices of the Meetings;"subsidiary" have the meaning given to them in the Companies Act; andand "subsidiaryundertaking""UK" or "United the United Kingdom of Great Britain and Northern Ireland.Kingdom" This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BabcockINS.L