Possible Offer for Vindon Healthcare plc

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES,CANADA, AUSTRALIA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION WHERE TO DO SO WOULDCONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TOMAKE AN OFFER OR TO PURSUE ANY OTHER TRANSACTION UNDER RULE 2.7 OF THE CITYCODE ON TAKEOVERS AND MERGERS (THE "TAKEOVER CODE"). ACCORDINGLY, VINDONHEALTHCARE SHAREHOLDERS ARE ADVISED THAT THERE CAN BE NO CERTAINTY THAT AFORMAL OFFER FOR VINDON HEALTHCARE WILL BE MADE. FOR IMMEDIATE RELEASE 15 July 2013 SOURCE BIOSCIENCE PLC ("SOURCE BIOSCIENCE" OR THE "COMPANY") POSSIBLE OFFER FOR VINDON HEALTHCARE PLC ("VINDON HEALTHCARE") The Board of Source BioScience (the "Board") the international diagnostic andgenetic analysis services business, announces that it is at an advanced stageof discussions with the board of Vindon Healthcare, a leading provider ofcontrolled environment services and products to the pharmaceutical and lifesciences sectors in the UK, Ireland, Europe and North America, regarding apossible all cash offer (the "Possible Offer") for the entire issued and to beissued share capital of Vindon Healthcare not already owned by SourceBioScience, at a price of 13.7 pence per Vindon Healthcare share (the "PossibleOffer Price"). The Possible Offer would value the entire issued and to beissued share capital of Vindon Healthcare at approximately £12.2 million. The Board of Source BioScience believes that an offer at this price wouldrepresent a very compelling 44% premium for Vindon Healthcare shareholderscompared to the closing mid market price on 15 July 2013, being the lasttrading day before this announcement. Further information on an offer for theentire issued and to be issued share capital of Vindon Healthcare (the"Offer"), if made, would be contained in an offer document to be posted toVindon Healthcare shareholders following the subsequent announcement of a firmintention to make an offer, in accordance with Rule 2.7 of the Takeover Code. In anticipation of making the Possible Offer, Source BioScience has todayprocured from the director shareholders of Vindon Healthcare irrevocableundertakings to accept the Possible Offer, if made at the Possible Offer Price,in respect of their existing holdings in Vindon Healthcare, amounting inaggregate to 24.68 per cent. of the existing issued share capital of VindonHealthcare. Details of these irrevocable commitments are set out below. TheBoard reasonably expects that the Possible Offer would receive a unanimousrecommendation from the Vindon Healthcare directors, subject to the receipt bythem of appropriate independent advice in accordance with Rule 3 of theTakeover Code. This statement is being made with the consent of VindonHealthcare. The Board believes that Vindon Healthcare represents a significant opportunityin the context of Source BioScience's growth and stated acquisition strategy.The Board considers Vindon Healthcare to be an excellent strategic fit withSource BioScience's business and believes that completion of the Possible Offerwill provide a number of commercial, operational and financial benefits whichwould be expected to create value for Source BioScience shareholders. Theanticipated benefits for Source BioScience of a completed acquisition of VindonHealthcare include: geographic expansion in the United States, the UnitedKingdom and Ireland, a broadening of its product and service portfolio,particularly in relation to its offering to the pharma/biotechnology industryand Contract Research Organisation customers, operational benefits from sharinggreater infrastructure, an enlarged customer base and cross sellingopportunities, and financial benefits including potential earnings accretionand EBITDA1 margin enhancement for the enlarged business in the first full yearof ownership.2 Further information on the merits of the Possible Offer is setout below. The making of any offer by Source BioScience remains subject to completion andcertain other pre-conditions, including but not limited to the unanimousrecommendation of such an offer by the directors of Vindon Healthcare, and thearrangement of suitable funding which is also addressed below. SourceBioScience reserves the right to waive any of the pre-conditions, includingthat in relation to the unanimous recommendation in the event of a competingoffer or proposed offer. Furthermore, completion of the Offer, if made, would be conditional upon,amongst other things, Source BioScience shareholder approval under the ListingRules and in order to obtain authority to issue new shares to partially fundit. This announcement does not constitute an announcement of a firm intention tomake an offer or to pursue any other transaction under Rule 2.7 of the TakeoverCode. Accordingly, Vindon Healthcare shareholders are advised that there can beno certainty that a formal offer for Vindon Healthcare will be made, even ifthe pre-conditions to the Possible Offer are satisfied or waived. 1 Earnings before interest, tax, depreciation and amortisation 2 This should not be construed as a profit forecast or interpreted to mean thatthe future earnings per share, profits, margins or cashflows of the SourceBioScience group will necessarily be greater than the historic publishedfigures. Background to, reasons for and expected benefits of the possible acquisition The Board believes that Vindon Healthcare represents a significant opportunityin the context of Source BioScience's growth and stated acquisition strategy.It considers Vindon Healthcare to be an excellent strategic fit with SourceBioScience and believes that completion of the Offer, if made, would provide anumber of commercial, operational and financial benefits which are expected tocreate value for Source BioScience shareholders. In particular: * The acquisition of Vindon Healthcare will provide the enlarged group with US-based facilities and operational infrastructure allied to an existing commercial network of customers and partners. This offers Source BioScience the opportunity to extend its LifeSciences and Healthcare Diagnostic activities into North America to address a substantial US-based market for its products and services. The US market is currently under-exploited by Source BioScience and Vindon Healthcare's established infrastructure significantly de-risks market entry into this important territory for Source BioScience. Further, the current location of the Vindon Healthcare infrastructure on both the East and West coasts of the US is aligned with the major centres of life science research activity and the distribution of potential customers. In particular, Source BioScience anticipates being able to launch its DNA sequencing services promptly in these new locations following completion of the acquisition; * Vindon Healthcare's environmentally controlled storage solutions will also allow Source BioScience to further internationalise its products business, particularly with respect to clone products. If the acquisition is completed, Source BioScience envisages operating a network of -80oC temperature storage facilities in key satellite locations worldwide which, when coupled with the extended reach of Source BioScience's products business, would reduce the risk of investment in infrastructure with the potential to increase revenue from environmentally controlled storage services and Source BioScience's products business in parallel. Currently the geographic reach of Source BioScience's clone business is constrained because of the need to ship these products to customers on dry ice from the UK, which is both logistically challenging and costly; * Source BioScience's service expertise, particularly in diagnostic testing and genetic analysis services, will add breadth and depth to Vindon Healthcare's existing services. This will enable Vindon Healthcare's storage service customers, especially those pharmaceutical and regenerative medicine customers, access to Source BioScience's tissue and gene-based analysis testing services and technologies. Customers' samples stored with Vindon Healthcare often represent unique and valuable biological resources. Enabling storage and downstream analysis to be conducted at a single, accredited facility, will eliminate the need for costly sample transport and de-risks the process for the customer; * Vindon Healthcare's expertise in environmentally controlled storage will also directly benefit the enlarged group in a number of ways which the Board believes could be rapidly crystallised. Source BioScience currently offers a portfolio of more than 20 million cDNA clones which are stored in -80°C freezers at Source BioScience's facilities in Cambridge with a duplicate archive maintained in Nottingham. Vindon Healthcare will be able to bring immediate benefits from its international storage solution expertise, to the advantage of the enlarged group; * Vindon Healthcare's service offering will add breadth and depth to Source BioScience's existing products and services portfolio and enhance the combined customer base and geographical reach of the enlarged group. This would considerably strengthen Source BioScience's pool of innovative technology and know-how, and its proposition across the range of specialist products and support services to the customers and prospective customers of both Source BioScience and Vindon Healthcare; * Significant cross selling opportunities are likely to arise from each company selling its respective services to the other's customer base, including into new territories when compared to the existing geographic market reach of the two businesses; * The Board believes that the enlarged group would have greater potential access to funding and other resources required to pursue organic and acquisitive growth than either of the separate companies of Source BioScience and Vindon Healthcare; * The combination of Source BioScience and Vindon Healthcare will provide complementary infrastructure and technology platforms to further crystallise opportunities for organic growth; * The acquisition will potentially provide acceleration of geographic expansion into other territories holding significant commercial opportunities for the enlarged group, but where the prior lack of locally owned infrastructure has previously been an impediment to realising these opportunities, or where the product or service offering of each of the standalone businesses was previously too narrow to be likely to generate a sufficient return on investment; and * Completion of the Possible Offer would be expected to result in accretion to the enlarged company's earnings per share and EBITDA1 margin enhancement in the first full financial year following completion of the acquisition of Vindon Healthcare and the firm placing of new shares in Source BioScience to part fund it.2 1 Earnings before interest, tax, depreciation and amortisation 2 This should not be construed as a profit forecast or interpreted to mean thatthe future earnings per share, profits, margins or cashflows of the SourceBioScience group will necessarily be greater than the historic publishedfigures. Funding arrangements Source BioScience is in the process of finalising funding arrangements for thePossible Offer, to include a firm placing of new shares (the "Firm Placing")and drawdown under a new debt facility under negotiation with its lending bank.Source BioScience intends to contact existing and prospective new institutionalinvestors in order to secure firm commitments for the placing element of thefunding. The Board's view is that the Firm Placing should be conducted at oraround the current share price. Irrespective of whether the Possible Offer is made (or, if made, whether itcompletes), Source BioScience intends to launch an open offer (the "OpenOffer") to existing shareholders to provide additional growth capital for itsbusiness, to enable the Company to capitalise on other organic and selectedacquisitive growth initiatives. Should the Possible Offer proceed to be made asanticipated, the Open Offer will also provide an opportunity for existingshareholders to reduce the effects of dilution that would arise from the firmplacing. Source BioScience is progressing draft legal documentation in relation to thenew debt facility, which the Board believes will be finalised on appropriatecommercial terms having already received positive indication of commitment fromits existing lender. Assuming completion of the Possible Offer, the new debtfacility would also be expected to provide debt refinancing in respect of theCompany's and Vindon Healthcare's existing indebtedness. Further information relating to the possible Firm Placing and the Open Offer isexpected to be contained in the prospectus to be issued in due course to SourceBioScience shareholders if the Possible Offer proceeds as anticipated. Takeover Code Source BioScience notes that Rule 2.6(a) of the Takeover Code requires thatSource BioScience, by not later than 5.00 p.m. on Monday 12 August 2013 (the"relevant deadline"), either announces a firm intention to make an offer forVindon Healthcare in accordance with Rule 2.7 of the Takeover Code or announcesthat it does not intend to make an offer, in which case the announcement willbe treated as a statement to which Rule 2.8 of the Takeover Code applies. The relevant deadline will cease to apply to Source BioScience if anotherofferor announces, prior to the relevant deadline, a firm intention to make anoffer for Vindon Healthcare. In such circumstances, Source BioScience will berequired to clarify its intentions in accordance with Rule 2.6(d) of theTakeover Code. The relevant deadline may be extended in certain circumstanceswith the consent of the Panel and Vindon Healthcare. In accordance with Rule 2.10 of the Takeover Code, Source BioScience announcesthat as at close of business on 15 July 2013, the issued share capital of theCompany comprised 204,783,266 ordinary shares of 2 pence each ("OrdinaryShares"), with ISIN number GB0009739649. All of these Ordinary Shares carryvoting rights of one vote per Ordinary Share. Source BioScience holds noOrdinary Shares in treasury. Opening Position Disclosure: In accordance with Rule 8.1, Source BioScience owns 150,000 ordinary shares inVindon Healthcare, in addition to the irrevocable rights to acquire sharesamounting to 21,923,349 ordinary shares in aggregate described below. Details of Irrevocable Commitments The following table sets out the required disclosure in accordance with Note 3of Rule 2.11 of the Takeover Code: No. of Percentage of VindonParty Ordinary Shares Healthcare Issued Share Capital Richard Hughes 15,200,349 17.11 Martin Liam Ferguson 4,150,000 4.67 Thomas Patrick Jackson 2,273,000 2.56 Martin Burrill 300,000 0.34 Total 21,923,349 24.68 All of the above irrevocable undertakings anticipate that any offer will bemade at the Possible Offer Price and provided that the offer is made on termswhich, in the reasonable opinion of Vindon Healthcare's Rule 3 adviser, do notrepresent a diminution in value of the proposed terms of the offer set out inthe irrevocable undertakings and will continue to be binding on such persons. Each of the above irrevocable undertakings has been entered into by therelevant director only as a shareholder of Vindon Healthcare and not in theircapacity as a director; nothing contained in the undertakings requires any ofthe Vindon Healthcare Directors to take or not to take any decision or actionin their capacity as a director of Vindon Healthcare. The above irrevocable undertakings will cease to be binding if: * a firm intention to make an offer or an offer for Vindon Healthcare is not announced in accordance with Rule 2.7 of the Code by 11.59 pm on 15 August 2013 (or such later time and/or date as Source BioScience and Vindon Healthcare may agree but in any event no later than in any event by 11.59 pm on 30 August 2013); or * The offer document relating to the above announced offer is not posted to Vindon Healthcare shareholders within 28 days of the date of the above announcement, unless otherwise agreed with the Takeover Panel (with the consent of Vindon Healthcare); or, * The offer, having been announced, lapses or is withdrawn. For further information, please contact: Source BioScience plcDr Nick Ash, CEOTel: +44 (0) 115 973 9010Email: [email protected] For investor and media enquiries:N+1 Singer (Financial Advisor, Sponsor and Broker to Source BioScience)Aubrey Powell/Joseph StroudTel: +44 (0)20 7426 3000www.n1singer.com College Hill (PR Agency to Source BioScience)Melanie Toyne-Sewell/Stefanie Bacher/Claire DickinsonTel: +44 (0)20 7457 2020Email: [email protected] Nplus1 Singer Advisory LLP ("N+1 Singer"), which is authorised and regulated inthe United Kingdom by the Financial Conduct Authority, is acting as exclusivelyas financial adviser to Source BioScience in connection with the contents ofthis announcement and the Possible Offer and no one else and will not beresponsible to anyone other than Source BioScience for providing theprotections afforded to clients of N+1 Singer nor for providing advice inrelation to the Possible Offer or any other matter referred to in thisannouncement. This announcement has been prepared in accordance with English law and theTakeover Code and information disclosed may not be the same as that which wouldhave been prepared in accordance with the laws of jurisdictions outsideEngland. The release, publication or distribution of this announcement in jurisdictionsother than the United Kingdom and the availability of any future offer toshareholders in Vindon Healthcare who are not resident in the United Kingdommay be affected by the laws or regulations of any such jurisdictions.Accordingly, any persons who are subject to the laws or regulations of anyjurisdiction other than the United Kingdom should inform themselves of, andobserve, any applicable requirements. Cautionary note regarding forward-looking statements This announcement contains certain forward-looking statements with respect tothe financial condition, results of operations and business of SourceBioScience and its subsidiaries and certain plans and objectives of the boardsof directors of Source BioScience and Vindon Healthcare. These forward-lookingstatements can be identified by the fact that they do not relate only tohistorical or current facts. Forward-looking statements often use words suchas "anticipate", "target", "expect", "estimate", "intend", "plan", "goal","believe", "will", "may", "should", "would", "could" or other words of similarmeaning. These statements are based on assumptions and assessments made by theBoard in light of its experience and perception of historical trends, currentconditions, expected future developments and other factors it believesappropriate. By their nature, forward-looking statements involve risk anduncertainty, and the factors described in the context of such forward-lookingstatements in this announcement could cause actual results and developments todiffer materially from those expressed in or implied by such forward-lookingstatements. Should one or more of these risks or uncertainties materialise, orshould underlying assumptions prove incorrect, actual results may varymaterially from those described in this announcement. Source BioScience andVindon Healthcare assume no obligation to update or correct the informationcontained in this announcement, whether as a result of new information, futureevents or otherwise, except to the extent legally required. The statements contained in this announcement are made as at the date of thisannouncement, unless some other time is specified in relation to them, andservice of this announcement shall not give rise to any implication that therehas been no change in the facts set out in this announcement since such date.Nothing contained in this announcement shall be deemed to be a forecast,projection or estimate of the future financial performance of Source BioScienceor Vindon Healthcare except where expressly stated. Publication on Website In accordance with Rule 30.4 of the Takeover Code, a copy of this announcementwill be available free of charge, subject to certain restrictions relating topersons resident in restricted jurisdictions, at www. Source BioScience.com byno later than 12 noon (London time) on 16 July 2013 (being the business dayfollowing the date of this announcement). About Source BioScience: Source BioScience plc (LSE: SBS) is an international diagnostics and geneticanalysis business serving the healthcare and research markets. The LifeSciencesdivision provides core laboratory research support from conceptualisation toimplementation, calling upon a wide range of innovative technology platformsincluding an online catalogue of biomolecular . Source BioScience is a trustedprovider of a complete range of sophisticated microarray, next generation andconventional sequencing services. GLP, GCP and CPA accreditations make thesequencing offerings very attractive for applications in regulatory studies orclinical settings. The Healthcare operations provide screening and referencelaboratory diagnostic testing for cancer and other diseases and additionalpredictive testing for treatment optimisation for clinicians and patients.Source BioScience has its headquarters in Nottingham, UK. For more information,see www.sourcebioscience.com. About Vindon Healthcare: Vindon Healthcare plc (AIM: VDN) along with its subsidiaries, is engaged in themanufacture of environmental control products for the pharmaceutical industry,life sciences and food sectors together with the provision of related services.The company provides products and services for the management of temperature,humidity and light, where controlled storage is required. Its product rangeincludes controlled environment rooms and storage chambers, blood bank storageunits and plant growth chambers. Vindon Healthcare also offers controlledenvironment storage facilities for its clients at its site in Rochdale. Formore information, see www.vindonhealthcare.com. Information on this announcement This announcement is not for release, publication or distribution in whole orin part, in, into or from the United States or any jurisdiction where to do sowould constitute a violation of the relevant laws of such jurisdiction. This announcement is not intended to, and does not, constitute or form part ofany offer, invitation or the solicitation of an offer to purchase, otherwiseacquire, subscribe for, sell or otherwise dispose of, any securities or thesolicitation of an offer to buy any securities pursuant to this announcement orto the Offer, if made, or otherwise. There is no certainty that the PossibleOffer referred to in this announcement will lead to a binding agreement ortransaction between the parties. If made, the Offer will be made solely by an offer document and a form ofacceptance, which will contain the full terms and conditions of any offer madeby Source BioScience for the entire issued and to be issued share capital ofVindon Healthcare not already owned by Source BioScience, including details ofhow that offer may be accepted. If the Offer is made, any acceptance or otherresponse to the Offer will need to be made on the basis of the information inthat Offer document and form of acceptance. The distribution of this announcement in jurisdictions other than the UnitedKingdom may be affected by the laws of relevant jurisdictions. Therefore anypersons who are subject to the laws of any jurisdiction other than the UnitedKingdom will need to inform themselves about, and observe, any applicablerequirements. This is an announcement falling under Rules 2.2(e), 2.4 and 2.5 of the TakeoverCode and does not constitute an announcement of a firm intention to make anoffer under Rule 2.7 of the Takeover Code. Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1% ormore of any class of relevant securities of an offeree company or of any paperofferor (being any offeror other than an offeror in respect of which it hasbeen announced that its offer is, or is likely to be, solely in cash) must makean Opening Position Disclosure following the commencement of the offer periodand, if later, following the announcement in which any paper offeror is firstidentified. An Opening Position Disclosure must contain details of the person'sinterests and short positions in, and rights to subscribe for, any relevantsecurities of each of (i) the offeree company and (ii) any paper offeror(s). AnOpening Position Disclosure by a person to whom Rule 8.3(a) applies must bemade by no later than 3.30 pm (London time) on the 10th business day followingthe commencement of the offer period and, if appropriate, by no later than 3.30pm (London time) on the 10th business day following the announcement in whichany paper offeror is first identified. Relevant persons who deal in therelevant securities of the offeree company or of a paper offeror prior to thedeadline for making an Opening Position Disclosure must instead make a DealingDisclosure. Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%or more of any class of relevant securities of the offeree company or of anypaper offeror must make a Dealing Disclosure if the person deals in anyrelevant securities of the offeree company or of any paper offeror. A DealingDisclosure must contain details of the dealing concerned and of the person'sinterests and short positions in, and rights to subscribe for, any relevantsecurities of each of (i) the offeree company and (ii) any paper offeror, saveto the extent that these details have previously been disclosed under Rule 8. ADealing Disclosure by a person to whom Rule 8.3(b) applies must be made by nolater than 3.30 pm (London time) on the business day following the date of therelevant dealing. If two or more persons act together pursuant to an agreement or understanding,whether formal or informal, to acquire or control an interest in relevantsecurities of an offeree company or a paper offeror, they will be deemed to bea single person for the purpose of Rule 8.3. Opening Position Disclosures must also be made by the offeree company and byany offeror and Dealing Disclosures must also be made by the offeree company,by any offeror and by any persons acting in concert with any of them (see Rules8.1, 8.2 and 8.4). Details of the offeree and offeror companies in respect of whose relevantsecurities Opening Position Disclosures and Dealing Disclosures must be madecan be found in the Disclosure Table on the Takeover Panel's website atwww.thetakeoverpanel.org.uk, including details of the number of relevantsecurities in issue, when the offer period commenced and when any offeror wasfirst identified. You should contact the Panel's Market Surveillance Unit on+44 (0)20 7638 0129 if you are in any doubt as to whether you are required tomake an Opening Position Disclosure or a Dealing Disclosure.