16th Jun 2005 07:13
Gyrus Group PLC16 June 2005 16 June 2005 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF IRELAND OR THE REPUBLIC OF SOUTH AFRICA PROPOSED ACQUISITION BY GYRUS OF ACMI FOR $497 MILLION (£275 MILLION) VENDOR PLACING OF 61,560,025 NEW ORDINARY SHARES AT 250P PER SHARE Gyrus Group PLC (the "Company" or the "Group") today announces the proposedacquisition of American Cystoscope Makers Inc. ("ACMI"), an established USmedical device company focused on urology and gynaecology, principally owned byinvestment funds managed by Fox Paine & Company, LLC, a California-based privateequity firm. • ACMI was founded in 1904 and was a pioneer in the development ofurological instrumentation and endoscopic equipment. ACMI currently targets fourkey areas in the field of minimally invasive surgery: urology; gynaecology;general surgery; and visualisation. • In the financial year to 31 December 2004, ACMI achieved sales of$184.7 million (£102.2 million) and earnings before interest, tax, depreciationand amortisation, operating exceptional items and adjusted one-off operatingitems of $27.0 million (£14.9 million). • Total consideration of $497 million will comprise consideration of $333million, together with debt and other obligations to be repaid by Gyrus of $164million. • The acquisition will be financed by (i) a Vendor Placing of new Gyrusordinary shares to raise £116 million ($209.6 million), net of expenses of theplacing, with institutional investors and a further £34.3 million ($62 million)to be subscribed by the Seller Placees and (ii) a new $250 million debt facilityto be provided by Bank of Scotland Corporate. The Vendor Placing has been fullyunderwritten at 250p per share by Numis Securities and Panmure Gordon, jointstockbrokers to the Group. • Gyrus believes that the acquisition will: - strengthen its competitive position in urology- create breadth and scale in gynaecology- provide a platform for expansion into general surgery • Gyrus expects savings from existing process improvement initiativeswithin ACMI and cost synergy benefits to contribute approximately $22 million(£12.2 million) in pre-tax earnings by the end of the three year periodfollowing the acquisition. The one-off costs of implementing these savings,which are anticipated to be accounted for across the three year period, areexpected to amount to $33 million (£18.3 million). • The acquisition is expected to be earnings enhancing in 2006 and forthe foreseeable future, before any non-recurring costs, the amortisation ofintangible assets and any non-cash charges for equity incentive schemes requiredunder IFRS. • The acquisition is subject to regulatory and shareholder approval. Aresolution to approve the acquisition will be proposed at an ExtraordinaryGeneral Meeting of Gyrus shareholders to be held on 4 July 2005. Theacquisition is expected to be completed by, and dealings in the new ordinaryshares to commence on, 19 July 2005, subject to US anti-trust clearance. Commenting on today's announcement, Brian Steer, Executive Chairman of Gyrus,said: "This transaction transforms Gyrus into a leading global player in the surgicalspecialities of ENT, gynaecology and urology. It significantly enhances ourposition as a result of the visualisation technologies ACMI brings. These,combined with Gyrus's proprietary tissue management technology, allow us to meetthe surgeon's need to 'see' and 'treat' in minimally invasive surgery. Itcreates a free standing urology division with a dedicated sales force andprovides a portfolio of products to support the Group's expansion into generalsurgery. This acquisition builds upon our successful track record of growth inthe US market both organically and by acquisition." Meeting for Analysts A meeting for analysts will be held at the offices of Financial Dynamics,Holborn Gate, 26 Southampton Buildings, London WC2A 1PB today at 8.30am BST.Please call Mo Noonan on 020 7269 7116 for further details. Gyrus is being jointly advised by Bear, Stearns International and NumisSecurities on the transaction. Numis is Sponsor to the Transaction and jointbroker to the vendor placing with Panmure Gordon. This summary should be read in conjunction with the full text of theannouncement. Enquiries: Gyrus Group PLC On 16 June 2005Brian Steer, Executive Chairman Tel: 020 7831 3113Simon Shaw, Chief Financial Officer Thereafter Tel: 0118 921 9750 Numis Securities Tel: 020 7776 1500Charles SpicerChris Wilkinson Bear, Stearns International Tel: 020 7516 6000Ian George Panmure Gordon Tel: 020 7459 3600Gilbert EllacombeDominic Morley Financial Dynamics Tel: 020 7831 3113Ben Atwell Numis Securities Limited, Bear, Stearns International Limited and Panmure Gordon(UK) Limited, which are regulated in the United Kingdom by The FinancialServices Authority, are acting exclusively for Gyrus Group PLC (within themeaning of the Rules of the Financial Services Authority) in connection with theVendor Placing and for nobody else. Numis Securities Limited, Bear, StearnsInternational Limited and Panmure Gordon (UK) Limited will not be responsible toanyone other than Gyrus Group PLC for providing the protections afforded totheir respective customers, nor for providing advice in relation to the VendorPlacing or the contents of this announcement or any matter referred to in thisannouncement. Neither the Ordinary Shares nor the Placing Shares have been, orwill be, registered under the United States Securities Act of 1933 (as amended),or under the securities laws of any state of the United States or any provinceor territory of Canada, Australia, Japan, the Republic of Ireland or theRepublic of South Africa. Subject to certain exceptions, the Placing Shares maynot, directly or indirectly, be offered, sold, taken up or delivered in or intoor from the United States, Canada, Australia, Japan, the Republic of Ireland orthe Republic of South Africa or their respective territories or possessions.This announcement does not constitute an offer to sell or issue or thesolicitation of an offer to buy or subscribe for New Ordinary Shares in anyjurisdiction in which such offer or solicitation is unlawful. Accordingly,copies of this announcement are not being and must not be mailed or otherwisedistributed or sent in or into or from the United States, Canada, Australia,Japan, the Republic of Ireland or the Republic of South Africa and any personreceiving this announcement (including custodians, nominees and trustees) mustnot distribute or send it in or into or from the United States, Canada,Australia, Japan or the Republic of Ireland or the Republic of South Africa.This announcement has not been approved by any of Numis Securities Limited,Bear, Stearns International Limited and Panmure Gordon (UK) Limited for thepurposes of section 21 of the Financial Services and Markets Act 2000. For illustrative purposes only, and except as otherwise stated, the exchangerate of US$1.80705 to £1.00 has been used to translate financial informationinto pounds sterling, being the US$/£ exchange rate prevailing on 15 June 2005. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO OR FROM THE UNITEDSTATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF IRELAND OR THE REPUBLIC OFSOUTH AFRICA INTRODUCTION Gyrus announced today that the Company has agreed to acquire ACMI. ACMI designs,manufactures, markets and services surgical systems to be used by surgeons andphysicians primarily for diagnosis and minimally invasive surgery in the fieldsof urology and gynaecology. The Company has agreed to acquire ACMI for a total consideration of $497 million(£275 million) which will comprise cash consideration of $333 million (£184.3million), together with debt and other obligations to be repaid by Gyrus of $164million (£90.7 million) on completion of the Acquisition. Further details of theAcquisition are set out in the document comprising listing particulars and aclass 1 circular (the "Listing Particulars") which will be circulated toShareholders in due course. The consideration will be satisfied through theissue of the Placing Shares detailed below and from the increased bankingfacilities detailed below. INFORMATION ON ACMI ACMI was founded in 1904 and was a pioneer in the development of urologicalinstrumentation and endoscopic equipment. ACMI currently targets four key areasin the field of minimally invasive surgery: urology; gynaecology; generalsurgery; and visualisation. It has a significant direct US sales force and hasfour manufacturing facilities in the US and Canada. It also has an Israel-basedsubsidiary, CByond, a research and development company developing technologiesin the digital visualisation area. ACMI achieved total sales of $184.7 million (£102.2 million) in the financialyear ended 31 December 2004 and earnings before interest, tax, depreciation andamortisation and operating exceptional items and adjusted for one off operatingitems of $27.0 million (£14.9 million). As at 31 December 2004 ACMI had netassets of $37.9 million. ACMI generated US sales in the financial year ended 31December 2004 of $109.7 million in urology, $35.6 million in gynaecology andgeneral surgery and $5.7 million in visualisation (not including sales ofvisualisation products within urology, gynaecology and general surgery). REASONS FOR AND BENEFITS OF THE ACQUISITION Gyrus's vision is to become a world leader in the medical device field byproviding innovative, procedure-enabling products that minimise discomfort andimprove patient outcomes. Following completion of the Acquisition, this willremain the vision of the Enlarged Group as Gyrus's and ACMI's complementaryproducts share a focus on surgeon-led and indication-specific procedures inminimally invasive surgery. The Enlarged Group will combine ACMI's urology,gynaecology and endoscopic expertise with Gyrus's tissue management technologyin these fields. This will enable the Enlarged Group to meet two keyrequirements of surgeons - the ability to visualise the operative site and theability effectively to manipulate tissue with minimum collateral damage. Specifically Gyrus believes that the Acquisition will bring the followingbenefits to the Enlarged Group: Opportunities in urology - ACMI's US leadership position in urology and itsbroad product range will complement the SuperPulseTM system, Gyrus'sincreasingly successful product offering for urological surgery. Opportunities in gynaecology - ACMI's gynaecology business will add a widerproduct range and other gynaecological procedures to Gyrus's existing strengthin the field of laparoscopic hysterectomies. Opportunities in general surgery - The Enlarged Group's established US productrange and leading positions in urology and gynaecology will provide a platformfrom which to expand into general surgery with technologies in visualisation andtissue management. Opportunities in visualisation - ACMI's established position in surgicalvisualisation, coupled with its recently-developed All-Digital EndoscopyTMsystem, will enable the Enlarged Group to sell visualisation products into eachof its specialist indication areas. Digital endoscopy offers enhanced pictureclarity and definition. A patented combined array of lightsource microchip andoptics offers the potential to develop narrower scopes for a wider field ofapplications. Sales force efficiencies - The addition of the existing ACMI sales team willgive the Enlarged Group the platform to expand and better utilise its salesforces which will be organised into an urology sales force and a gynaecology andgeneral surgery sales force. This should allow the Enlarged Group to maximisethe opportunities within the combined product-specific portfolio and increaseits focus on direct sales. Improve the international sales network - Outside the US, the combination ofACMI's product portfolio and Gyrus's direct sales teams and distribution networkshould allow the Enlarged Group to expand and enhance its international salesperformance. Manufacturing efficiencies - The integration of the existing manufacturingexpertise and facilities of Gyrus and ACMI should allow the Enlarged Group tocontinue to improve manufacturing efficiencies. In particular, the existingGyrus "lean manufacturing" process and ACMI "process improvements" initiativeswill be combined to improve profitability. R&D efficiencies - The Enlarged Group will have a portfolio of products rangingfrom Gyrus's PK technology through to ACMI's All-Digital EndoscopyTM systemallowing it to continue to target the surgeon-led, indication-focused demand forspecialist products. The Enlarged Group should benefit from the combination ofthe R&D capabilities and expertise of Gyrus and ACMI and will continue to investin R&D to enhance its existing product range and develop the next generation ofproducts. STRATEGY AND PROSPECTS OF THE ENLARGED GROUP Following completion of the Acquisition it is intended that Gyrus's existingsurgical division will be separated into two with a urology division focused onthat area and a restructured surgical division focused on gynaecology andgeneral surgery. Consequently, the Enlarged Group will have four operatingdivisions: • ENT Division - focused on otology, sinus and rhinology and head & neck; • Urology Division - focused on urology; • Surgical Division - focused on gynaecology and general surgery; and • Partnered Technologies Division - which will continue to exploit the Enlarged Group's technologies outside its core areas of focus through strategic partnership. This division is focused on the cosmetic, cardiovascular, gastrointestinal, hysteroscopy and arthroscopy areas. ACMI achieved adjusted earnings before interest, tax depreciation andamortisation in the financial year ended 31 December 2004 of $27.0 million(£14.9 million). Gyrus anticipates that the Enlarged Group will benefit from themanufacturing process improvement programme initiated by ACMI in the fourthquarter of 2004 and that, in addition, the combination of ACMI and Gyrus willcreate opportunities for cost synergies arising from: • Expansion of Gyrus's "lean manufacturing" process throughout the Enlarged Group to improve gross margins; • Utilising improved purchasing power across the supply chain to reduce material costs; • Optimisation of the manufacturing facilities; and • Rationalisation of back office functions. Gyrus expects the process improvement programme and cost synergy benefits takentogether to enhance pre-tax earnings by approximately $22 million (£12.2million) per annum by the end of the three-year period following theAcquisition. In order to realise these benefits, Gyrus anticipates significantnon-recurring costs of approximately $33 million (£18.3 million) in total. It islikely that these costs will be accounted for across the whole of the three yearperiod following the Acquisition. Gyrus believes that the Acquisition will beearnings enhancing in 2006 and for the foreseeable future, before anynon-recurring costs, the amortisation of intangible assets and any non-cashcharges for equity incentive schemes required under IFRS. Gyrus anticipates significant opportunities to enhance the revenues of theEnlarged Group through the realignment of the Enlarged Group's sales forces intoseparate urology and gynaecology/general surgery teams. Given the benefitslikely to accrue to the Enlarged Group in the form of ACMI's processimprovements programme and the synergies that Gyrus expects to arise as a resultof the Acquisition, Gyrus views the financial and trading prospects of theEnlarged Group for the current financial year and beyond with optimism. Uponcompletion of the Acquisition, the Enlarged Group will have pro forma netborrowings of approximately £139.3 million. CURRENT TRADING Gyrus continues to trade well during 2005 with the ENT and Surgical Divisionsgrowing revenues as expected and the Partnered Technologies Divisionexperiencing the flat revenues but increased volumes that were anticipated atthe end of 2004. Overall revenues continue to grow in accordance withexpectations. The Group's three-year operating efficiency programme continues toyield margin improvements. THE ACQUISITION Pursuant to the Acquisition Agreement, Gyrus will purchase ACMI for a totalconsideration of $497 million comprising consideration of $333 million(comprising the issue of the Placing Shares with the balance being in cash)together with $164 million of debt or other obligations to be repaid by Gyrus.The Acquisition Agreement is subject to a number of conditions including theapproval of shareholders, regulatory approval under the HSR Act and Admission. THE VENDOR PLACING The Company has entered into the Vendor Placing Agreement with Numis and PanmureGordon pursuant to which, inter alia, Numis and Panmure Gordon have agreed toprocure placees for the Placing Shares (other than Placing Shares to be acquiredby the Seller Placees) at the Placing Price. The Vendor Placing, which has beenfully underwritten by Numis and Panmure Gordon (other than in respect of thePlacing Shares to be acquired by the Seller Placees), is conditional, interalia, upon Shareholder approval, the Vendor Placing Agreement becomingunconditional in all respects and not having been terminated in accordance withits terms and Admission. Shareholders have no right of pre-emption in respect ofthe Placing Shares. FP ACMI, LLC, FP Blue, LLC, FP Annex Fund, LLC, GS Mezzanine Partners, L.P. andGS Mezzanine Partners Offshore, L.P., the Seller Placees to whom Placing Shareswill be issued, will acquire as placees a total of 13,724,025 Placing Sharespursuant to the Vendor Placing. These shares will be subject to certainrestrictions more fully described in the Listing Particulars. The Placing Shares will be issued credited as fully paid by virtue of completionof the Acquisition Agreement and will be identical to and rank pari passu in allrespects with the existing Ordinary Shares, including the right to receive allfuture dividends and other distributions declared, paid or made in respect ofthe Ordinary Shares from the date of Admission. The Placing Shares are not beingmade available to the public and are not being offered or sold in anyjurisdiction where it would be unlawful to do so. Application has been made to the UK Listing Authority for the Placing Shares tobe admitted to the Official List and to the London Stock Exchange for thePlacing Shares to be admitted to trading on the London Stock Exchange's marketfor listed securities. It is expected that Admission will become effective andthat dealings for normal settlement in the Placing Shares will commence on 19July 2005. Further information on, and details of the obligations and termination rightsunder, the Vendor Placing Agreement are set out in the Listing Particulars. EXTRAORDINARY GENERAL MEETING An Extraordinary General Meeting will be held on 4 July 2005 at 11.00 a.m. Thepurpose of the Extraordinary General Meeting is to seek Shareholders' approval: (i) of the Acquisition; (ii) to increase the authorised share capital of Gyrus from £3,000,000 to£3,261,632 representing an increase of 8.7 per cent.; (iii) to confer on the Directors authority under section 80 of the Act to allotthe Placing Shares and further relevant securities (as defined in section 80(2)of the Act) up to a maximum nominal amount of £205,468 which, together with theexisting authorities under section 80 of the Act, represents 33.3 per cent. ofthe ordinary share capital of the Company in issue after completion of theVendor Placing; (iv) to authorise the remuneration committee of the Company to make a specialone-off grant of a conditional award of shares under the 2005 Long TermIncentive Plan to up to 25 senior executives of the Enlarged Group; and (v) to increase the aggregate maximum remuneration which may be paid to thenon-executive directors from £150,000 to £300,000 per annum and to amend theCompany's articles of association accordingly. FURTHER INFORMATION ON ACMI History and overview ACMI was founded in 1904 and was a pioneer in the development of urologicalinstrumentation and endoscopic equipment. ACMI is a leading designer,manufacturer, marketer and servicer of surgical systems primarily for urologyand gynaecology used by surgeons and physicians for diagnosis and minimallyinvasive surgery ("MIS"). Between 1910 and 1930, ACMI developed into a leading manufacturer of innovativeurological instruments in the US, patenting nearly 50 devices, including suchlandmark products as retroscopes, cystoscopes, optical lens systems,lithotriptors, otoscopes and illuminators. ACMI continued to advance the stateof endoscopy thereafter with the development of fibre optics and coherent imagebundles for flexible endoscopy. In 1986, ACMI merged with the Circon Corporation, a pioneer in the use of colourvideo technology within the field of medicine and recognised as having launchedthe world's first successful medical video system. In the years immediatelyfollowing this merger, ACMI focused on updating and redesigning a large numberof its endoscopic instruments including the development of the first flexiblecystoscope and new, more advanced camera systems. In 1995, ACMI merged with Cabot Medical, then owner of Surgitek, therebybroadening ACMI's product line to include disposable urology products includingstents, guidewires and stone baskets. The Cabot merger created apublicly-traded, minimally invasive surgery company with a strong presence inthe endoscopic, urological and gynaecological fields. It also brought thecapability to design, manufacture and market disposable gynaecological,urological and general surgical medical devices. In November 1999, ACMI was acquired by a consortium led by investment fundsmanaged by Fox Paine, a California-based private equity investment company. In August 2004 ACMI acquired C2Cure, Inc. and its subsidiary CByond Ltd ("CByond"), a research and development company developing technologies in the digitalvisualisation area. The acquisition of CByond has enabled ACMI to offer itsAll-Digital EndoscopyTM video endoscopy system, developed in partnership withCbyond. ACMI's digital endoscopy offers a number of significant technicaladvantages, including improved image quality, the ability to implement productupgrades through software changes and built-in LED illumination. Products and industries ACMI currently targets four key areas in the field of minimally invasivesurgery: urology; gynaecology; general surgery; and visualisation. ACMI'sproduct offering includes both durable equipment and disposable products as wellas service and repair operations for these products. Urology ACMI had US sales in urology in the financial year ended 31 December 2004 of$109.7 million. ACMI has a number of product lines addressing this industryincluding endoscopes, flexible cystoscopes, and surgical instruments for benignprostatic hyperplasia and kidney stone management and lithotripsy systems. Keycompetitors in this industry include Karl Storz, Olympus and Richard Wolf. Gynaecology and General Surgery ACMI had US sales in gynaecology and general surgery in the financial year ended31 December 2004 of $35.6 million. It has a number of product lines within thisfield including surgical and diagnostic instruments for tubal ligation, tissueremoval/biopsies, cryosurgery and MIS procedures, endoscopes, insufflators,suction-irrigation systems, biopsy instruments and other instruments forminimally invasive procedures. According to U.S. Uro-Gynecological Surgical Devices Markets, Frost & Sullivan,2005, ACMI had an estimated US market share in 2004 in gynaecological endoscopicproducts (comprising falloposcopes, laparoscopes and hysteroscopes) of 13.6 percent., giving it fourth position after Karl Storz, Richard Wolf and Johnson &Johnson. ACMI has market-leading positions within specific product areas in thegynaecological market according to U.S. Uro-Gynecological Surgical DevicesMarkets, Frost & Sullivan, 2005. Specifically ACMI had an estimated 21.4 percent. market share of the US hysteroscope market in 2004, giving it secondposition after Johnson & Johnson and was US market leader in the gynaecologicalfluid management systems market with an estimated 42.5 per cent. market share in2004. Key competitors in this market include Johnson & Johnson and AmericanMedical Systems. ACMI was also market leader in the supply of devices for arange of other gynaecological procedures (comprising tubal patency screening,tubal ligation, dilation and curettage and myomectomy) with an estimated marketshare of 30.5 per cent. in 2004. Key competitors in this market include AmericanMedical Systems, Tyco Healthcare, Boston Scientific and Cooper Surgical. Visualisation ACMI had sales in the visualisation industry in the financial year ended 31December 2004 of $5.7 million. This does not include the indication-specificvisualisation products such as endoscopes that are included under the relevantindications detailed above. Within visualisation, ACMI has a number of productlines including cameras, monitors and light sources. In August 2004 ACMIacquired CByond, an Israeli-based developer and manufacturer of digitalvisualisation technologies for medical devices. During the two years prior toacquiring CByond, ACMI partnered with CByond and launched its All-DigitalEndoscopyTM video endoscopy system. Sales and distribution network ACMI has a significant direct US sales force focused primarily on minimallyinvasive technology in the fields of urology, gynaecology and general surgery. Asales force of approximately 90 persons covering 10 regions in the US issupported by approximately 100 marketing and customer service personnel andservices over 7,300 customer accounts. ACMI has approximately 60 product lineswith approximately 3,200 SKUs. ACMI had international sales of $25.2 million in the financial year ended 31December 2004, equivalent to 14 per cent. of total revenues. InternationallyACMI sells in 72 countries through a network of over 40 distributors except inCanada where it maintains a direct sales force. Research and development ACMI maintains an active R&D department with approximately 70 employees.Expenditure in the financial year ended 31 December 2004 was $13.9 millionequivalent to approximately 8 per cent. of revenues. R&D expenditure is focussedon the internal development of products, specifically endoscopes and cameras. Intellectual property and patent strategy ACMI's intellectual property and patent strategy is coordinated at a corporatelevel by the legal department, in coordination with the chief technologyofficer. ACMI pursues wide patent protection for its technology. ACMI's patentapplications are typically filed first in the US patent office, to be followedby other foreign applications within 12 months. Patent submissions on the novel features of ACMI's technologies are at differentstages of maturity as they progress through the various patent offices. On anon-going basis, ACMI will pursue further applications based on new embodimentsof the technologies. ACMI currently has over 100 active patents worldwidecovering various aspects of its technology. Manufacturing ACMI has vertically integrated manufacturing with key capabilities in the areasof design and manufacture of optical lens systems and assemblies, fibre opticbundles and mechanical instrument components, plastics and coating technologies,software and hardware development as well as design and assembly for digitaltechnology. Over 80 per cent. of ACMI's revenues are derived fromself-manufactured products produced through four manufacturing facilities in theUS and Canada. Financial summary A summary of the trading results for ACMI as extracted without materialadjustment from the accountants' report set out in the Listing Particulars isset out below. For the year ended 31 December 2002 2003 2004 $'000 $'000 $'000Turnover 169,341 177,075 184,723Gross Profit 88,118 88,596 86,971Operating Profit (before goodwill 15,003 19,211 18,635amortisation and exceptional items)Depreciation - fixed assets 2,881 3,268 2,775Write down of placed assets 1,349 1,273 1,923Amortisation of intangible assets 983 1,438 1,255 _____ _____ _____EBITDA (before exceptional items) 20,216 25,190 24,588One-off operating items - - 2,452 _____ _____ _____Adjusted EBITDA 20,216 25,190 27,040 Properties ACMI currently has its headquarters and administrative functions located in aleased facility in Southborough, Massachusetts, USA. ACMI's flexible scopes andlenses are manufactured at leased facilities located in Stamford, Connecticut,USA. ACMI's rigid scopes, loops and electrodes are manufactured in an ownedfacility located in Norwalk, Ohio, USA. ACMI's video, suction, irrigation andstent products are manufactured in owned facilities located in Racine,Wisconsin, USA. ACMI's hand instruments are manufactured in leased facilitieslocated in Windsor, Ontario, Canada. A small leased facility located in SantaBarbara, California, USA, specialises in the assembly of microtools. Themicrotool assembly business is currently in the process of being transferredfrom Santa Barbara to Windsor. ACMI also has a leased facility in Nesher, Israelat which the development, assembly and testing of its digital visualisationtechnology is carried out. Employees The number of full time employees of ACMI by function as at 30 September 2004was as follows: Manufacturing: 549Sales, marketing and customer service: 207Research and development: 77General and administration: 66Total: 899 EXPECTED TIMETABLE OF PRINCIPAL EVENTS 2005Listing Particulars and Forms of Proxy posted to Shareholder 16 JuneLatest time and date for receipt of Forms of Proxy 11:00 a.m. on 2 JulyExtraordinary General Meeting 11:00 a.m. on 4 JulyExpected date of completion of the Acquisition, Admission, settlement and 8.00 a.m. on 19 Julycommencement of dealings in the Placing SharesExpected date for crediting of the Placing Shares issued to CREST stock accounts 19 Julyin uncertificated (paperless) formDespatch of definitive share certificates in respect of the Placing Shares in 27 Julycertificated form by Notes: (1) The dates set out in the Expected Timetable of Principal Eventsabove and mentioned throughout this announcement may be adjusted by agreementbetween the Company and Numis, in which event the new dates will be notified tothe UK Listing Authority and to the London Stock Exchange and, whereappropriate, to Shareholders. (2) All references to time in this announcement are to British Summer Time. STATISTICS RELATING TO THE VENDOR PLACING Number of Placing Shares 61,560,025Number of Ordinary Shares in issue immediately following completion of the Vendor 145,383,517Placing (assuming no exercise of options under the Share Incentive Schemes) Market capitalisation of the Company immediately following completion of the 363.5 millionVendor Placing (at the Placing Price) Numis Securities Limited, Bear, Stearns International Limited and Panmure Gordon(UK) Limited, which are regulated in the United Kingdom by The FinancialServices Authority, are acting exclusively for Gyrus Group PLC (within themeaning of the Rules of the Financial Services Authority) in connection with theVendor Placing and for nobody else. Numis Securities Limited, Bear, StearnsInternational Limited and Panmure Gordon (UK) Limited will not be responsible toanyone other than Gyrus Group PLC for providing the protections afforded totheir respective customers, nor for providing advice in relation to the VendorPlacing or the contents of this announcement or any matter referred to in thisannouncement. Neither the Ordinary Shares nor the Placing Shares have been, orwill be, registered under the United States Securities Act of 1933 (as amended),or under the securities laws of any state of the United States or any provinceor territory of Canada, Australia, Japan, the Republic of Ireland or theRepublic of South Africa. Subject to certain exceptions, the Placing Shares maynot, directly or indirectly, be offered, sold, taken up or delivered in or intoor from the United States, Canada, Australia, Japan, the Republic of Ireland orthe Republic of South Africa or their respective territories or possessions.This announcement does not constitute an offer to sell or issue or thesolicitation of an offer to buy or subscribe for New Ordinary Shares in anyjurisdiction in which such offer or solicitation is unlawful. Accordingly,copies of this announcement are not being and must not be mailed or otherwisedistributed or sent in or into or from the United States, Canada, Australia,Japan, the Republic of Ireland or the Republic of South Africa and any personreceiving this announcement (including custodians, nominees and trustees) mustnot distribute or send it in or into or from the United States, Canada,Australia, Japan or the Republic of Ireland or the Republic of South Africa.This announcement has not been approved by any of Numis Securities Limited,Bear, Stearns International Limited and Panmure Gordon (UK) Limited for thepurposes of section 21 of the Financial Services and Markets Act 2000. APPENDIX I Terms and Conditions of the Placing 1. Introduction These terms and conditions apply to persons making an offer to acquire PlacingShares under the Placing (which may include Numis or Panmure Gordon or any oftheir respective nominee(s)). References in these terms and conditions to the"Placing Agents" shall be to Numis and/or Panmure Gordon, as the context shallrequire. Each person to whom these conditions apply, as described above, who confirms hisagreement to the Placing Agents (on behalf of themselves and the Company) toacquire Placing Shares (a "Placee") hereby agrees with each of the PlacingAgents and the Company and Capital IRG, the Company's registrars, to be bound bythese terms and conditions as being the terms and conditions upon which PlacingShares will be issued and acquired under the Placing. A Placee shall, withoutlimitation, become so bound if the Placing Agents confirm to the Placee itsallocation of Placing Shares pursuant to the Placing. Members of the public are not eligible to take part in the Placing. Theannouncement and the terms and conditions set out herein are directed only atpersons ("Relevant Persons") whose ordinary activities involve them inacquiring, holding, managing and disposing of investments (as principal oragent) for the purposes of their business and who have professional experiencein matters relating to investments for the purposes of Article 19 of theFinancial Services and Markets Act 2000 (Financial Promotion) Order 2001, asamended. The announcement and the terms and conditions set out herein must notbe acted on or relied on by persons who are not Relevant Persons. Anyinvestment or investment activity to which the terms and conditions set outherein relates is available only to Relevant Persons and will be engaged in onlywith Relevant Persons. Neither the announcement nor the terms and conditionsset out herein constitute an offer for sale or subscription of any securities inthe Company. 2. Agreement to acquire Placing Shares Conditional on (i) the Vendor Placing Agreement becoming unconditional in allrespects, including as to Admission occurring on or prior to 8.00 a.m. on 13August 2005 and not having been terminated in accordance with its terms and (ii)receipt by the Placee of the confirmation from the Placing Agents referred to inparagraph 1 above, each Placee agrees to acquire at the Placing Price thatnumber of Placing Shares allocated to such Placee under the Placing inaccordance with the arrangements described in this document. To the fullestextent permitted by law, each Placee acknowledges and agrees that it will not beentitled to exercise any right of rescission at any time provided that this doesnot affect any other rights such Placee may have. The Vendor Placing may be terminated by Numis up until 5.00 p.m. on today's dateif a force majeure event occurs or at any time prior to 7.00 a.m. on the date ofAdmission if there is a material breach of warranty. By accepting theobligations set out in the terms and conditions herein the Placee agrees thatany exercise by Numis of any right to terminate the Vendor Placing Agreement orto waive or extend any condition in the Vendor Placing Agreement shall be withinthe absolute discretion of Numis and that Numis shall have no liability to thePlacee whatsoever in connection with any decision to exercise or not to exerciseany such right. If the Vendor Placing Agreement does not become unconditionalor is terminated in accordance with its terms prior to Admission, the Placingwill not proceed and the Placee's rights and obligations will cease and noclaims will be capable of being made by the Placee in respect of the Placing. The Placing Shares will be issued credited as fully paid by virtue of completionof the Acquisition Agreement and will be identical to and rank pari passu in allrespects with the existing Ordinary Shares, including the right to receive allfuture dividends and other distributions declared, paid or made in respect ofthe Ordinary Shares after the date of Admission. The Placing Shares are notbeing made available to the public and are not being offered or sold in anyjurisdiction where it would be unlawful to do so. The Placing Shares will be acquired by the Placee free of all expenses and freeof all stamp duty and stamp duty reserve tax ("SDRT") unless stamp duty or SDRTis chargeable on the issue of Placing Shares to the Placee under any of sections67 and 93 (Depository Receipts) or sections 70 or 96 (Clearance Services) of theFinance Act 1986. By accepting the terms and conditions herein, each Placeeconfirms and warrants that these sections will not apply to the issue of PlacingShares to it. If the Placee is not able to confirm and warrant that the abovesections do not apply to it or if any such stamp duty or SDRT is payable undersuch sections, it will be entirely for the Placee's account and neither theCompany nor the Placing Agents will have any liability in respect thereof. 3. Payment for Placing Shares Each Placee undertakes to pay the Placing Price for each of the Placing Sharesallocated to such Placee in such manner as shall be directed by the PlacingAgents. 4. Representations and Warranties By participating in the Placing and upon the Placing Agents making theconfirmation referred to in paragraph 1 above, each Placee confirms, represents,warrants and undertakes to the Placing Agents (for the benefit of the PlacingAgents and the Company) that: (i) the exercise by the Placing Agents (or either of them) of anyrights or discretion under the Vendor Placing Agreement shall be within theabsolute discretion of the Placing Agents (or the relevant one of them) and thePlacing Agents need not have any reference to the Placee and shall have noliability to the Placee whatsoever in connection with any decision to exerciseor not to exercise any such right. Each Placee agrees that they have no rightsagainst the Placing Agents, the Company or any of their respective directors,officers, employees, agents or advisers under the Vendor Placing Agreementpursuant to the Contracts (Rights of Third Parties) Act 1999; (ii) in agreeing to acquire Placing Shares under the Placing, eachPlacee is relying solely on this announcement and the Listing Particulars andnot on any information or representation or warranty in relation to the Companyor any of its subsidiaries or any of its shares other than as contained in thisannouncement and the Listing Particulars; (iii) neither the Placee nor, as the case may be, their clients expectthe Placing Agents to have any duties or responsibilities to the Placee similaror comparable to the duties of "best execution" and "suitability" imposed by TheConduct of Business Source Book contained in The Financial Services Authority'sHandbook of Rules and Guidance, and that the Placing Agents are not acting forthe Placee and that the Placing Agents will not have any duties orresponsibilities for providing to the Placee the protections afforded to clientsof the Placing Agents or for providing any advice in relation to the Placing orthe Placing Shares; (iv) to the fullest extent permitted by law and to the extent permittedby the Rules of the Financial Services Authority, neither the Placing Agents northeir respective ultimate holding companies nor any direct or indirectsubsidiary undertakings of those holding companies nor any of their respectivedirectors, officers, employees, agents and advisers shall be liable to thePlacee for any matter arising in connection with the Placing or any acquisitionof Placing Shares pursuant to the Placing and that where any such liabilitynevertheless arises as a matter of law the Placee will immediately waive anyclaim against any of such persons which the Placee may have in respect thereof; (v) in the case of a person who confirms to the Placing Agents onbehalf of a Placee an agreement to acquire for Placing Shares that personrepresents and warrants that he has the authority to do so on behalf of thePlacee; (vi) it is not and is not applying as nominee or agent for, a person whois, or may be, liable to pay stamp duty or SDRT under any of the sections 67,70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearanceservices); (vii) it is not a national or resident of the United States, Australia,Canada or Japan or a corporation, partnership or other entity organised underthe laws of the United States, Canada, Australia or Japan and that the Placeewill not offer, sell, renounce, transfer or deliver directly or indirectly anyof the Placing Shares in to the United States, Australia, Canada or Japan or anyother jurisdiction where to do so would be in breach of any applicable law and/or regulation or to or for the benefit of any person resident in the UnitedStates, Australia, Canada or Japan or any other jurisdiction where to do sowould be in breach of any applicable law and/or regulation and the Placeeacknowledges that the Placing Shares have not been and will not be registeredunder the United States Securities Act of 1933, as amended and the relevantexemptions are not being obtained from the Securities Commission of any provinceof Canada and that the same are not being offered for sale and may not be,directly or indirectly offered, sold, transferred or delivered in the UnitedStates, Australia, Canada or Japan or any other jurisdiction where to do sowould be in breach of any applicable law and/or regulation; (viii) it is entitled to acquire the Placing Shares in its allocationunder the laws of all relevant jurisdictions which apply to such Placee and thatsuch Placee has fully observed such laws, obtained all governmental and otherconsents which may be required thereunder or otherwise and complied with allnecessary formalities and that it has not taken any action or omitted to takeany action which will or may result in the Company or the Placing Agents or anyof their respective directors, officers, employees, agents or advisers acting inbreach of the legal or regulatory requirements of any territory in connectionwith the Placing or its allocation of Placing Shares under the Placing; and (ix) the Placee is a person of a kind described in paragraph 5 ofArticle 19 or paragraph 2 of Article 49 of the Financial Services and MarketsAct 2000 (Financial Promotion) Order 2001 (as amended). 5. Supply and Disclosure of Information If the Company, the Placing Agents, the Company's registrars or any of theiragents request any information about a Placee's agreement to acquire PlacingShares, such Placee must promptly disclose it to them. 6. Miscellaneous The rights and remedies of the Placing Agents, the Company and the Company'sregistrars under these terms and conditions are in addition to any rights andremedies which would otherwise be available to each of them and the exercise orpartial exercise of one will not prevent the exercise of others. Onapplication, each Placee may be asked to disclose, in writing or orally, to thePlacing Agents: (i) if he is an individual, his nationality; or (ii) if he is a discretionary fund manager, the jurisdictionin which the funds are managed or owned. All documents will be sent at the Placee's risk. They may be sent by post tosuch Placee at an address notified to the Placing Agents. Each Placee agrees to be bound by the Memorandum and Articles of Association ofthe Company (as amended from time to time) once the Placing Shares which suchPlacee has agreed to acquire have been issued to such Placee. The contract to acquire Placing Shares and the appointments and authoritiesmentioned herein will be governed by, and construed in accordance with, the lawsof England. For the exclusive benefit of each of the Placing Agents, theCompany and the Company's registrars, each Placee irrevocably submits to theexclusive jurisdiction of the English courts in respect of these matters Thisdoes not prevent an action being taken against a Placee in any otherjurisdiction. In the case of a joint agreement to acquire Placing Shares, references to aPlacee in these terms and conditions are to each such Placee and such Placees'liability is joint and several. Monies received from Placees pursuant to the Vendor Placing will be held by oron behalf of the Placing Agents until such time as the Vendor Placing Agreementbecomes unconditional in all respects. If the Vendor Placing Agreement does notbecome unconditional in all respects by 8.00 a.m. on 13 August 2005, such monieswill be returned without interest. APPENDIX II The following definitions apply throughout this announcement: "Acquisition" the proposed acquisition of ACMI pursuant to the Acquisition Agreement; "Acquisition Agreement" the conditional agreement dated 16 June 2005 between, amongst others, the Company, ACMI and the Seller Placees relating to the Company's acquisition of ACMI; "Admission" admission of the Placing Shares to the Official List and to trading on the market for listed securities of the London Stock Exchange and "Admission becoming effective" means it becoming effective in accordance with the Listing Rules and paragraph 2.1 of the Admission and Disclosure Standards; "Admission and Disclosure Standards" the rules published by the London Stock Exchange in relation to the admission to trading of, and confirming requirements for, securities admitted to the London Stock Exchange's market for listed securities; "Company" Gyrus Group PLC; "Enlarged Group" Gyrus, its subsidiaries and its subsidiary undertakings (and, where the context requires it, its associated undertakings) following completion of the Acquisition; "FSMA" the Financial Services and Markets Act 2000, as amended; "Gyrus" or "Group" the Company and its subsidiaries and subsidiary undertakings, and, where the context requires it, its associated undertakings; "Listing Rules" the listing rules of the UK Listing Authority made under section 74 of FSMA; "London Stock Exchange" the London Stock Exchange plc; "Numis" or "Sponsor" Numis Securities Limited; "Official List" the Official List of the UK Listing Authority; "Ordinary Shares" ordinary shares of 1 pence each in the Company; "Panmure Gordon" Panmure Gordon (UK) Limited; "Placing Price" 250 pence, being the price at which each Placing Share is to be issued under the Vendor Placing; "Placing Shares" the 61,560,025 Ordinary Shares to be placed by Numis pursuant to the Vendor Placing Agreement; "Seller Placees" FP ACMI, LLC, FP Blue, LLC, FP Annex Fund, LLC, GS Mezzanine, L.P. and GS Mezzanine Partners Offshore, L.P. "UK Listing Authority" the Financial Services Authority acting in its capacity as competent authority under FSMA; "United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland; "United States", "US" or "USA" the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia; "Vendor Placing" the conditional placing of the Placing Shares at the Placing Price on the terms and conditions of the Vendor Placing Agreement; and "Vendor Placing Agreement" the conditional agreement dated 16 June 2005 between the Company, Numis and Panmure Gordon, details of which are set out in paragraph 13 of Part VII of the Listing Particulars. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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