Response to press speculation

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

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO CERTAINTY THAT ANY FIRM OFFER WILL BE MADE EVEN IF THE PRE-CONDITIONS REFERRED TO BELOW, OR ANY OTHER PRE-CONDITIONS, ARE SATISFIED OR WAIVED.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. 

For immediate release

8 December 2022

K3 Capital Group plc ("K3" or the "Company")

Response to press speculation

The board of K3 (the "Board") notes the press speculation and confirms that, following receipt of expressions of interest from multiple parties, it is in advanced discussions with Sun European Partners, LLP, on behalf of Sun Capital Partners Group VIII, LLC, (collectively, "Sun Capital"), having negotiated with Sun Capital the key terms of a possible cash offer to acquire the entire issued, and to be issued, share capital of the Company at a price of 350 pence per K3 share (the "Proposal").

The Proposal would represent a premium of approximately:

· 16.7% to the closing price of K3 shares on 7 December 2022, being the last business day before this announcement;

· 31.3% to the K3 3-month volume weighted average price to 7 December 2022; and

· 36.4% to the K3 6-month volume weighted average price to 7 December 2022.

The Board has formed a committee of independent members led by Ian Mattioli (the "Independent Directors"), who are taking independent financial advice on matters relating to the Proposal from Numis Securities Limited ("Numis") in its capacity as Financial Adviser to the Company. The Independent Directors, who have been so advised by Numis as to the financial terms of the Proposal, have confirmed to Sun Capital that they would be minded to recommend unanimously the Proposal should a firm intention to make an offer pursuant to Rule 2.7 of the Code be announced on such terms.

The Proposal is subject to a number of pre-conditions, including the satisfactory completion of confirmatory due diligence. Any such pre-conditions must be satisfied or waived prior to Sun Capital making an announcement of a firm intention to make an offer pursuant to Rule 2.7 of the Code.

The Board is working closely with Sun Capital to help complete its confirmatory due diligence and satisfy its other pre-conditions as soon as practicable. The other parties who previously expressed an interest have confirmed that they are no longer considering a possible offer for the Company.

Important Takeover Code notes

For the purposes of Note 3 on Rule 2.5 of the Code, this announcement has been made with the consent of Sun Capital.

In accordance with Rule 2.5 of the Code, Sun Capital reserves the right to introduce other forms of consideration and/or vary the mix or composition of any offer and vary the transaction structure. Sun Capital also reserves the right to amend the terms of any offer including making the offer on less favourable terms than those described in this announcement:

a. to the extent that K3 declares, makes or pays any dividend or distribution or other payment to its shareholders (in which case Sun Capital reserves the right to make an equivalent reduction to the Proposal); and/or

b. with the agreement of the Independent Directors; and/or

c. if a third party announces a firm intention to make an offer for K3 pursuant to Rule 2.7 of the Code on less favourable terms than the Proposal; and/or

d. following the announcement by K3 of a Rule 9 waiver pursuant to the Code.

There can be no certainty that any offer will be made for the Company even if the pre-conditions are satisfied or waived.

Following this announcement, the Company is now considered to be in an "offer period", as defined in the Code, and the dealing disclosure requirements listed below will apply.

In accordance with Rule 2.6(a) of the Code, Sun Capital is required, by no later than 5.00 p.m. on 5 January 2022, being the 28th day following the date of this announcement, to either announce a firm intention to make an offer for K3 in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer, in which case that announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Takeover Panel, in accordance with Rule 2.6(c) of the Code.

A further announcement will be made when appropriate.

Enquiries:

K3 Capital Group PLC

Numis (Financial Adviser, Nominated Adviser and Broker to K3)

Houlihan Lokey (Financial Adviser to Sun Capital)

About K3

K3 Capital Group plc (AIM: K3C) is a multi-disciplinary and complementary group providing specialist advisory services to SMEs, incorporating Business and Company Sales, Restructuring and Insolvency and Tax Advisory services. The Group floated on the London Stock Exchange's Alternative Investment Market (AIM) in April 2017.

Services provided by the Group fall into three key operating divisions:

Business Sales Division:

· Company sales and business brokerage

· Corporate finance services

· Transaction services

· Debt advisory 

Tax Division:

· Research and development tax credit advisory

· Tax investigations

· Tax planning

· Tax advisory 

Restructuring Division:

· Restructuring advisory

· Financial advisory

· Creditor services

· Forensic accounting and expert witness

· Pension advisory

· Accelerated M&A

Sources and bases

In this announcement:

· the closing price of K3 shares on 7 December 2022, being the last business day before this announcement, was 300 pence;

· the K3 3-month volume weighted average price on 7 December 2022 was 266.6 pence;

· the K3 6-month volume weighted average price on 7 December 2022 was 256.6 pence.

The trailing volume weighted average prices are derived from Bloomberg.

Further information

Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as Financial Adviser exclusively for K3 and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than K3 for providing the protections afforded to clients of Numis, nor for providing advice in relation to any matter referred to herein.

Houlihan Lokey UK Limited ("Houlihan Lokey"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Sun Capital and for no one else in connection with the matters described in this announcement and will not be responsible to anyone other than Sun Capital for providing the protections afforded to its clients or for providing advice in relation to such matters. Neither Houlihan Lokey nor any of its affiliates (nor any of their respective directors, officers, employees or agents), owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Houlihan Lokey in connection with this announcement, any statement contained herein or otherwise.

This announcement is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction.

The release, publication or distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities law of any such jurisdiction.

Relevant securities in issue

In accordance with Rule 2.9 of the Code, K3 confirms that as at the date of this announcement, it has 73,503,464 ordinary shares of 1 penny each in issue and admitted to trading on AIM, the market operated by London Stock Exchange plc (the Company does not hold any shares in treasury). The total number of voting rights in the Company is therefore 73,503,464. The International Securities Identification Number ("ISIN") for K3 ordinary shares is GB00BF1HPD20.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

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

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on Website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available at https://www.K3groupplc.com/ promptly and in any event by no later than 12 noon on the business day following this announcement. The content of this website is not incorporated into and does not form part of this announcement.

Ends