Regulatory News Item
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION
FOR IMMEDIATE RELEASE
Superior transaction for sale of
· Agreement to sell
· The ICU Transaction values
· After deduction of debt and other liabilities, the equity value of the ICU Transaction is
· Smiths expects to receive initial net cash proceeds on completion of the ICU Transaction of
· In addition to the initial net cash proceeds, Smiths will also receive 2.5m new ICU Medical shares, worth
· As shareholder input has already informed the amount and mechanism of return in the TA Transaction, the same approach is proposed in the ICU Transaction. Specifically, the Board proposes to return 55% (equivalent to
· The sale of
· Completion and receipt of the initial cash proceeds is expected in the first half calendar year 2022, subject to approval by Smiths' shareholders and customary regulatory approvals
· The Board has withdrawn its recommendation of the TA Transaction
After announcement of the TA Transaction, ICU Medical offered to acquire
After deduction of debt and other liabilities, the equity value of the ICU Transaction is
The ICU Transaction will create an expanded global medical device company, bringing a combined portfolio of products and solutions to more patients and providers worldwide. The combination represents a meaningful value creation opportunity through both revenue and cost synergies. Smiths will participate in this value creation through its 2.5m ICU Medical shares and an additional
As part of the ICU Transaction, Smiths and ICU Medical have agreed the terms of a shareholders' agreement to govern the relationship between Smiths and ICU Medical in respect of Smiths' holding of shares in ICU Medical. Smiths shall have the right to nominate up to one non-executive director to the ICU Medical board and appoint such director to the audit committee of ICU Medical for as long as Smiths owns at least 5% of the fully diluted enlarged ICU Medical share capital. Under the terms of the shareholders' agreement, Smiths' shares in ICU Medical shall be subject to a six-month lock-up.
The ICU Transaction will be a Class 1 transaction under the UK Listing Rules and will therefore be conditional upon the approval of Smiths' shareholders. It will also be conditional on receipt of certain merger and other regulatory approvals and the termination of the sale agreement with Trulli Bidco Limited. ICU Medical has provided strong contractual commitments to Smiths to secure the necessary merger and foreign direct investment clearances and approvals by 8 March 2022 (the "Long Stop Date"). However, in certain limited circumstances, the Long Stop Date may be extended to 8 March 2023. ICU Medical has further agreed that, if it failed to satisfy these anti-trust and other regulatory conditions by the Long Stop Date, it would pay Smiths a break fee of
$300m (the "Reverse Break Fee"), $200m of which would be payable in cash with the balance of $100m to be settled by the issuance to Smiths of new ICU Medical shares. Smiths is not required to pay any break fee in the event that the transaction does not complete. ICU Medical will also pay $250,000 of cash per day to compensate Smiths for the cash which is expected to be generated by Smiths Medical from 1 January 2022 until the ICU Transaction closes.
Under French employment laws, prior to making any decision to enter into the ICU Transaction (including by way of entry into any binding share purchase agreement),
The Board, taking into account its overarching statutory and fiduciary duties, has carefully considered the ICU Transaction from a value perspective and evaluated execution risks associated with it and the timing to close. The Board considers that the ICU Transaction is superior to the TA Transaction and accordingly, Smiths has withdrawn its recommendation of the TA Transaction and has entered into a put option agreement (the "Put Option") with ICU Medical pursuant to which, following completion of the French Employment Consultation, Smiths has the unilateral and unconditional right to require ICU Medical to enter into a binding share purchase agreement on the terms reflected in the ICU Transaction. If Smiths chooses to exercise the Put Option following the end of the consultation process, the Board expects to unanimously recommend the ICU Transaction, and to send the requisite circular to Smiths' shareholders requesting their approval of it.
As shareholder input already informed the amount and mechanism of capital return in the TA Transaction, the same approach is proposed in the ICU Transaction. Following completion of the ICU Transaction, the Board proposes to return 55% (equivalent to
The Board announces that it is withdrawing its recommendation of the TA Transaction and accordingly, at the General Meeting convened for
"Delivering on our commitment to maximise value, the ICU Transaction provides both a higher value for Smiths' shareholders, as well as future value creation through our 10% holding of the enlarged combined group and a potential
"The combination of these two businesses makes sense for the medical device marketplace and fits well with ICU Medical's existing business. By joining two complementary product portfolios to create a leading IV therapy company, we can help simplify customer workflows and add significant value and choice. Together, we will be a scaled global competitor and a US-based medical device company that increases the stability of the medical supply chain and can grow as clinical care models evolve. From an economic perspective, we believe we have presented a well-structured offer that considers the existing offer, minimizes risk, and offers upside to all stakeholders. We look forward to serving more customers as we continue to bring clinical and economic value to the marketplace."
Investor and analyst briefing
A conference call for investors and analysts will be held at
Jemma Spalton, Director of Investor Relations
Alex Le May /
Goldman Sachs (Joint Sponsor, Joint Financial Adviser & Joint Corporate Broker) +44 (0)20 7774 1000
JP Morgan Cazenove (Joint Sponsor, Joint Financial Adviser & Joint Corporate Broker) +44 (0)20 7742 4000
Gleacher Shacklock (Joint Financial Adviser) +44 (0)20 7484 1150
Smiths is a global technology company listed on the
This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of
Throughout the announcement, the enterprise value of Smiths Medical is stated on a debt free, cash free basis and before taking into account any adjustments required under the terms of the ICU Transaction; tax; and associated transaction costs.
In this announcement: (i) references to "£" or "GBP" are to the lawful currency of the United Kingdom; and (ii) references to "$" or "USD" are to the lawful currency of the United States of America.
The sale proceeds received by Smiths under the terms of the ICU Transaction will be received in USD ($). Equivalents have been presented in GBP (£) in this announcement for illustrative purposes using a rate of
Certain figures included in this announcement have been subject to rounding adjustments.
Forward Looking Statements
This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "anticipates", "believes", "could", "estimates", "expects", "intends", "may", "plans", "projects", "should" or "will", or, in each case, their negative or other variations or comparable terminology, "targets", "aims", "forecasts" or by discussions of strategy, plans, objectives, goals, future events or intentions.
These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include, but are not limited to, statements regarding Smiths' intentions, beliefs or current expectations concerning, among other things, the Group, results of operations, financial condition, liquidity, prospects, growth and strategies of the Group and Smiths Medical.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the actual results of operations of the Group and Smiths Medical, and the developments of the markets and the industries in which they operate, may differ materially from those described in, or suggested by, the forward-looking statements contained in this announcement. In addition, even if the results of operations of the Group and Smiths Medical and the developments of the markets and the industries in which they operate are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. A number of risks, uncertainties and other factors could cause results and developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, changes in law and regulation, currency fluctuations, changes in business strategy and political and economic uncertainty.
Forward-looking statements may, and often do, differ materially from actual results. Any forward-looking statements in this announcement reflect Smiths' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group's business, results of operations, financial condition, prospects, growth and strategies.
Other than in accordance with its legal or regulatory obligations (including under the Listing Rules, the Disclosure Guidance and Transparency Rules, the Prospectus Regulation Rules, the Market Abuse Regulation (EU No. 596/2014) and the Market Abuse Regulation (EU No. 596/2014) as it forms part of domestic law by virtue of the
No profit forecast or estimates
Unless otherwise stated, no statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings, earnings per Smiths share or income, cash flow from operations or free cash flow for the Group or Smiths Medical, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings, earnings per Smiths share or income, cash flow from operations or free cash flow for the Group or Smiths Medical, as appropriate.
This announcement is not intended to, and does not constitute or form part of, any offer or invitation to purchase, acquire, subscribe for, sell, dispose of or issue, or any solicitation of any offer to sell, dispose of, purchase, acquire or subscribe for, any security or a solicitation of any vote or approval, in any jurisdiction. Smiths' shareholders are advised to read carefully the formal documentation in relation to the ICU Transaction once it has been despatched. Any response to the ICU Transaction should be made only on the basis of the information in the formal documentation to follow.
The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and, therefore, any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. Any failure to comply with these requirements or restrictions may constitute a violation of the securities laws or regulations of any such jurisdiction. This announcement has been prepared for the purposes of complying with English law and the UK Listing Rules and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of England.
Important information relating to the joint financial advisers and joint sponsors
with the ICU Transaction.
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