On 23 January 2023, the boards of directors of Dignity and Yellow (SPC) Bidco Limited, a newly formed company indirectly owned or controlled by a consortium comprised joint offerors SPWOne V Limited, Castelnau Group Limited and Phoenix Asset Management Partners Limited announced that they had reached agreement on the terms of a recommended cash offer to acquire Dignity. [what we find incomprehensible, is that Castlenau issued no announcement of its own that day – hence the bid was not covered on the QuotedData website]
The offer
Dignity shareholders are being offered 550p per share, valuing the business at an enterprise value of £789m. Alternatively, Dignity shareholders can opt to receive D shares in Valderrama (the parent company of Yellow (SPC) Bidco) – these shares are unlisted, investors would get 5.5 Valderrama D shares for each Dignity share OR shareholders can opt to receive 7 1/3 shares in Castlenau for each Dignity share. The alternative share offers are capped at 50% of Dignity.
To complicate things further, Castlenau will exchange the 10,361,149 shares in Dignity that it already owns by it for loan notes issued by Bidco, which in turn will be exchanged, through the exercise of a series of put and call options, for Valderrama E Shares; and the Phoenix Asset Management Partners Affiliates will exchange the 4,515,010 Dignity shares it owns by them for loan notes issued by Bidco, which in turn will be exchanged, through the exercise of a series of put and call options, for (i) Valderrama E Shares or (ii) new Castelnau shares.
Castelnau intends to launch a placing of new shares to raise net proceeds of up to approximately £75m – hence the prospectus – which it intends to use to fund its equity investment in Valderrama. If the proceeds that Castelnau raises are insufficient to fund its equity investment in Valderrama, Castelnau will draw down funds under two loan agreements entered into, in each case, between it and Phoenix UK Fund Limited, an affiliate of Phoenix Asset Management Partners.
[There is a lot more in the announcement than that, and if you are a shareholder in Dignity, I suggest you take the time to read it carefully. Honestly, we aren’t sure why it needs to be so complex.]
The prospectus
Castelnau has today published a prospectus containing details of:
- a proposed issue of up to 133,052,656 new ordinary shares to be issued in connection with the acquisition;
- a proposed issue of up to 32,442,740 ordinary shares to be issued pursuant to the Consortium Rollover [the bit above about how consortium members’ existing Dignity shareholders will be treated];
- a placing of up to 154,000,000 shares at 75.02p; and
- a placing programme for up to 300,000,000 shares and/or C shares in the twelve months from the date of the prospectus.
Expected timetable
Publication of the Prospectus and Placing open 1 February 2023
Latest time and date for receipt of commitments under the Placing midday on 3 March 2023
Announcement of the results of the Placing 7.00 a.m. on 6 March 2023
Admission and dealings in the Placing Shares commence 8.00 a.m. on the date being two business days following the date on which the Takeover Offer has become or been declared unconditional
Crediting of CREST stock accounts in respect of the Placing Shares as soon as reasonably practicable on the date of Admission
Where applicable, definitive share certificates despatched in respect of the Placing Shares within 10 Business Days of Admission
Issues under the Placing Programme
Placing Programme opens 1 February 2023
Placing Programme closes and last date for Shares to be issued pursuant to the Placing Programme 31 January 2024
CGL : Castlenau publishes prospectus in connection with Dignity bid