Result of Placing

RNS Number : 3052T

Diploma PLC

17 March 2023

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, DISTRIBUTION OR FORWARDING, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

For immediate release

17 March 2023  

DIPLOMA PLC

Result of Placing

Diploma PLC ("Diploma" or the "Company"), the international group supplying specialised technical products and services, announces the successful pricing of the non-pre-emptive placing of new ordinary shares of 5p each in the capital of the Company ("Ordinary Shares") following yesterday's announcement (the "Placing").

A total of 9,297,005 new Ordinary Shares (the "Placing Shares") have been placed with institutional investors by Barclays Bank PLC ("Barclays") and Numis Securities Limited ("Numis") (together, the "Bookrunners") at a price of 2,525 pence per Placing Share (the "Placing Price") raising gross proceeds of approximately £235 million.

Concurrently with the Placing, each of the directors of the Company have subscribed for an aggregate of 3,960 new Ordinary Shares (the "Subscription Shares"), at the Placing Price, pursuant to subscription letters entered into with the Company (the "Subscription"). The proceeds of the Subscription will be approximately £100,000. In addition, retail investors have subscribed in the separate offer made by the Company via the PrimaryBid platform for a total of 50,000 new Ordinary Shares (the "Retail Shares") at the Placing Price (the "Retail Offer") raising gross proceeds of approximately £1 million.

Together, the Placing, Subscription and Retail Offer (together, the "Capital Raise") in aggregate comprised 9,350,965 new Ordinary Shares, and will raise gross proceeds of approximately £236 million. The Placing Price represents a discount of approximately 4.2 per cent to the closing share price of 2,636 pence on 16 March 2023. The Placing Shares, the Subscription Shares and the Retail Offer Shares (together, the "New Ordinary Shares") being issued together represent approximately 7.5 per cent of the existing issued ordinary share capital of Diploma prior to the Offer.

Applications have been made to the Financial Conduct Authority (the "FCA") and London Stock Exchange plc (the "LSE") respectively for the admission of the New Ordinary Shares to the premium listing segment of the Official List of the FCA and to trading on the main market for listed securities of the LSE (together, "Admission"). It is expected that Admission will become effective on or before 8.00 a.m. on 21 March 2023. The Placing, the Subscription and the Retail Offer are conditional upon, amongst other things, Admission becoming effective and upon the placing agreement between the Bookrunners and the Company not being terminated in accordance with its terms.

The New Ordinary Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with each other and with the existing Ordinary Shares, including, without limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.

Following Admission, the total number of ordinary shares in issue in Diploma will be 134,030,507. The Company does not hold any shares in treasury, and therefore the total number of voting rights in Diploma will be 134,030,507 following Admission, and this figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

Board participation in the Subscription

Each of the directors of the Company have agreed to subscribe for the number of Subscription Shares at the Placing Price opposite their name as set out below:

Name	Number of Subscription Shares
David Lowden	396
Johnny Thomson	990
Chris Davies	990
Anne Thorburn	396
Dean Finch	396
Andy Smith	396
Geraldine Huse	396

Smaller related party transaction

Capital Group ("Capital") is a substantial shareholder in the Company for the purposes of the Listing Rules as a result of having been entitled to exercise, or to control the exercise of, over 10 per cent. of the votes able to be cast at general meetings of the Company within the last 12 months. Capital is therefore considered to be a related party of the Company for the purposes of the Listing Rules. Capital has agreed to subscribe for 1,806,310 Placing Shares at the Placing Price for an aggregate consideration of approximately £46 million. The participation in the Placing by Capital constitutes a "smaller" related party transaction and falls within Listing Rule 11.1.10R and this announcement (the "Announcement") is therefore made in accordance with Listing Rule 11.1.10R(2)(c).

This Announcement contains inside information for the purposes of the Market Abuse Regulation (Regulation (EU) No 596/2014) , as it forms part of retained EU law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 ("UKMAR").

The person responsible for releasing this Announcement is John Morrison, Company Secretary.

Diploma PLC LEI: 2138008OGI7VYG8FGR19 

For further information please contact:

Diploma	[phone]
J ohnny Thomson Chris Davies Kellie McAvoy
Barclays (Joint Global Coordinator and Joint Bookrunner )	[phone]
Alisdair Gayne Neal West Guy Bomford Chris Madderson
Numis (Joint Global Coordinator and Joint Bookrunner )	[phone]
Mark Lander Julian Cater George Price William Wickham
Teneo	[phone]
Martin Robinson  Olivia Peters

Pre-Emption Group Reporting

The Placing is a non-pre-emptive issue of equity securities for cash and accordingly the Company makes the following post transaction report in accordance with the most recently published Pre-Emption Group Statement of Principles (2022).

Name of issuer	Diploma PLC
Transaction details	In aggregate, Capital Raise of 9,350,965 New Ordinary Shares (comprising 9,297,005 Placing Shares, 3,960 Subscription Shares and 50,000 Retail Shares) represents approximately 7.5% of the Company's issued ordinary share capital. Settlement for the New Ordinary Shares and Admission are expected to take place on or before 8.00 a.m. on 21 March 2023.
Use of proceeds	The proceeds of the proposed Placing, Subscription and Retail Offer will be used to refinance the consideration paid for the acquisition of Tennessee Industrial Electronics, LLC , a market leading value-add distributor of aftermarket parts and repair services into the fast-growing US industrial automation end market, with a focus on robotics and computer numerical control (CNC) machines , as well as provide the Group with greater flexibility to execute on its strong M&A pipeline to accelerate future organic growth .
Quantum of proceeds	In aggregate, the Capital Raise raised gross proceeds of approximately £236 million and net proceeds of approximately £232 million.
Discount	The Placing Price of 2,525 pence represents a discount of 4.2 per cent. to the closing share price of 2,636 pence on 16 March 2023.
Allocations	Soft pre-emption has been adhered to in the allocations process. Management was involved in the allocations process, which has been carried out in compliance with the MiFID II Allocation requirements. Allocations made outside of soft pre-emption were preferentially directed towards existing shareholders in excess of their pro rata, and wall-crossed accounts.
Consultation	The Joint Bookrunners undertook a pre-launch wall-crossing process, including consultation with major shareholders, to the extent reasonably practicable and permitted by law.
Retail investors	The Capital Raise included a Retail Offer, for a total of 50,000 Retail Shares, via the PrimaryBid platform. Retail investors, who participated in the Retail Offer, were able to do so at the same Placing Price as all other investors participating in the Placing and Subscription. The Retail Offer was made available to existing shareholders and new investors in the UK. Investors were able to participate through PrimaryBid's platform via its partner network (covering 60+ FCA registered intermediaries) and through PrimaryBid's free-to-use direct channel. Investors had the ability to participate in this transaction through ISAs and SIPPs, as well as General Investment Accounts (GIAs). This combination of participation routes meant that, to the extent practicable on the transaction timetable, eligible UK retail investors (including certificated retail shareholders) had the opportunity to participate in the Capital Raise alongside institutional investors. Allocations in the Retail Offer were preferentially directed towards existing shareholders in keeping with the principle of soft pre-emption.

Important Notices

No action has been taken by the Company, Barclays Bank PLC, acting through its investment bank ("Barclays") or Numis Securities Limited ("Numis" and, together with Barclays, the "Bookrunners") or any of their respective affiliates, or any person acting on its or their behalf that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and the Bookrunners to inform themselves about, and to observe, such restrictions.

No prospectus, offering memorandum, offering document or admission document has been or will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with the Prospectus Regulation (EU) 2017/1129 (the "EUProspectus Regulation") or the UK version of the EU Prospectus Regulation as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 (the "UK Prospectus Regulation")) to be published. Persons needing advice should consult a qualified independent legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, FORWARDING OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA (COLLECTIVELY, THE "UNITED STATES"), AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION. THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK EXCHANGE PLC, NOR IS IT INTENDED THAT IT WILL BE SO APPROVED.

This Announcement or any part of it does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States, Canada, Australia, the Republic of South Africa, Japan or any other jurisdiction in which the same would be unlawful. No public offering of the Placing Shares is being made in any such jurisdiction.

The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any State or other jurisdiction of the United States, and may not be offered, sold or transferred directly or indirectly in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any State or any other jurisdiction of the United States. Accordingly, the Placing Shares are being offered and sold by the Company only (i) outside the United States in "offshore transactions" (as such terms are defined in Regulation S under the Securities Act ("Regulation S")) pursuant to Regulation S under the Securities Act and otherwise in accordance with applicable laws; and (ii) in the United States to a limited number of "qualified institutional buyers" (as defined in Rule 144A under the Securities Act). No public offering of securities is being made in the United States.

This Announcement is for information purposes only and is directed only at: (i) persons in member states of the European Economic Area (the "EEA") who are qualified investors within the meaning of Article 2(e) of the Prospectus Regulation ("Qualified Investors"); or (ii) in the United Kingdom, qualified investors within the meaning of Article 2(e) of the UK Prospectus Regulation who are (a) persons who have professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (b) persons who fall within Article 49(2)(a) to (d) of the Order; or (c) otherwise, persons to whom it may otherwise lawfully be distributed (all such persons together being referred to as "Relevant Persons"). Any investment or investment activity to which this Announcement relates is available in member states of the EEA only to Qualified Investors or the United Kingdom only to Relevant Persons and will be engaged in only with such persons. This Announcement must not be acted on or relied on by persons in member states of the EEA who are not Qualified Investors or the United Kingdom who are not Relevant Persons.

In Canada, no prospectus has been filed with any securities commission or similar regulatory authority in respect of the Placing Shares. No such securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon the merits of any proposed offering of the Placing Shares and any representation to the contrary is an offence; no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares and the Placing Shares have not been, nor will they be, registered under or offering in compliance with the securities laws of any state, province or territory of Australia, Canada, the Republic of South Africa or Japan. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, the Republic of South Africa, or Japan or any other jurisdiction in which such activities would be unlawful.

In Canada, the Placing Shares may only be offered and sold in the provinces of Alberta, British Columbia, Ontario and Quebec on a basis exempt from the prospectus requirements of applicable securities laws. In connection with any offer or sale made to investors in the Placing that are located in Canada, the Placee will be required to provide a signed investor letter, confirming its eligibility to participate in the Placing and containing additional prescribed disclosure for the purposes of compliance with Canadian securities law requirements.

Certain statements contained in this Announcement constitute "forward-looking statements" with respect to the financial condition, results of operations and businesses and plans of the Company and its subsidiaries (the "Group"). Words such as "believes", "anticipates", "estimates", "expects", "intends", "plans", "aims", "potential", "will", "would", "could", "considered", "likely", "estimate" and variations of these words and similar future or conditional expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon future circumstances that have not occurred. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. As a result, the Group's actual financial condition, results of operations and business and plans may differ materially from the plans, goals and expectations expressed or implied by these forward-looking statements. No representation or warranty is made as to the achievement or reasonableness of, and no reliance should be placed on, such forward-looking statements. No statement in this Announcement is intended to be, nor may it be construed as, a profit forecast or be relied upon as a guide to future performance. The forward-looking statements contained in this Announcement speak only as of the date of this Announcement. The Company, its directors, the Bookrunners, their respective affiliates and any person acting on its or their behalf each expressly disclaim any obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation, the Listing Rules, UK MAR, the Disclosure Guidance and Transparency Rules, the rules of the LSE or the FCA.

Barclays Bank PLC is authorised by the Prudential Regulation Authority ("PRA") and regulated in the United Kingdom by the PRA and the FCA. Numis Securities Limited is authorised and regulated in the United Kingdom by the FCA. Each of Barclays and Numis are acting exclusively for the Company and no one else in connection with the Placing and will not regard any other person (whether or not a recipient on this Announcement) as its client in relation to the Placing or any other matter referred to in this Announcement and will not be responsible to anyone (including any Placees) other than the Company for providing the protections afforded to its clients or for providing advice to any other person in relation to the Placing or any other matters referred to in this Announcement. Neither Barclays nor Numis is acting for the Company with respect to the Retail Offer or the Subscription.

Each of the Bookrunners and their respective affiliates may have engaged in transactions with, and provided various commercial banking, investment banking, financial advisory transactions and services in the ordinary course of their business with the Company and/or its affiliates for which they would have received customary fees and commissions. Each of the Bookrunners and their respective affiliates may provide such services to the Company and/or its affiliates in the future.

This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by either Bookrunner or by any of its affiliates or any person acting on its or their behalf as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

This Announcement does not constitute a recommendation concerning any investor's investment decision with respect to the Placing. Any indication in this Announcement of the price at which ordinary shares have been bought or sold in the past cannot be relied upon as a guide to future performance. The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

The Placing Shares to be issued or sold pursuant to the Placing will not be admitted to trading on any stock exchange other than the LSE.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into or forms part of this Announcement.

This Announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom 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 the United Kingdom.

UK Product Governance Requirements

Solely for the purposes of the product governance requirements of Chapter 3 of the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK Product Governance Rules") and/or any equivalent requirements elsewhere to the extent determined to be applicable , and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any 'manufacturer' (for the purposes of the UK Product Governance Rules and/or any equivalent requirements elsewhere to the extent determined to be applicable ) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that such Placing Shares are: (a) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in Chapter 3 of the FCA Handbook Conduct of Business Sourcebook ("COBS"); and (b) eligible for distribution through all permitted distribution channels (the "UK target market assessment"). Notwithstanding the UK target market assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The UK target market assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the UK target market assessment, each of Barclays and Numis will only procure investors for the Placing Shares who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the UK target market assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of COBS 9A and COBS 10A, respectively; or (b) a recommendation to any investor or group of investors to invest in, or purchase or take any other action whatsoever with respect to the Placing Shares. Each distributor is responsible for undertaking its own UK target market assessment in respect of the Placing Shares and determining appropriate distribution channels.

NOTWITHSTANDING ANYTHING IN THE FOREGOING, NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE BY ANY PERSON ANYWHERE AND THE COMPANY HAS NOT AUTHORISED OR CONSENTED TO ANY SUCH OFFERING IN RELATION TO THE PLACING SHARES.

 

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