Acquisition Update

RNS Number : 1475X

Darwen Holdings PLC

20 June 2008

 



Darwen announces agreement to acquire the Optare Group, placing to raise £16m and name change to Optare plc

Darwen Holdings plc (the 'Company') today announces that it has conditionally agreed, subject to Existing Shareholder approval, to acquire the entire share capital of Jamesstan Investments Ltd ('Jamesstan'), the holding company of the Optare Group, for an enterprise value of £15.95 million. If approved by Existing Shareholders, the transaction will be regarded as a reverse take-over under the AIM Rules. An admission document in respect of the proposed enlarged company has been published and will be sent to shareholders at 9.00am today.

In conjunction with the Acquisition and in order to implement the Directors' strategy for the Enlarged Group, the Company is also announcing that it intends to raise approximately £16 million before expenses, through the issue of 40 million Placing Shares at the Placing Price of 40p.

The Directors believe that this is a transformational deal, and the Executive Directors have subscribed to Placing Shares worth £650,000 at the Placing Price, alongside the institutional investors.

The Directors believe that the proposed acquisition is a compelling strategic fit with the Group for the following reasons: 

• Comprehensive product offering

  • Improved skills including an in-house design capability

  • Improved after sales ability with national reach

  • Reduced costs and improved operational performance

  • Enhanced geographic reach

Commenting on today's news, Chief Executive Andrew Brian said:

'Optare, a brand synonymous with top quality service and market-leading products, complements Darwen's existing strong market position; this deal is fantastic news for our investors and builds on Darwen's strategic progress to date. I am delighted at the level of institutional support, which endorses the strategy we set out when we floated in February. We are excited about building a stronger and more competitive business, to capitalise on the opportunity to deliver market-leading hybrid public transport solutions and to deliver great results for our customers, business partners and employees.'

Historically, Darwen's vehicles have utilised traditional diesel-powered technology. The Directors intend to increase the production and sales of its existing products through improved manufacturing processes and the strengthening of the sales team. To support this, the Company intends to invest in new, custom-designed premises, new plant and equipment, and internet and communication infrastructure.

At the same time, the Directors believe that there is a strong desire from bus operators for a more fuel-efficient, affordable and higher capacity bus, and a lower emission alternative to the traditional diesel-powered vehicles. The combined product suite of Darwen and Jamesstan is expected to deliver a complete vehicle solution to its customers, and will have at its core a lightweight, diesel-engined vehicle with a low emission hybrid variant.

The Directors believe that growth opportunities for the new group will be fuelled by:

• Operators' need to produce fuel economies and reduce costs and carbon emissions

• Introduction of Low Emission Zones ('LEZs') and congestion charging, which are driving replacement cycles

• Quality incentive contracts, which seek to reduce emissions

• Disability Discrimination Act

• Demand from operators seeking better integration of manufacturing activities that allow a quicker response to their needs

• Demand for hybrid solutions, notably from Transport for London

Contacts

Darwen Holdings plc                                         [phone]

Andrew Brian

Cenkos Securities plc (Nomad and broker)     [phone]

Stephen Keys/Camilla Hume

MC2 (Financial PR)                                           [phone]

Sarah Lindgreen/Lauren Jones

Shareholders are informed that an AIM Admission Document has been published and posted today, together with a notice convening a General Meeting ('GM') of the Company, at which the approval of shareholders will be sought for the proposed acquisition, an increase in the authorised share capital of the Company, the authority to allot the new ordinary shares pursuant to the proposed acquisition, the placing, and to change the name of the Company to Optare plc. A copy of the Admission Document is available from the Company's website: www.darwengroup.com

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

	2008
Record date	20 June
Latest time and date for receipt of Forms of Proxy for the General Meeting	11 July
General Meeting	11 am on 12 July
Admission and commencement of dealings in New Ordinary Shares on AIM	15 July
Where applicable, expected dates for CREST accounts to be credited in respect of the New Ordinary Shares	15 July
Where applicable, expected date of dispatch of definitive share certificates for New Ordinary Shares by	22 July

PLACING STATISTICS

Number of Existing Ordinary Shares	49,293,145
Number of Placing Shares	40,000,000
Placing Price per new Ordinary Share	40p
Number of Consideration Shares	4,375,000
Estimated Gross Proceeds of the Placing receivable by the Company	£16 millionllion
Estimated net proceeds of the Placing receivable by the Company	£14,973,000
Market capitalisation of the Company at the Placing Price at Admission	£37.4 millionllion
Percentage of Enlarged Share Capital represented by the Placing Shares	42.7%
Percentage of Enlarged Share Capital represented by the Consideration Shares	4.7%

Notes to editors 

About Darwen Holdings

Darwen Holdings plc ('Darwen') specialises in the design, assembly and supply of single and double deck buses to bus service operators in the UK, through its subsidiary, Darwen Group Ltd ('Darwen Ltd'). It was admitted to trading on the AIM market in February 2008. 

Darwen Ltd was established in August 2007 from the business and assets of East Lancashire Coachbuilders Ltd. The company went on to acquire specialist design, manufacturing and product development consultancy skills with the addition of Leyland Product Developments Ltd (now known as Darwen LPD), in November 2007. Darwen's Board believes that market demand for high quality, low emission public service vehicles is growing. In response, Darwen is developing a line of low emission buses, using diesel electric hybrid technology.

Management includes founder and Chairman, Roy Stanley, and Chief Executive, Andrew Brian. John Fickling is a Non-Executive Director, and it is proposed that Michael Dunn will join the Board as Chief Financial Officer on completion of the Acquisition.

www.darwengroup.com 

About Jamesstan 

Jamesstan was established in January 2008 to acquire Optare Holdings, whose subsidiaries include Optare Group Ltd. Roy Stanley is the sole shareholder of Jamesstan.

About Optare

Optare is a leading manufacturer of small buses and coaches in the UK. It has three business units: bus manufacture, coach sales and an after sales service business operating under the Unitec brand. The Optare Group employs 540 people and has an annual turnover of £58 million. It has sites in Leeds, Rotherham, Essex and Glasgow.

www.optare.com

 

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