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Trace Group PLC (TCC)

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Wednesday 18 July, 2007

Trace Group PLC

Offer Update

Trace Group PLC
18 July 2007


18 July 2007


NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM THE UNITED STATES,
CANADA, AUSTRALIA OR JAPAN


Trace Group plc
('Trace' or the 'Company')


Response of Trace to the Revised Cash Offer from Tulip Holdings Limited 
('Tulip')


The Company announces that it is today sending a document to Trace Shareholders
in response to the revised cash offer from Tulip in which Daniel Chapchal,
Chairman, on behalf of the Trace Independent Directors (being Mr. Daniel
Chapchal, Professor David Begg, Mr. Colin Clarke and Mr. Robin Woodall) has
stated as follows:

'I am writing to you, on behalf of the Trace Independent Directors, in response
to Tulip's revised offer document and to outline our reasons for recommending
that you reject Tulip's revised cash offer of 156 pence per Trace Share (the 
'Tulip Revised Offer').  As you are aware, the Trace Independent Directors have
given their recommendation to the increased cash offer of 180 pence per Trace
Share (the 'Recommended Increased Offer') from Microgen plc ('Microgen'). Our
position with regard to the Recommended Increased Offer from Microgen remains
unchanged.

In order to facilitate an understanding of our position, I would first like to
set out the sequence of events that has taken place over the last few months:
     
•    On 20 April 2007, the Board of Tulip and the Trace Independent Directors 
     announced that they had reached agreement on the terms of a recommended 
     proposal for the acquisition of Trace by Tulip at a price of 135
     pence in cash per Trace Share.

•    On 25 May 2007, the Board of Microgen and the Trace Independent Directors 
     announced the terms of a recommended cash offer of 155 pence per Trace
     Share, as subsequently made by Microgen in its offer document posted on 1 
     June 2007, for the entire issued and to be issued ordinary share capital of 
     Trace.

•    On 13 June 2007, Tulip announced its revised offer of 156 pence in cash per 
     Trace Share, as subsequently made by Tulip in its offer document posted on
     10 July 2007.

•    On 15 June 2007, the Board of Microgen and the Trace Independent Directors 
     announced that they had agreed the terms of a recommended increased cash 
     offer of 180 pence per Trace Share, as subsequently made by Microgen in its
     offer document posted on 20 June 2007.

The Tulip Revised Offer has not been recommended by the Trace Independent
Directors and the position of the Trace Independent Directors remains unchanged
with regard to the Recommended Increased Offer from Microgen.  Trace
Shareholders should be aware that the Recommended Increased Offer from Microgen
of 180 pence in cash per Trace Share is 24 pence per share greater than the
Tulip Revised Offer of 156 pence in cash per Trace Share, representing a
substantial premium of 15.4 per cent.

When considering its decision to recommend Microgen's increased offer of 180
pence in cash per Trace Share, the Trace Independent Directors were given
assurances by the Board of Microgen that, following the Recommended Increased
Offer from Microgen becoming or being declared unconditional in all respects,
the existing contractual and statutory employment rights, including pension
rights, of the directors, management and employees of Trace would be fully
safeguarded.  Microgen has also stated that, in the event that Microgen acquires
sufficient shares in Trace to cancel Trace's listing on the Official List (that
is to say greater than 75 per cent of the voting share capital of Trace), Trace
employees will be given the opportunity, should they so wish, to transfer onto
Microgen's standard terms and conditions of employment which will provide
employees with salaries, profit share, bonus schemes, share option plans and
other benefits in line with existing Microgen staff.

Trace Shareholders should also be aware that Microgen has acquired 3,680,000
Trace Shares, representing approximately 25.83 per cent of the Trace Shares. 
Microgen announced on 16 July 2007, the second closing date of its Recommended
Increased Offer, that it had received valid acceptances in respect of 2,507,002
Trace Shares, representing approximately 17.59 per cent of the Trace Shares. 
The valid acceptances include 1,127,880 Trace Shares, representing approximately
7.92 per cent of the Trace Shares, received pursuant to an irrevocable
commitment from Herald Investment Management Limited and 10,000 Trace Shares,
representing approximately 0.07 per cent of the Trace Shares, received pursuant
to an undertaking from me to procure acceptance of the Recommended Increased
Offer from Microgen of the Trace Shares held in my SIPP. In addition, Microgen
has also received an undertaking to accept its Recommended Increased Offer from
Colin Clarke, one of the Trace Independent Directors, in respect of the
1,426,453 Trace Shares (representing 10.01 per cent of the Trace Shares) owned
by him and his connected parties upon the lapsing of his existing irrevocable
commitment to the Tulip Revised Offer. Such lapsing will occur in the event that
the Tulip Revised Offer lapses or is withdrawn.  Therefore, on 16 July 2007,
Microgen announced that, in aggregate, it owned or had received valid
acceptances in respect of a total of 6,187,002 Trace Shares, representing
approximately 43.42 per cent of the Trace Shares which it is entitled to count
towards the satisfaction of the acceptance condition under its Recommended
Increased Offer.

The Recommended Increased Offer from Microgen of 180 pence in cash per Trace
Share is 24 pence per share greater than the Tulip Revised Offer of 156 pence in
cash per Trace Share, representing a substantial premium of 15.4 per cent.  The
Trace Independent Directors, who have been so advised by Shore Capital and
Corporate Limited, consider the terms of the Recommended Increased Offer from
Microgen to be fair and reasonable. In providing advice to the Trace Independent
Directors, Shore Capital and Corporate Limited has taken into account the Trace
Independent Directors' commercial assessments.

Accordingly the Trace Independent Directors unanimously urge Trace Shareholders
not to accept the Tulip Revised Offer and they recommend that all Trace
Shareholders accept the Recommended Increased Offer from Microgen.'



Press Enquiries:

Trace Group plc                                  Telephone: +44 (0) 20 7825 1000
Daniel Chapchal
David Begg

Shore Capital and Corporate Limited              Telephone: +44 (0) 20 7408 4090
(Financial adviser to Trace)
Alex Borrelli
Pascal Keane


Shore Capital and Corporate Limited, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting exclusively for
Trace Group plc and no one else in connection with the Recommended Increased
Offer and will not be responsible to anyone other than Trace Group plc for
providing the protections afforded to clients of Shore Capital and Corporate
Limited nor for providing advice in relation to the Recommended Increased Offer,
or the contents of this announcement or any matter referred to herein.


Dealing disclosure requirements

Under the provisions of Rule 8.3 of the Takeover Code (the 'Code'), if any
person is, or becomes, 'interested' (directly or indirectly) in 1% or more of
any class of 'relevant securities' of Trace, all 'dealings' in any 'relevant
securities' of that company (including by means of an option in respect of, or a
derivative referenced to, any such 'relevant securities') must be publicly
disclosed by no later than 3.30 pm (London time) on the London business day
following the date of the relevant transaction. This requirement will continue
until the date on which the Recommended Increased Offer becomes, or is declared,
unconditional as to acceptance, lapses or is otherwise withdrawn or on which the
'offer period' otherwise ends. If two or more persons act together pursuant to
an agreement or understanding, whether formal or informal, to acquire an
'interest' in 'relevant securities' of Trace they will be deemed to be a single
person for the purpose of Rule 8.3 of the Code.

Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant
securities' of Trace by Microgen or Tulip or Trace or by any of their respective
'associates' must be disclosed by no later than 12.00 noon (London time) on the
London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative reference to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a 'dealing' under Rule 8, you should consult the Panel.



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