Sulzer and the board of Castle Support Services plc have agreed the terms of a recommended cash offer by Sulzer (UK) Holdings Ltd for the entire ordinary share capital of Castle Support Services plc, the sole owner of Dowding & Mills. The offer will comprise 108 pence in cash for each Castle Support Services plc share, valuing the entire existing issued ordinary share capital of Castle Support Services plc at approximately GBP 127.5 million (CHF 217 million).
Founded in 1919, Dowding & Mills is one of the largest independent repair and maintenance providers for generators, motors and associated equipment. With its quality repair and remanufacturing service that recycles existing materials and components, the company provides a fast alternative to replacement of motors and generators. Dowding &Mills generated annual sales of GBP 125.5 million (CHF 213 million) in the twelve months ended on June 30, 2009 and employs approximately 1400 people in the UK, USA, Australia and UAE. Some activities of Dowding &Mills also trade under the names Boothams Engineers, EMS, and Dickson Dowding & Mills.
The intended acquisition of the service business Dowding & Mills will increase Sulzer’s customer support service sales, with an associated increase in the proportion of sales generated with service activities. The combination of Dowding &Mills with Sulzer Turbo Services is expected to improve the growth prospects of the combined businesses. A strengthening of service business is one of the five areas of focus of Sulzer. Customer support businesses are generally less cyclical and therefore have more stable sales, earnings and cash contributions.
The intended acquisition of Dowding & Mills will expand Sulzer’s technical competences into the near adjacent electromechanical service market and complements Sulzer Turbo Services’ capabilities in mechanical services for turbomachinery. It will create a leading independent provider of maintenance and repair services for turbomachinery, generators and motors. The broader service offering will allow further strengthening of the relationship with the shared customer base as well as with potential new customers.
The intended acquisition will improve the foundation for future geographic expansion. Dowding & Mills broadens the geographic presence of Sulzer Turbo Services. Sulzer’s strength in technology transfer will allow an accelerated development of the international presence beyond the current locations. The electromechanical activities offer a potential to expand the service offering with phased investments in new locations in emerging markets.
The offer to acquire Dowding & Mills confirms Sulzer’s commitment to external growth. The intended acquisition reflects Sulzer’s strategy to complement and strengthen its current portfolio. It is also in line with its acquisition discipline based on the clear criteria of strategic fit, value creation and integration. The acquisition will be funded using existing cash. Sulzer will maintain its sound financial position, allowing further external growth.
The directors of Castle Support Services plcconsider the terms of the offer to be fair and reasonable and unanimously recommend that the Castle Support Services plcshareholders accept the offer. In aggregate, and including the shareholdings of the Castle Support Services plcdirectors, Sulzer (UK) Holdings Ltd has received irrevocable undertakings to accept the offer in respect of shares representing 94.09% of Castle Support Services plc.
If Sulzer receives acceptances of 90% or more of the Castle Support Services plcshares, assuming all other conditions of the offer have been satisfied or waived, Sulzer intends to exercise the rights for compulsory acquisition of the remaining Castle Support Services plcshares on the same terms as the offer.
Sulzer Turbo Services is an independent provider of repair and maintenance services for thermal turbomachinery and other rotating equipment. The division also manufactures and sells replacement parts for gas turbines, steam turbines and compressors. Sulzer Turbo Services’ customers are in the oil and gas, hydrocarbon processing, power generation and other industrial markets. Sulzer Turbo Services achieved sales of CHF 291 million in 2009 with around 1200 employees.
Note: For further details regarding the recommended offer please refer to the 2.5 announcement, www.sulzer.com.
Dealing Disclosure Requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of Castle Support Services plc must make an Opening Position Disclosure following the commencement of the offer period. An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of Castle Support Services plc. An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period. Relevant persons who deal in the relevant securities of Castle Support Services plc prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of Castle Support Services plc must make a Dealing Disclosure if the person deals in any relevant securities of Castle Support Services plc. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of Castle Support Services plc, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of Castle Support Services plc, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by Castle Support Services plc and by Sulzer and the Offeror and Dealing Disclosures must also be made by Castle Support Services plc and Sulzer and the Offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel’s website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129.
The defined terms used in this paragraph “Dealing Disclosure Requirements” are defined in the Code which can be found on the Takeover Panel’s website.
This document has been prepared solely for its use at the announcement to be made on June 2, 2010 in connection with the proposed acquisition by Sulzer (UK) Holdings Ltd. (“Sulzer”) of all of the issued and to be issued shares of Castle Support Services plc (the “Acquisition”).
N M Rothschild & Sons Limited is authorized and regulated in the United Kingdom by the Financial Services Authority, is acting as financial adviser to Sulzer and no-one else in connection with the contents of this document and will not be responsible to any person other than Sulzer for providing the protections afforded to clients of N M Rothschild & Sons Limited nor for providing advice in relation to any matter referred to herein.
This document is being supplied to you solely for your information. This document does not constitute a prospectus or a prospectus equivalent document. This document is not intended to, and does not constitute, or form part of, an offer to sell or an invitation to purchase or subscribe for any securities, or a solicitation of any vote or approval in any jurisdiction. No representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document is made by any of N M Rothschild & Sons Limited or Sulzer and no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) is accepted by any of them, their respective affiliates or their respective officers, employees, agents or advisers in relation to it or any other information made available in connection with the document.
This document includes "forward-looking statements" which are based on the current expectations of the management of Castle Support Services plc and Sulzer and are subject to uncertainty and changes in circumstances. The forward-looking statements contained herein may include statements about the expected effects on Sulzer of the Acquisition, the expected timing and scope of the Acquisition, anticipated earnings enhancements, estimated cost savings and other synergies, costs to be incurred in achieving synergies, potential divestitures and other strategic options and all other statements in this document other than historical facts. Forward-looking statements include, without limitation, statements typically containing words such as "intends", "expects", "anticipates", "targets", "estimates" and words of similar import. By their nature, forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Although the board of Sulzer believes the expectations in such forward-looking statements are reasonable, there are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, unanticipated issues associated with the satisfaction of the conditions to the Acquisition; issues associated with obtaining necessary regulatory approvals and the terms and conditions of such approvals; the inability to integrate successfully Castle Support Services plc within Sulzer or to realize synergies from such integration within the time periods anticipated; and changes in anticipated costs related to the acquisition of Castle Support Services plc. Additional factors that could cause actual results and developments to differ materially include, among other things: unanticipated changes in revenue, margins, costs, and capital expenditures; issues associated with new product introductions; foreign currency fluctuations; increased raw material prices; unexpected issues associated with the availability of local suppliers and skilled labor; the risks associated with growth, geographic factors and political and economic risks; actions of competitors; changes in economic or industry conditions generally or in the markets served by Castle Support Services plc and Sulzer; the state of financial and credit markets; efficiencies and capacity utilization of facilities; issues related to new facilities and expansion of existing facilities; work stoppages, labor negotiations, and labor rates; government approval and funding of projects; the ability of our customers to receive financing; and the ability to complete and appropriately integrate restructurings, consolidations, acquisitions, divestitures, strategic alliances, and joint ventures. Forward-looking statements only speak as of the date on which they are made.
None of N M Rothschild & Sons Limited or Sulzer undertakes any obligation (except as required by law or regulation) to revise or update any information contained in this document, regardless of whether that information is affected as a result of new information, future events or otherwise.
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