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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. UPON PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION WILL BE CONSIDERED TO BE IN THE PUBLIC DOMAIN
FOR IMMEDIATE RELEASE
3 July 2023
RECOMMENDED CASH OFFER
by
Novacyt UK Holdings Limited
(a wholly-owned subsidiary of Novacyt S.A.)
for
Yourgene Health plc
to be effected by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006
Summary
- The boards of directors of Novacyt and Yourgene are pleased to announce that they have reached agreement on the terms and conditions of a recommended cash offer to be made by Novacyt UK, a wholly-owned subsidiary of Novacyt, for the entire issued and to be issued share capital of Yourgene (the "Acquisition").
- Under the terms of the Acquisition, each Yourgene Shareholder will be entitled to receive:
0.522 pence in cash per Yourgene Share
· The Acquisition values the entire issued and to be issued share capital of Yourgene at approximately £16.7 million.
· The Acquisition Price represents a premium of approximately:
- 167.7 per cent. to the Closing Price of 0.195 pence per Yourgene Share on 30 June 2023 (being the last Business Day prior to the date of this Announcement);
- 111.3 per cent. to the Volume Weighted Average Price per Yourgene Share during the three-month period ended 30 June 2023 (being the last Business Day prior to the date of this Announcement);
- 57.2 per cent. to the Volume Weighted Average Price per Yourgene Share during the six-month period ended 30 June 2023 (being the last Business Day prior to the date of this Announcement); and
- 74.0 per cent. to the December 2022 placing price of 0.30 pence per Yourgene Share.
- If, on or after the date of this Announcement and on or prior to the Effective Date, any dividend and/or other distribution and/or other return of capital in respect of the Yourgene Shares is declared, made, paid or becomes payable by Yourgene, Novacyt UK reserves the right to reduce the consideration payable for each Yourgene Share under the terms of the Acquisition by an amount up to the amount per Yourgene Share of such dividend and/or distribution and/or other return of capital, in which case any reference in this Announcement to the consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced. In such circumstances, Yourgene Shareholders would be entitled to retain any such dividend and/or distribution and/or other return of capital.
- It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (or if Novacyt UK elects, with the consent of the Takeover Panel, by way of a Takeover Offer).
Background to, and reasons for, the Acquisition
· The boards of Novacyt and Novacyt UK believe that the Acquisition strongly aligns with Novacyt's post-COVID-19 strategy, set out by Novacyt in early 2022, which was focussed on the twin objectives of portfolio development and geographic expansion and included pursuing strategic M&A transactions to build scale and diversification to support the long-term growth of the business. For this reason, the boards of Novacyt and Novacyt UK therefore believe there is a compelling strategic and financial rationale for the Acquisition.
· The Enlarged Group is expected to create a more scaled, diversified operator in the diagnostics sector. The Acquisition combines highly complementary technologies and services, with the Enlarged Group able to leverage mutual research and development capabilities for ongoing product development and portfolio enhancement to improve the customer offering.
· The diagnostics industry, in which both Novacyt and Yourgene operate, is highly competitive, with multiple scale competitors. Continuing to invest in research and development to develop Yourgene's service and product offering over the long term requires highly targeted continued investment, which the combination of the two groups will facilitate, through utilisation of combined capital resources and commercial infrastructure.
· Novacyt considers that customers will benefit significantly from the combination, driven by the complementary suite of diagnostic products and services of the two groups. This will enable the delivery of more integrated solutions through the efficient pooling of resources.
· Novacyt believes that Yourgene's core NIPT offering and PCR portfolio has significant growth potential that can be further accelerated by the significant resources and investment that Novacyt can provide, given its strong financial position.
· The Acquisition is expected to enable Novacyt to deliver significant value to customers across the combined set of businesses through streamlined technology and sharing of best operational practices to create a more robust and sustainable operating model to serve partners and customers.
· The Novacyt Directors believe that there is significant potential for the Enlarged Group to strengthen customer relationships and cross-sell its expanded range of products and services within the combined installed base, whilst maintaining specialist capabilities in discrete competencies. In particular, Novacyt sees potential to leverage Yourgene's proprietary Ranger® Technology to differentiate the Enlarged Group's molecular diagnostics portfolio while continuing to explore further use cases within the Yourgene and Novacyt product portfolios.
· Novacyt believes that Yourgene will reach its full potential under Novacyt's ownership, accelerating revenue growth and building long-term value for the Enlarged Group, driven by the increased investment in Yourgene that could be provided as part of the Enlarged Group.
· The Novacyt Directors expect cost synergies to be generated through the rationalisation of duplicative functions and systems, elimination of excess facilities and combination of leadership roles within the Enlarged Group.
· The boards of directors of Novacyt and Novacyt UK believe that the Enlarged Group will be a more attractive prospect as a consolidated entity to attract investment from a wider range of institutional investors.
· The boards of directors of Novacyt and Novacyt UK believe that the Acquisition Price represents a full and fair value for Yourgene Shareholders. The Acquisition Price allows Yourgene Shareholders to immediately crystallise the value of their holdings, in cash, at a significant premium to the current share price of Yourgene, while not taking any of the substantial risk that remains to Yourgene as a standalone entity.
Recommendation
- The Yourgene Directors, who have been so advised by Stifel Nicolaus Europe Limited ("Stifel") as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Yourgene Directors, Stifel has taken into account the commercial assessments of the Yourgene Directors. Stifel is providing independent financial advice to the Yourgene Directors for the purposes of Rule 3 of the Code.
- Accordingly, the Yourgene Directors intend to recommend unanimously that the Yourgene Shareholders vote or procure votes in favour of the Scheme at the Court Meeting and the Special Resolution relating to the Acquisition to be proposed at the General Meeting (or, if Novacyt UK exercises its right to implement the Acquisition by way of a Takeover Offer, to accept such offer), as the Yourgene Directors who hold Yourgene Shares (in a personal capacity or through a nominee) have irrevocably undertaken to do, or as they have otherwise irrevocably undertaken to direct (and use all reasonable endeavours to procure that) their nominees do, in respect of their own (and their connected persons') beneficial holdings of Yourgene Shares (or those Yourgene Shares over which they have control) other than any Yourgene Shares held by them pursuant to the SIP, amounting, in aggregate to 428,977,159 Yourgene Shares (representing, in aggregate, approximately 13.5 per cent. of the Yourgene Shares in issue on 30 June 2023 (being the last Business Day prior to the date of this Announcement)).
Irrevocable undertakings
- In addition to the irrevocable undertakings from the Yourgene Directors, Novacyt UK has also received an irrevocable undertaking to vote or procure votes in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting (or, if Novacyt UK exercises its right to implement the Acquisition by way of a Takeover Offer, to accept such offer) from BGF Investments LP in respect of 399,264,611 Yourgene Shares (representing approximately 12.6 per cent. of the Yourgene Shares in issue on 30 June 2023 (being the last Business Day prior to the date of this Announcement)).
- In total therefore, as at the date of this Announcement, Novacyt UK has received irrevocable undertakings to vote or procure votes in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting (or, if Novacyt UK exercises its right to implement the Acquisition by way of a Takeover Offer, to accept such offer) with respect to a total of 828,241,770 Yourgene Shares (representing, in aggregate, approximately 26.1 per cent. of the Yourgene Shares in issue on 30 June 2023 (being the last Business Day prior to the date of this Announcement).
- Full details of the irrevocable undertakings received by Novacyt UK are set out in Appendix 3 to this Announcement.
Information on the Novacyt Group
- Novacyt is an international diagnostics business delivering a broad portfolio of in vitro and molecular diagnostic tests for a wide range of infectious diseases, enabling faster, more accurate, accessible testing to improve healthcare outcomes. Novacyt provides customers with modular decentralised and near to patient instruments workflows using its integrated and scalable instrumentation/solutions. Novacyt specialises in the design, manufacture and supply of real-time PCR kits, reagents and a full range of laboratory and qPCR instrumentation for molecular biology research and clinical use. Novacyt offers a varied and comprehensive range of qPCR assays, covering human, veterinary, biodefence, environmental, agriculture and food testing. Novacyt Shares are admitted to trading on AIM and on the Euronext Growth Paris.
- Novacyt UK is a wholly-owned subsidiary of Novacyt.
Information on Yourgene
- Yourgene is an international integrated technologies and services business, enabling the delivery of genomic medicine. Yourgene works in partnership with global leaders in DNA technology to advance diagnostic science.
- Yourgene primarily develops, manufactures, and commercialises simple and accurate molecular diagnostic and screening solutions, for reproductive health and precision medicine. Yourgene's portfolio of in vitro diagnostic products includes non-invasive prenatal tests (NIPT) for Down's Syndrome and other genetic disorders, Cystic Fibrosis screening tests, invasive rapid aneuploidy tests and DPYD genotyping assays.
- Building on expertise in genomic technology, Yourgene's Ranger® Technology offers next generation size selection with a range of sample preparation platforms for dynamic target enrichment. Ranger® Technology can be utilised to improve workflows and performance in multiple applications including NIPT, oncology, infectious disease testing and gene synthesis.
- Yourgene Genomic Services offers a clinical service from the UK and Taiwan focusing on precision medicine and reproductive health, including NIPT.
- Yourgene is headquartered in Manchester, UK with offices in Taipei (divestment pending), Singapore, the U.S. and Canada, and the Yourgene Shares are admitted to trading on AIM.
- As previously disclosed by Yourgene on 18 February 2019, in connection with the Yourgene Group's corporate and commercial restructure of its relationship with Life Technologies Limited (a subsidiary of Thermo Scientific Inc.) in February 2019, Yourgene agreed to a £6.5 million contingent liability payable by Yourgene to Life Technologies Limited in the event that, inter alia, any person (together with its connected persons or any other persons with whom it is acting in concert) acquires interests in securities carrying more than 50 per cent. of the voting rights of Yourgene or any person or group acquires all or substantially all of the business/assets of Yourgene. Such payment is due and payable by Yourgene to Life Technologies Limited in cash on the date of such an event. In connection with the Acquisition and pursuant to this obligation, Novacyt will fund Yourgene so that it can make this payment to Life Technologies Limited upon completion of the Acquisition.
- Yourgene has an existing term loan facility in place with Silicon Valley Bank (UK branch) (the "SVB Loan"). Following completion of the Acquisition, it is expected that the SVB Loan will be repaid in full.
Timetable, Conditions and Scheme Document
· It is intended that the Acquisition will be effected by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. The purpose of the Scheme is to provide for Novacyt UK to become the owner of the whole of the issued and to be issued share capital of Yourgene. The Scheme will be put to Scheme Shareholders at the Court Meeting and to Yourgene Shareholders at the General Meeting. In order to become Effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted. The implementation of the Scheme must also be approved by Yourgene Shareholders at the General Meeting.
· The Acquisition is subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document.
· It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and General Meeting, together with the associated Forms of Proxy, will be posted to Yourgene Shareholders as soon as reasonably practicable and, in any event, within 28 days of the date of this Announcement, unless Novacyt UK and Yourgene otherwise agree, and the Takeover Panel consents, and will be made available by Yourgene and Novacyt UK at https://yourgenehealth.com/our-investors/offer-for-yourgene-health-plc/ and https://novacyt.com/investors/ respectively (subject to certain restrictions in relation to persons in Restricted Jurisdictions).
· The Acquisition is currently expected to complete during Q3 2023, subject to the satisfaction or waiver (as applicable) of the Conditions. An expected timetable of key events relating to the Acquisition will be provided in the Scheme Document.
Commenting on the Acquisition, James McCarthy, acting Chief Executive Officer of Novacyt, said:
"We are delighted to announce this recommended offer for Yourgene. We regard Yourgene as a highly respected company with a world class team of employees that offers differentiated solutions to customers. We consider Novacyt and Yourgene to be highly complementary and expect the combination of the two businesses to benefit stakeholders of both Novacyt and Yourgene."
Commenting on the Acquisition, Lyn Rees, Chief Executive Officer of Yourgene, said:
"The Board of Yourgene welcome the offer from Novacyt UK. The prospect and scale of what the new enlarged group could bring to our customers, employees and other stakeholders is exciting given the complimentary fit of both businesses. Whilst the two companies work within the same molecular diagnostic space, they both bring distinctive strengths and are focused in different market segments, which opens up further opportunities for growth."
This summary should be read in conjunction with, and is subject to, the full text of this Announcement and its Appendices. In particular, the Acquisition is subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix 2 to this Announcement contains details of sources of information and bases of calculation contained in this Announcement. Appendix 3 to this Announcement contains a summary of the irrevocable undertakings referred to in this Announcement. Appendix 4 to this Announcement contains definitions of certain terms and expressions used in this Announcement.
The person responsible for arranging the release of this Announcement on behalf of Novacyt UK is James McCarthy.
The person responsible for arranging the release of this Announcement on behalf of Yourgene is Lyn Rees.
Enquiries:
Novacyt
James Wakefield (Chairman) / James McCarthy (acting Chief Executive Officer) c/o Numis
| Numis (Financial Adviser and Joint Broker to Novacyt and Financial Adviser to Novacyt UK) | ||||||||
| Freddie Barnfield / Stuart Ord / Duncan Monteith / Jack McLaren S.P. Angel Corporate Finance LLP (Nominated Adviser and Joint Broker to Novacyt) Matthew Johnson / Charlie Bouverat (Corporate Finance) Vadim Alexandre / Rob Rees (Corporate Broking) Tel: +44 (0) 20 3470 0470
|
| Cairn (Nominated Adviser to Yourgene) | |
| Liam Murray / Ludovico Lazzaretti | Tel: +44 (0) 20 7213 0880 |
| Walbrook PR Limited (Media and Investor Relations for Yourgene) | |
| Alice Woodings / Lianne Applegarth | Tel: +44 (0) 20 7933 8780 or yourgene@walbrookpr.com Mob: +44 (0) 7407 804 654 / +44 (0) 7584 391 303 |
Stephenson Harwood LLP is providing legal advice to Novacyt and Novacyt UK.
Addleshaw Goddard LLP is providing legal advice to Yourgene.
Please see associated PDF to view the full announcement.