TIDMSWG
RNS Number : 1263Y
Shearwater Group PLC
17 August 2018
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE
UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR
JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION
OR DISTRIBUTION WOULD BE UNLAWFUL.
This announcement contains inside information as stipulated
under the Market Abuse Regulation (EU) no. 596/2014 ("MAR").
17 August 2018
SHEARWATER GROUP PLC
Proposed GBP30.3 million Acquisition
Proposed Placing, Open Offer and Suspension of trading
Shearwater Group plc (AIM: SWG) ("Shearwater", the "Company" or
the "Group"), the digital resilience group, has today entered into
a conditional agreement to acquire the entire issued share capital
of Brookcourt Solutions Limited ("Brookcourt"), a leading
independent UK-based cyber security solutions company, for total
consideration of GBP30.3 million (the "Proposed Acquisition").
Highlights
-- Established in 2005, Brookcourt specialises in the provision
of cyber security and network solutions within complex, advanced
threat landscapes
-- Winning over 20 industry awards to date, Brookcourt has
longstanding customer relationships with multiple FTSE 100 and FTSE
250 companies across a variety of industry sectors
-- Brookcourt has a strong track record of profitable
performance and cash generation - for the financial year ended 31
March 2017, Brookcourt generated unaudited revenue of GBP22.2
million and GBP2.8 million of EBITDA
-- Proposed Acquisition represents a transformational deal for
Shearwater:
o substantially broadens the Group's cyber security solutions
and services capability, facilitating access to a complementary,
large enterprise client base
o creates a strong platform to drive organic and acquisitions
growth, within a fragmented cyber security services and solutions
market
o access to a highly experienced management team remaining with
the Group to lead the expansion of Brookcourt, and support the
further development of the business into cyber security and managed
service solutions
-- Enlarged Group expected to be cashflow positive following
acquisition
-- Total consideration of GBP30.3 million, payable GBP22.95
million in cash and GBP7.35 million in Consideration Shares
-- Proposed placing of between approximately GBP25 million and
GBP30 million and open offer of up to GBP1 million to fund the
Proposed Acquisition and provide additional working capital for the
Enlarged Group
David Williams, Chairman of Shearwater, said:
"This transformational acquisition provides us with a
substantial platform from which we can grow organically and by
further acquisitions.
"One of the key elements of our buy and build strategy is that
the management teams stay with the business and become active parts
of the enlarged group - I am therefore delighted that Phil, Dene
and the Brookcourt team are joining us.
"As well as being strategically and operationally a major
development for us, this transaction will also bring a step change
in our scale and breadth of offering, and notably it will make us
cashflow positive following completion."
Phil Higgins, Co-founder and Chief Executive Officer of
Brookcourt, said:
"We had a number of options to develop and grow our business,
but were very much drawn to joining Shearwater owing to our shared
vision and the real opportunity to be part of a rapidly growing
PLC. This unity provides us with the resources, additional industry
expertise and support to scale the business in delivering a broader
solutions offering to our existing and prospective customers.
"We are delighted to be joining Shearwater at such a pivotal
time in Brookcourt's development and we very much look forward to
realising our ambitions for the business as part of the wider
group."
Enquiries:
Shearwater Group plc www.theshearwatergroup.co.uk
David Williams c/o Instinctif Partners
Michael (Mo) Stevens
Cenkos Securities plc - NOMAD and Broker
Max Hartley - NOMAD
Julian Morse / Michael Johnson - Sales +44 (0) 20 7397 8900
Instinctif Partners - Financial PR shearwater@instinctif.com
Adrian Duffield / Chantal Woolcock / +44 (0) 20 7427 1412
Kay Larsen
Acquisition Agreement
The Company has today entered into a conditional agreement to
acquire the entire issued share capital of Brookcourt for total
consideration of GBP30.3 million. The Proposed Acquisition will be
subject, inter alia, to shareholder approval at a general meeting,
raising the funds necessary to finance the Proposed Acquisition
through the Proposed Placing and Proposed Open Offer and Admission
(all as defined below).
The total consideration of GBP30.3 million will be satisfied by
cash consideration of GBP22.95 million with the balance of GBP7.35
million to be satisfied by the issue of new ordinary shares in the
capital of the Company ("Ordinary Shares") at the placing price
(the "Consideration Shares"). The Consideration Shares will be
subject to a lock in arrangement for a period of 12 months
following completion of the Proposed Acquisition, and customary
orderly market provisions for a futher 12 months following the
expiry of the lock in arrangement.
Information on Brookcourt Solutions Limited
Brookcourt was established in 2005 by the current management
team with the aim of providing secure networking and cyber security
solutions to UK-based corporate and public sector customers.
Building upon their prior experience of working within software
vendors, hardware resellers and network solution providers,
management believed there was an opportunity to create a leading
secure networking and cyber security solutions business, which
could challenge the market leading solution providers and
traditional resellers, through a differentiated customer service
proposition, which was more creative and agile, held service
delivery management at the core of the offering, and was able to
access "best in breed" technology solutions in order to meet a
customer's secure networking requirements.
Initially focused on the financial services sector, Brookcourt
has since expanded its customer base and now serves a variety of
clients within technology, media, telecoms, retail, energy and
utilities, healthcare, transport and logistics, industrial
manufacturing, public sector and insurance markets.
Over the past 13 years, Brookcourt's secure networking and cyber
security solutions proposition has grown substantially and has
developed a reputation for high levels of customer service which
has enabled it to build long standing relationships with its client
base. The business has won 20 industry awards, including Security
Service Provider of the Year, Customer Service Provider of the
Year, Security Reseller of the Year, and has been included within
the London Stock Exchange's top 1000 companies to Inspire Britain
2017.
The Company believes that the Proposed Acquisition represents a
transformational deal, with the Enlarged Group expected to be
cashflow positive following completion of the Proposed Acquisition.
The Proposed Acquisition would substantially broaden Shearwater's
cyber security solutions and services capability, provide access to
a complementary client base aligned to larger enterprises, and
creates a strong platform of scale to effect consolidation at the
portfolio company level.
Brookcourt has a strong track record of profitable performance
and cash generation. For the financial year ended 31 March 2017,
Brookcourt generated unaudited revenue of GBP22.2 million and
GBP2.8 million of EBITDA. For the financial year ended 31 March
2018, Brookcourt generated unaudited revenue of GBP20.9 million and
an adjusted EBITDA of GBP2.0 million, as a result of increased
business development activity during the year, which has resulted
in a number of significant new customer contract wins falling into
financial year ending 2019.
Proposed placing and open offer
In order to finance in part the Proposed Acquisition and to
provide additional working capital for the enlarged Group (the
"Enlarged Group") following the Proposed Acquisition, the Company
is proposing to raise between approximately GBP25 million and GBP30
million (before expenses) through a placing of new Ordinary Shares
(the "Placing Shares") (the "Proposed Placing"). The Company is
also proposing to raise up to a further GBP1 million by way of an
open offer of new Ordinary Shares (the "Open Offer Shares") to
existing qualifying shareholders of the Company (the "Proposed Open
Offer").
The Proposed Acquisition would constitute a reverse takeover
under rule 14 of the AIM Rules for Companies (the "AIM Rules") and
will therefore be conditional upon, inter alia, shareholder
approval at a general meeting, no material adverse change having
occurred in respect of Brookcourt and the admission of the Placing
Shares and the Consideration Shares and admission of the Enlarged
Group to trading on AIM ("Admission").
As such, there can be no certainty that the Proposed Acquisition
will proceed. The Company intends to publish a combined shareholder
circular and AIM admission document (the "Circular") in relation to
the Proposed Acquisition and the Enlarged Group in due course.
The Company will make a further announcement in due course.
Suspension of trading
In accordance with rule 14 of the AIM Rules, the Company's
Ordinary Shares will be suspended from trading on AIM with effect
from 7:30 a.m. today. The Ordinary Shares will remain suspended
until such time that either the Circular has been published or an
announcement has been released confirming that the Proposed
Acquisition shall not proceed.
Group Strategy
The Group is focused on building a UK-based group providing
digital resilience solutions and services. Through the application
of its "buy, focus, grow" strategy, the Group aims to identify
investment and acquisition opportunities where the target company
has a leading product, solution, service or consulting capability
whose potential can be unlocked through active management and
capital investment.
Through recent acquisitions and a number of organic growth
initiatives, the Group is at the early stages of building a broad
portfolio of information security, governance, risk and compliance,
cyber and cyber security platforms, which aim to meet the
ever-increasing digital resilience demands from the Group's
customers. This will provide the Group's current and prospective
shareholders with exposure to a large and rapidly growing sector
through a portfolio approach, which aims to balance risk and return
in a highly dynamic and often unpredictable operating
environment.
Management and Board
The Board of Directors of Shearwater will remain unchanged
following completion of the Proposed Acquisition and Admission.
Brookcourt's two co-founders, Phil Higgins and Dene Stacey,
operate as Chief Executive Officer and Chief Operating Officer of
Brookcourt respectively, and will remain in their current
positions, reporting directly to Shearwater as the parent
company.
Important notice
This announcement is for information purposes only and is not
intended to and does not constitute, or form part of, any offer or
invitation to purchase, subscribe for or otherwise acquire or
dispose of, or any solicitation to purchase or subscribe for or
otherwise acquire or dispose of, any securities in the United
States, Republic of South Africa, Australia, Canada or Japan or any
other jurisdiction in which such an offer or solicitation may lead
to a breach of any applicable legal or regulatory requirements.
Persons needing advice should consult with an independent financial
adviser authorised under the Financial Services and Markets Act
2000, as amended ("FSMA"), who specialises in advising on the
acquisition of shares and other securities, if that person is in
the United Kingdom, or any appropriately authorised person under
applicable laws, if that person is located in any other
jurisdiction. The information contained in this announcement is not
for release, publication or distribution to persons in any
jurisdiction where to do so might constitute a violation of local
securities laws or regulations.
This announcement has been issued by and is the sole
responsibility of the Company. The information contained in this
announcement is for background purposes only and does not purport
to be full or complete. The information in this announcement is
subject to change without notice.
Upon the publication of this announcement via a Regulatory
Information Service, this inside information is now considered to
be in the public domain. If you have any queries on this, then
please contact David Williams, Chairman of the Company (responsible
for arranging release of this announcement) via Instinctif.
This announcement may contain and the Company may make verbal
statements containing "forward-looking statements" with respect to
certain of the Company's plans and its current goals and
expectations relating to its future financial condition,
performance, strategic initiatives, objectives and results.
Forward-looking statements sometimes use words such as "aim",
"anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "seek", "may", "could", "outlook" or other words
of similar meaning. By their nature, all forward-looking statements
involve risk and uncertainty because they relate to future events
and circumstances which are beyond the control of the Company,
including amongst other things, United Kingdom domestic and global
economic business conditions, market-related risks such as
fluctuations in interest rates and exchange rates, the policies and
actions of governmental and regulatory authorities, the effect of
competition, inflation, deflation, the timing effect and other
uncertainties of future acquisitions or combinations within
relevant industries, the effect of tax and other legislation and
other regulations in the jurisdictions in which the Company and its
affiliates operate, the effect of volatility in the equity, capital
and credit markets on the Company's profitability and ability to
access capital and credit, a decline in the Company's credit
ratings; the effect of operational risks; and the loss of key
personnel. As a result, the actual future financial condition,
performance and results of the Company may differ materially from
the plans, goals and expectations set forth in any forward-looking
statements. Any forward-looking statements made in this
announcement by or on behalf of the Company speak only as of the
date they are made. Except as required by applicable law or
regulation, the Company expressly disclaims any obligation or
undertaking to publish any updates or revisions to any
forward-looking statements contained in this announcement to
reflect any changes in the Company's expectations with regard
thereto or any changes in events, conditions or circumstances on
which any such statement is based.
The distribution of this announcement in certain jurisdictions
may be restricted by law. No action has been taken by the Company
or Cenkos Securities plc ("Cenkos") that would permit an offering
of such shares or possession or distribution of this announcement
or any other offering or publicity material relating to such shares
in any jurisdiction where action for that purpose is required,
other than the United Kingdom. Persons into whose possession this
announcement comes are required by the Company and Cenkos to inform
themselves about, and to observe, such restrictions. The
information contained in this announcement may not be distributed,
published, reproduced, transmitted or otherwise made available in
whole or in part or disclosed by recipients to any other person and
may not be reproduced in any manner whatsoever. Any forwarding,
distribution, reproduction, or disclosure of any information
contained in this announcement in whole or in part is unauthorised.
Failure to comply with these restrictions may constitute a
violation of the US Securities Act of 1933, as amended or the
applicable laws of other jurisdictions. Subject to certain
exemptions, the securities referred to in this announcement may not
be offered or sold in the United States, Australia, Canada, Japan,
South Africa or certain other jurisdictions or for the account or
benefit of any national resident or citizen of certain
jurisdictions. No prospectus will be made available in connection
with the matters contained in this announcement and no such
prospectus is required to be published. Persons needing advice
should consult an independent financial adviser.
Cenkos, which is authorised and regulated in the United Kingdom
by the Financial Conduct Authority is acting as nominated adviser
and broker to Shearwater in connection with the Proposed
Acquisition and the Proposed Placing. Cenkos is acting exclusively
for Shearwater and no one else in connection with the Proposed
Acquisition and the Proposed Placing and will not be responsible to
anyone other than Shearwater for providing the protections afforded
to clients of Cenkos or for providing advice in relation to the
Proposed Acquisition and the Proposed Placing or the contents of
this announcement or any transaction, arrangement or matter
referred to herein.
Apart from the responsibilities and liabilities, if any, which
may be imposed on Cenkos by the FSMA or the regulatory regime
established thereunder, Cenkos does not accept any responsibility
whatsoever for the contents of this announcement, and makes no
representation or warranty, express or implied, for the contents of
this announcement, including its accuracy, completeness or
verification, or for any other statement made or purported to be
made by it, or on its behalf, in connection with the Company or the
Placing Shares or the Proposed Placing, and nothing in this
announcement is or shall be relied upon as, a promise or
representation in this respect whether as to the past or future.
Cenkos accordingly disclaims to the fullest extent permitted by law
all and any liability whether arising in tort, contract or
otherwise (save as referred to above) which it might otherwise have
in respect of this announcement or any such statement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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