London / UK. (abf / nmr) The boards of Associated British Foods PLC (ABF) and National Milk Records PLC (NMR) are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition to be made by ABF, pursuant to which AB Agri Limited (an indirect wholly-owned subsidiary of ABF) will acquire the entire issued and to be issued ordinary share capital of NMR. It is intended that the Offer be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (or, if ABF so elects, with the consent of the Panel, a Takeover Offer) between NMR and NMR Shareholders. Under the terms of the Acquisition, each NMR Shareholder will be entitled to receive 215 pence in cash per NMR Share. The Acquisition values the entire issued and to be issued ordinary share capital of NMR at approximately GBP 48.0 million on a fully diluted basis.
The Acquisition represents a premium of approximately:
- 87.0 percent to the Closing Price of an NMR Share of 115.0 pence on 05 June 2023, being the Last Practicable Date;
- 94.6 percent to the volume weighted average share price (VWAP) of an NMR Share of 110.5 pence for the three month period ended on the Last Practicable Date; and
- 85.6 percent to the VWAP of an NMR Share of 115.9 pence for the six month period ended on the Last Practicable Date.
Overview of ABF
The ABF Group is a diversified international food, ingredients and retail group with 132,000 employees in 53 countries. ABF has a premium listing on the Main Market of the London Stock Exchange and has a market capitalisation of some GBP 14 billion with a net cash position of circa GBP 0.6 billion.
AB Agri is ABF’s international agri-food business and a leader in the UK agricultural sector. AB Agri occupies a key position in the food supply chain, with a presence in more than 80 countries, employing over 3,000 people internationally. AB Agri supplies a wide range of animal feed, supplements and specialist ingredients, and provides value-added services and expertise to farmers, feed and food manufacturers and retailers. It operates at the heart of the agricultural industry and its vision centres around working with its customers to produce high-quality, affordable, safe and responsibly sourced food products. AB Agri has an established position in the UK dairy industry, working with over 2,000 UK dairy farms.
Background to and reasons for the Acquisition
AB Agri actively looks to add new, complementary capabilities through M+A and has a track record of successfully acquiring businesses. NMR’s business is well aligned with AB Agri’s objective of supporting customers across the dairy industry, helping to drive efficiency and increase productivity. NMR provides complementary services and technology offerings to AB Agri’s existing operations across the dairy supply chain, and AB Agri believes that a combination will enable a better service to the dairy industry, initially in the UK, offering products that deliver increased value, efficiency and ultimately profitability for farmers. AB Agri is excited about NMR becoming part of the broader group and believes that the Acquisition will allow NMR to accelerate and de-risk the delivery of its strategy, as well as creating greater opportunities for NMR’s customers, employees and wider stakeholders.
NMR recommendation
The NMR Directors, who have been so advised by Canaccord Genuity 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 NMR Directors, Canaccord Genuity has taken into account the commercial assessments of the NMR Directors. Canaccord Genuity is providing independent financial advice to the NMR Directors for the purpose of Rule 3 of the Code.
Accordingly, the NMR Directors believe that the Acquisition is in the best interests of NMR Shareholders as a whole and intend to recommend unanimously that NMR Shareholders vote or procure votes in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), as all the NMR Directors holding NMR Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 284,792 NMR Shares (representing, in aggregate, approximately 1.34 percent of the NMR Shares in issue on the Last Practicable Date).
Irrevocable Undertakings
In addition to the irrevocable undertakings noted above, ABF has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of 14,072,334 NMR Shares, representing approximately 66.25 percent of the NMR Shares in issue on the Last Practicable Date.
In addition, ABF has received an undertaking to act on a reasonable endeavours basis to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of 194,880 NMR shares (representing, in aggregate, approximately 0.92 percent of the NMR Shares in issue on the Last Practicable Date).
Therefore, as at the date of this announcement, ABF has received irrevocable undertakings and reasonable endeavours undertakings in respect of a total of 14,552,006 NMR Shares (representing approximately 68.51 percent of the NMR Shares in issue on the Last Practicable Date).
Timetable and Conditions
It is intended that the Acquisition be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (or, if ABF so elects and with the consent of the Panel, a Takeover Offer). The purpose of the Scheme is to provide for AB Agri to become the owner of the entire issued and to be issued ordinary share capital of NMR. The Scheme will be put to Scheme Shareholders at the Court Meeting and to the NMR 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 percent in value of the Scheme Shares voted. In addition, the implementation of the Scheme must also be approved by NMR Shareholders at the General Meeting.
The Acquisition will be on the terms and subject to the Conditions and certain further terms set out in Appendix 1 to this announcement, including, among other things: (a) the approval of Scheme Shareholders at the Court Meeting and the passing of the Resolutions to be proposed at the General Meeting; (b) the CMA confirming in response to a briefing note that it has no further questions or, alternatively, CMA approval; (c) the sanction of the Scheme by the Court; and (d) the Scheme becoming Effective no later than the Long Stop Date. The Acquisition does not require the approval of ABF shareholders.
The Scheme Document will include full details of the Scheme, together with an explanatory statement providing details of the Acquisition, and the notices convening the Court Meeting and the General Meeting. The Scheme Document will also contain the expected timetable of the Acquisition and will specify the necessary actions to be taken by NMR Shareholders. The Scheme Document will be sent to NMR Shareholders within 28 days of the date of this announcement (or such later date as NMR, ABF and the Panel agree).
If any dividend or other distribution in respect of the NMR Shares is declared, paid or made on or after the date of this announcement, ABF reserves the right to reduce the consideration payable for each NMR Share under the terms of the Acquisition by the amount per NMR Share of such dividend or distribution. If ABF exercises this right or makes such a reduction in respect of a dividend or distribution, NMR Shareholders will be entitled to receive and retain that dividend or distribution. The Acquisition is currently expected to become Effective during Q3 2023.
Accompanying statements of NMR and AB Agri
Commenting on the announcement, Trevor Lloyd, Chairman of NMR, said: «I am pleased to announce ABF’s intention to acquire NMR. ABF’s and AB Agri’s status within the UK agricultural sector and expertise in the dairy industry will provide a significant benefit to NMR’s customers. As the UK dairy supply chain continues its drive to carbon neutrality, NMR’s work with GenoCells and milk data, and our pivotal role in payment testing, will contribute important information to aid in this transition. The backing of ABF will accelerate and de-risk NMR’s ability to deliver its strategic objectives, streamlining industry processes by creating a holistic business that can provide end-to-end data and analysis to ensure the long term sustainability, efficiency and profitability of UK dairy. The NMR team looks forward to working as part of ABF and AB Agri to further position NMR as a leading player at the centre of the UK dairy industry.»
Commenting on the announcement, José Nobre, Chief Executive of AB Agri, said: «I am delighted to be announcing AB Agri’s intention to acquire NMR. NMR is a high-quality business which is extremely complementary and additive to our dairy strategy and offering to the dairy industry. We have supported dairy farmers for more than 30 years with nutrition and specialty feed products, and more recently with data and technology platforms which deliver insights that create continuous improvement in agricultural supply chains. Acquiring NMR is an extension of this strategy and will enable us to service the industry better, offering products that deliver increased value, efficiency and ultimately profitability for dairy farmers. NMR has assembled a strong team and we are excited by the prospect of working together with them to accelerate the development of the business.»
