THE FOLLOWING ANNOUNCEMENT IS BEING MADE PURSUANT TO THE REQUIREMENTS OF RULE 19.6(B) OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE").
28 January 2019
TT Electronics plc
Update to stated post-offer intention statements with regard to Stadium Group plc and trading update
TT Electronics plc ("TT") announces that further to the completion of its recommended cash acquisition of the entire issued and to be issued share capital of Stadium Group plc ("Stadium"), which was effected by way of a scheme of arrangement under Part 26 of the Companies Act 2006 on 18 April 2018 (the "Acquisition"), its board of directors (the "TT Board") has decided to take certain courses of action which differ from the statements of intent made pursuant to Rules 2.7(c)(iv) and 24.2 of the Code (the "Stated Intentions"), as set out in its announcement of 15 February 2018 and the scheme document published on 15 March 2018 (together, the "Offer Documentation").
Reasons for changes to the Stated Intentions
The initial integration has gone as planned, as set out in the Offer Documentation.
The revisions to TT's Stated Intentions are a result of opportunities identified during the initial phase of integration to optimise manufacturing to meet customer demand. The revised integration plan is expected to enhance our collective business operations and customer service to help facilitate growth and improved business performance of the enlarged business.
The revised integration plan includes additional investment in Stadium's site in Hartlepool, UK to add new production lines and convert part of the site to warehousing to fulfil additional customer demand. Distribution of power supplies will be moved from the site in Reading, UK, to Hartlepool to consolidate operations to better serve our customers. Technical support and customer interfaces will remain unchanged and these activities will continue to be served by employees at the Reading and Norwich sites.
Certain customer product lines will be moved from Hartlepool, UK, to Dongguan, China, to fulfil customer requests for lower cost manufacturing options, creating additional capacity and space at the Hartlepool site.
Planned cost synergies are tracking ahead of our projected business case and advice to shareholders as at April 2018, which has allowed us to make increased investment in Stadium's operations and R&D activities. These synergies include:
· Savings associated with the removal of PLC cost duplication which have now been realised;
· Consolidation of sales networks in North America; and
· Procurement supply chain savings which are on track or ahead of prior expectations.
The synergies include headcount duplication which has been eliminated, resulting in less than 2 per cent headcount reductions as at 25 January 2019.
TT's supply chain team are now directly supporting Stadium's operations. In addition, TT is in the process of setting up one of TT's North American facilities to deliver product to Stadium's North American customer base.
As a result of the identified growth potential and additional cost synergies created, TT has made additional investments in Stadium's operations and R&D activities. This investment includes an additional circa £1m run rate investment per annum by 2020 to meet additional customer demand, representing additional engineers and a new advanced technology centre opened in Shenzhen, China.
Revisions to Stated Intentions
As stated in the Offer Documentation, the TT Board did not envisage making overall job reductions related to the Stadium workforce (as at the time of the Acquisition) initiated by TT throughout the integration process of more than 3 per cent of Stadium's total head count (as at the time of the Acquisition). It is now intended that as part of the restructuring activity described above, there will be a redundancy programme which is likely to involve additional headcount reductions. TT's revised intention is expected to result in overall job reductions related to the Stadium workforce (as at the time of the Acquisition) and initiated by TT throughout the integration process of no more than 4 per cent of Stadium's total head count (as at the time of the Acquisition).
The revisions to the original Stated Intentions cover only Stadium facilities and have been proposed by the joint Stadium and TT leadership teams.
The TT Board notes that, whilst the scope of the redundancy programme is now wider than had previously been anticipated, the overall total level of redundancies is still expected to be relatively limited and will have no impact on customer support. The TT Board also notes that all other Stated Intentions have been complied with. In accordance with Rule 19.6(c) of the Code, a further announcement will be made on 18 April 2019.
Trading update
Trading for the Group to the end of December 2018 has continued to be positive and in line with our plans. The year concluded with a very good performance from across the business, in line with the guidance set out in the trading statement of 13 November 2018, with good revenue growth and a strong order book.
In December 2018 the Group entered into an agreement to extend its multi-currency revolving credit facility, taking the maturity date out from May 2021 to December 2023 and increasing its size from £150 million to £180 million.
For further information please contact: |
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TT Electronics plc |
Tel: +44 (0)1932 825 300 |
Richard Tyson, Chief Executive Officer Mark Hoad, Chief Financial Officer Emma Darke, Head of Investor Relations and Communications |
Rothschild (Financial Adviser) |
Tel: +44 (0)20 7280 5000 |
Neil Thwaites |
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Numis (Corporate Broker) |
Tel: +44 (0) 20 7260 1000 |
Luke Bordewich |
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Michael Burke |
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MHP (PR Adviser) |
Tel: +44 (0)20 3128 8100 |
Tim Rowntree / Katie Hunt |
About TT Electronics
TT Electronics is a global provider of engineered electronics for performance critical applications.
The company operates in industries where there are structural growth drivers, working with market-leading customers in industrial, medical, aerospace and defence, and transportation sectors. Products designed and manufactured include sensors, power management devices and connectivity solutions. TT has design and manufacturing facilities in the UK, US, Sweden and Asia.
The company has three divisions. The Sensors and Specialist Components division works with customers to develop standard and customised solutions including sensors and power management devices. Our solutions improve the precision, speed and reliability of critical aspects of our customers' applications. The Power and Connectivity division designs and manufactures power application products and connectivity devices which enable the capture and wireless transfer of data. We collaborate with our customers to develop innovative solutions to optimise their electronic systems. The Global Manufacturing Solutions division provides manufacturing services and engineering solutions for our product divisions and to customers that often require a lower volume and higher mix of different products. We produce printed circuit board assemblies through to full electronic products to our customers' designs coupled with engineering testing and integration services.
Cautionary Statement
This document contains forward-looking statements. These have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report. The Directors can give no assurance that these expectations will prove to have been correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The Directors undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
Important notices relating to financial advisers
N M Rothschild & Sons Limited (Rothschild & Co), which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively as financial adviser to TT and for no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than TT for providing the protections afforded to its clients or for providing advice in relation to the matters referred to in this announcement. Neither Rothschild & Co, nor any of its affiliates, owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Rothschild & Co in connection with this announcement, any statement contained herein or otherwise.
Numis Securities Ltd (Numis), which is authorised and regulated in the United Kingdom by the FCA, is acting solely for TT as broker and for no one else in relation to the content of this announcement and other matters described in this announcement, and will not be responsible to anyone other than TT for providing the protections afforded to the clients of Numis or for providing advice to any other person in relation to the content of this announcement or any other matters described in this announcement.
