Last checked at 25 Jun 2008 16:55
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
FOR IMMEDIATE RELEASE
25 June 2008
FLOMERICS GROUP PLC
Statement re: Mentor Offer
Flomerics Group plc ("Flomerics" or "the Company"), the global supplier of simulation software, would like to remind shareholders of its position regarding the unsolicited offer by Mentor Graphics Corporation ("Mentor") of 104 pence per Flomerics share (the "Mentor Offer").
As stated in the Company's defence document sent to Flomerics shareholders on 27 May 2008, the Flomerics Board believes that the Mentor Offer does not reflect the true value of Flomerics and recommends that shareholders take no action in relation to it. The Board's rejection of the Mentor Offer is not with regard to Mentor as an offeror, but is driven wholly by the Board's view of the fundamental value of the Company, which it believes is in excess of 104 pence per share.
The Mentor Offer was made on the basis of historic publicly available information and the Board believes that Mentor does not fully understand the existing business, the strengths of the product portfolio and the future prospects and growth potential of Flomerics.
Flomerics Trading Remains Strong
Flomerics is a market leader and international brand in growth markets, led by an experienced management team whose focused strategy of investing in people and technology in 2006/7 has started to pay back. Those results are clearly evidenced by the trading statement for the first quarter of 2008, which was published on 27 May 2008 and after Mentor made its offer, showing Adjusted Revenue up approximately 42% from Q1 2007 and Adjusted Profits up approximately £1.1 million from the corresponding quarter of 2007. Accordingly, this information was not taken into account by Mentor when its offer was made.
Trading has remained strong since the end of the first quarter of 2008, demonstrating the continuing success of that strategy. Cash balances as at 30 May 2008 were in excess of £6.5m compared with approximately £3.0 million as at 31 December 2007.
Mentor Acceptances
The Board also notes the announcement by Mentor on 24 June 2008 that as at 3.00pm on 23 June 2008, the second closing date of the Mentor Offer, total valid acceptances had been received by Mentor representing only 2.19 per cent of Flomerics' existing issued share capital.
Given the Board's repeated recommendation that Flomerics shareholders should reject the Mentor Offer as they believe it materially undervalues Flomerics shares, the Board is pleased to note Mentor has received such a low level of acceptances for its offer, which has now been open for over 35 days.
Conclusion
David Mann, Chairman of the Board of Flomerics, commented:
"The unsolicited Mentor Offer was considered by the Board of Flomerics, in conjunction with its independent adviser, and it was unanimously concluded that this Offer does not reflect the true value of Flomerics shares. Accordingly, it does not carry the recommendation of the Flomerics Board.
The Board believes that Flomerics has a strong product portfolio and a blue chip customer base placing it firmly amongst an elite group of established, successful, independent computer aided engineering companies. Your Directors remain committed to adding shareholder value and continuing to build a globally successful market leader."
The Flomerics Directors, whose names are set out below, confirm that the estimates of Adjusted Revenue and Adjusted Profit reported on in the trading statement remain valid for the purposes of the Mentor Offer and that BDO Stoy Hayward LLP and Jefferies International Limited (who reported thereon) have indicated that they have no objection to their reports continuing to apply.
The Board, which has been so advised by Jefferies International Limited, continues to believe that the Mentor Offer is wholly inadequate and therefore recommends shareholders to continue to reject it and take no action in relation to the Mentor Offer.
Enquiries:
| Flomerics Group PLC Gary Carter Keith Butcher
| Tel: 020 8487 3000 |
| Jefferies International Ltd (Financial Adviser to Flomerics) Andres Pieczanski Sarah McNicholas
| Tel: 020 7029 8000 |
| Oriel Securities Limited (Nominated Adviser and Corporate Broker to Flomerics) Andrew Edwards Michael Shaw
| Tel: 020 7710 7600 |
| Citigate Dewe Rogerson Ginny Pulbrook Seb Hoyle
| Tel: 020 7638 9571 |
Flomerics Shares in Issue
Pursuant to Rule 2.10 of the City Code, Flomerics confirms that it has 22,972,070 ordinary shares of one penny each in issue and admitted to trading on the Alternative Investment Market of the London Stock Exchange (ISIN GB0003436192).
Save as set out above, there have been no material changes in the information set out in the Flomerics' Defence Document dated 27 May 2008.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the 'Code'), if any person is, or becomes, 'interested' (directly or indirectly) in 1% or more of any class of 'relevant securities' of Flomerics, all 'dealings' in any 'relevant securities' of that company (including by means of an option in respect of, or a derivative referenced to, any such 'relevant securities') must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the 'offer period' otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an 'interest' in 'relevant securities' of Flomerics, they will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant securities' of Flomerics by a potential offeror or by Flomerics, or by any of their respective 'associates', must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant securities' 'dealings' should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a 'dealing' under Rule 8, you should consult the Panel.
Other
Jefferies International Limited, which is authorised and regulated in the UK by The Financial Services Authority, is acting exclusively for Flomerics and no one else in connection with the Mentor Offer and, accordingly, will not be responsible to anyone other than Flomerics for providing the protections afforded to customers of Jefferies International Limited or for providing advice in relation to the Mentor Offer or in relation to the contents of this document or any transaction or arrangement or other matter referred to herein.
Oriel Securities Limited ('Oriel Securities'), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Flomerics and no-one else in connection with the matters referred to herein and will not be responsible to anyone other than Flomerics for providing the protections afforded to clients of Oriel Securities or for giving advice in relation to such matters.
If you are in any doubt as to the action you should take in connection with the Mentor Offer, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000, if you are in the United Kingdom, or, if not, from another appropriately authorised independent financial adviser.
The Flomerics Directors, whose names are set out below, accept responsibility for the information contained in this document, save that the only responsibility accepted by them in respect of the information relating to Mentor (which has been compiled from public sources) is to ensure that such information has been correctly and fairly reproduced and presented. Subject as aforesaid, to the best of the knowledge and belief of the Flomerics Directors (who have taken all reasonable care to ensure that such is the case), the information in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information. The Flomerics Directors are David W Mann (Non Executive Chairman), Gary C Carter (Chief Executive), Keith Butcher (Finance Director), Thomas R Rowbotham (Non Executive Director) and Peter R Teague (Non Executive Director).
Note to Editors
Flomerics (www.flomerics.com) is a world-leading developer of engineering simulation software and services for analysis of fluid flow, heat transfer. Flomerics' business model is drastically different from traditional analysis because its software is designed to be embedded deeply into the design process and used by mainstream design engineers, not just by analysis specialists.