Market Tracker weekly bulletin – 24 January 2019

Market Tracker weekly bulletin – 24 January 2019

A round up of key developments in corporate transactions covered by Lexis®PSL Corporate and Market Tracker this week, including an offer for RPC Group by Apollo Global Management, the administration of Patisserie Valerie, a look at recent transfers from AIM to the Main Market and the Main Market to AIM, and a summary of the Financial Times and ICSA’s Boardroom Bellwether Winter Survey.


RPC Group plc offer by Apollo Global Management

On 23 January 2019, RPC announced that it had received a final recommended cash offer from Apollo for £3.3 billion to acquire its entire issued and to be issued ordinary share capital. The offer by Apollo is structured by way of a scheme of arrangement and follows a period of negotiation that began in September, during which Apollo extended the deadline for the takeover five times.

RPC had originally been the subject of two competing possible bids, with private equity firm Bain Capital eventually withdrawing its offer in December last year.

Corporate Governance and AGMs

Patisserie Valerie in administration

Café chain Patisserie Valerie has fallen into administration after a series of failed rescue talks with banks.

KPMG, the company’s administrator will close 70 outlets immediately. The remaining 121 outlets will continue to trade, with the hope of securing financing.  The company announced in a statement that it did not have enough money to pay off its significant debts.

In October 2018, the company raised funds through a placing, however this has not been sufficient to ensure that all liabilities are met.

Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee, said:

‘The extraordinary black-hole in Patisserie Valerie’s accounts which has led to this administration raises grave corporate governance concerns and poses serious questions regarding the effectiveness of the auditor and the current arrangements for regulation. The BEIS Committee will picking up these issues in the context of our current inquiry on the future of audit.’

In focus: Recent transfers from AIM-Main Market & Main Market-AIM

Established companies tend to list on the London Stock Exchange’s Main Market, with smaller growth companies choosing to list on AIM. Since 2008, 65 companies have moved from AIM to the Main Market, and 56 companies have moved from the Main Market to AIM. The number of companies choosing to transfer each year remains reasonably low, with only one company moving from the Main Market to AIM in 2018.

 AIM to Main MarketMain Market to AIM


The AIM Rules and the Listing Rules require that a company that is de-listing obtain shareholder approval for the de-listing. The AIM Rules state that this requirement applies ‘except where the Stock Exchange agrees otherwise’.  The Stock Exchange may agree that shareholder approval is not required for an AIM company which is de-listing and moving to the Main Market, as shareholders are able to trade their shares on a comparable dealing facility. Companies that move from AIM to the Main Market are required to comply with the UK Corporate Governance code, which applies to companies quoted on the Official List.

The Listing Rules require that a company wishing to cancel its listing on the Official List seek the approval of not less than 75% of its shareholders in a general meeting.

Recent transactions

Plus 500

Plus 500 announced an intention to transfer from AIM to the Main Market on 20 June 2018. The company stated that the admission would provide a more appropriate platform for the continued growth of the Plus 500 Group and would raise the profile of the company. The company outlined that shareholders would benefit as a move to the Main Market would result in tighter corporate governance requirements, as well as regulatory and reporting disciplines. A potential inclusion of the company in the FTSE indices was another reason for the transfer.

The company’s shares were admitted to trading on the Main Market on 26 June 2018.

Palace Capital Holdings

On 27 February 2018, Palace Capital Holdings announced an intention to cancel trading of its shares on AIM and proposed the listing of the company’s shares on the Main Market. The company outlined that a premium listing will support its trading liquidity and provide a greater range of potential investors for its shares.

On 28 March 2018, the company’s shares were admitted to trading on the Main Market.

Circassia Pharmaceuticals 

Circassia Pharmaceuticals announced a proposal to cancel its listing on the Main Market and transfer the company’s listing to AIM on 10 December 2018.

The company outlined that it did not comply with the FCA’s requirements (Listing Rule 9.2.15) regarding a company’s free float status, which requires listed companies to maintain at least 25 % free float in their listed shares. Certain shareholdings do not count towards the free float- these include shareholdings of over 5% of an issuer’s listed shares and those held by the issuer’s directors. Circassia had not been successful in increasing its free float over a six-month period as prescribed by the FCA. Following shareholder approval of the transfer on 4 January 2019, admission to the Main Market is expected to become effective on 4 February 2019.

Latest developments

Brexit woes main takeaway from ICSA Boardroom Bellwether Winter 2018 survey

The most recent Boardroom Bellwether survey, which is conducted twice a year by ICSA in association with the Financial Times, was published on 20 January 2019. The research surveyed the opinion of FTSE 350 company secretaries on a range of issues, including Brexit, boardroom diversity, compliance and corporate governance.

The report indicates that company sentiment has worsened significantly since the summer edition of the report. 56% of respondents project that global economic conditions will decline in the next 12 months, compared to 24% of respondents in both summer 2018 and winter 2017. Only 11% of respondents project that conditions will improve, down from 29% in summer 2017.

The survey also found that companies are more pessimistic about the implications of Brexit on the UK economy and their company. Only 2% of respondents expressed the opinion that UK economic conditions would improve in the next 12 months, whilst 81% projected a decline. Prior to the EU referendum result, the winter 2015 survey found companies were optimistic about the UK economy. 40% of respondents projected an improvement, and only 11% projected a decline.

It is likely that the possibility of a ‘no-deal Brexit’ was not considered a realistic possibility by most respondents to the summer 2018 survey.  58% of respondents to the summer survey felt Brexit would have no impact on their business, suggesting that many companies were confident a satisfactory agreement would be struck between the EU and the UK. In contrast, when asked about the impact to the individual company in the recent winter survey, 0% of respondents projected that Brexit will be positive, 28% projected no change, and 73% projected that Brexit will cause damage to them. However, despite the negativity surrounding Brexit, only 4% of respondents said their company had already, or was considering, redomiciling to an EU country.

The report also looked at boardroom diversity and concluded that it is improving at a ‘disappointingly slow’ rate. Whilst 72% of respondents regard their company as diverse in terms of gender, only 32% of respondents believe there is an appropriate amount of ethnic diversity. However, for the first time, ICSA found that respondents believe their executive ‘pipeline’ is sufficiently diverse, suggesting that this may be an area in which relatively swift progress is made in the future.

In relation to the new gender pay gap reporting requirement, 65% of respondents indicated that their company would be taking action to reduce the gap. However, only 34% of companies had produced an action plan. In response to potential new legislation requiring companies to report on any ethnicity pay gap, 52% of respondents believed this data would be difficult or very difficult to calculate.

The Market Tracker Trend Report AGM Season 2018, produced by the Lexis®PSL Corporate and Market Tracker team, also looks at some of the issues raised in the ICSA survey. A complimentary copy of the report is can be downloaded here.

Official Listing of Securities, Prospectus and Transparency (Amendment etc) (EU Exit) Regulations 2019

A draft of this SI has been laid before Parliament. The draft Regulations are identical to the draft Official Listing of Securities, Prospectus and Transparency (Amendment etc) (EU Exit) Regulations published in November 2018 with the exception of minor non-material amendments. For more on this story see our news article: Official Listing of Securities, Prospectus and Transparency (Amendment etc) (EU Exit) Regulations 2019- (a subscription to Lexis®PSL Corporate is required).

FRC continues investigations in relation to Carillion

 The FRC is continuing to progress its original investigations in relation to the collapse of Carillion in conjunction with other regulators. A key area of focus has been the financial performance of Carillion’s major contracts in both the construction and services divisions, and whether Carillion management and its auditors ensured that this was appropriately reported in its financial statements. The investigations are also considering conduct relating to pension liabilities, goodwill, cash disclosures and going concern.

IOSCO issues good practices report to assist audit committees in supporting audit quality

The Board of the International Organisation of Securities Commissions (IOSCO) has published the IOSCO Report on Good Practices for Audit Committees in Supporting Audit Quality, which aims to assist audit committees in promoting and supporting audit quality. Audit committees play an important role in contributing to greater confidence in the quality of information in listed companies’ financial reports and the good practices report sets out recommendations for features that an audit committee should have to be more effective in its role, including matters such as the qualifications and experience of audit committee members. For more on this story see our news article: IOSCO issues good practices report to assist audit committees in supporting audit quality - (a subscription to Lexis®PSL Corporate is required).

ABI: Ethnicity pay reporting ‘an important next step’

The ABI is supporting efforts to introduce ethnicity pay reporting as a further step to improving diversity and inclusion across all job levels and in all sectors, supporting proposals to introduce more stringent and detailed reporting requirements.

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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.