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Private equity group Hanover Active Equity Fund (Hanover)
consolidated its takeover of a company by triggering a mandatory offer
following an unsolicited approach for the target company from an unnamed third
announced a recommended bid for
Brady plc on 14 October 2019 and had extended the closing date to
receive acceptances from 18 November 2019 to 29 November, as they had not met
the 50% acceptance condition.
18 November, Brady announced that it had
received a possible offer from an unnamed third party. The same day, Hanover increased its offer for Brady from
£8.3 million to £15 million, which was supported by Brady’s board. Later in the
day Hanover disclosed that it had purchased further shares in
Brady, building their stake to 46.1% and thus triggering Rule 9 of The City
Code on Takeovers and Mergers. This meant that Hanover now had to make a
mandatory offer for the remaining shares. This strategy would compel
shareholders to consider Hanover’s offer first and would therefore take the
initiative away from the unnamed bidder.
later entered arrangements to stakebuild
further. On 20 November 2019 they owned 55.56% of Brady’s
issued share capital. This meant that the 50% acceptance condition was met,
effectively sealing Hanover’s position.
5 December Hanover announced it had
acquired or agreed to acquire 80.1% of Brady’s shares. This date being the
closing date of the mandatory offer, Hanover urged remaining shareholders to
accept the offer. At the time of writing Hanover made no further announcement
in relation to acceptances received.
was most likely sought after in this manner because they provide trading and
risk management software to global commodity and energy markets, and they are
the largest such business in Europe. Their software is used by commodity
traders globally, especially in metals trading. The company however required a
cash injection for working capital and financing of £15 million to carry out
its market expansion. Brady confirmed that it was advancing funding initiatives
prior to 30 November 2019 to get access to the money required for working
a leading business, a lack of investment has held the company back from
growing, and recent changes in share price indicates that it is unlikely to
raise the finance required on the public market. The share price dropped from
56.50p to 33.50p in the first half of August 2019, and from 21 August 2019 to 4
October 2019, the price fell from 33.50p to a low of 3.75p. The share price
fell so dramatically because Brady had warned off an 18% reduction in revenue
in 2019 owing to a lack of expansion.
recommended the offer from Hanover as the private equity group has experience
in investing in technology companies. It also provides the company certainty in
receiving the funding it requires.
Tracker will continue to monitor this transaction as it develops.
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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.
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