GroPep Limited ("GroPep") and Novozymes A/S ("Novozymes") have reached an agreement under which Novozymes will acquire all of the issued securities in GroPep (the "Proposal"). It is intended that the Proposal will be implemented via Schemes of Arrangement ("Scheme") between GroPep and its share and option holders. The Proposal is expected to be completed by the end of 2006, subject to satisfying all relevant conditions.
The Proposal
The Proposal involves consideration of $2.05 cash per share and values the issued share capital of GroPep at approximately $96 million.
The Proposal price represents an attractive premium to recent market prices of GroPep shares, being: a premium of 40% over the last sale price of GroPep shares on the trading day prior to this announcement (August 11, 2006);
a premium of 40% over the volume weighted average share price of GroPep shares in the one month period prior to today's announcement;
and a premium of 33% over the volume weighted average share price of GroPep shares in the three month period prior to today's announcement.
GroPep and Novozymes have agreed to cooperate in relation to the implementation of the Proposal and have entered into an Implementation Agreement which governs such cooperation. Implementation of the Proposal is conditional upon the satisfaction of certain conditions, in particular:
- approval by the Federal Court of Australia and GroPep's share and option holders;
- appropriate regulatory consents;
- an independent expert's report concluding that the Proposal is fair and reasonable and in the best interests of GroPep;
- no regulatory intervention prohibiting the Scheme;
- satisfactory completion of environmental due diligence;
- satisfactory completion of environmental due diligence;
- no "Prescribed Occurrences" or "Material Adverse Change";
- and no breach of GroPep's or Novozymes' representations and warranties given under the Implementation Agreement.
Regulatory consents usual for a transaction of this nature include approval by Australian Stock Exchange Limited, the Australian Securities and Investments Commission and the Treasurer of the Commonwealth of Australia (Foreign Investment Review Board).
The Proposal will also encompass a separate scheme of arrangement with respect to GroPep's unlisted options.
GroPep has appointed Sumner Hall to act as independent expert to provide an opinion on the Proposal.
It is expected that the Scheme booklets and explanatory statements will be sent to shareholders by early October 2006. These documents will outline full details of the Proposal, the Scheme process, as well as the independent expert's conclusions.
Recommendation
The Board of Directors of GroPep, with the assistance of its advisers, has carefully considered the Proposal.
Subject to the conclusions of the independent expert, the Board intends to recommend unanimously that GroPep shareholders support the Proposal in the absence of a superior proposal. The Directors and their associates also intend to vote in favour of the Proposal in respect of their own shares in the absence of a superior proposal and subject to the conclusions of the independent expert.
The Scheme documentation will contain the Directors' formal recommendations and the independent expert's report. Shareholders are advised to read these documents in full before voting on the Proposal.
Comment
Commenting on the Proposal, the Chairman of GroPep, Mr Richard England, said today "The Board of GroPep is pleased with this Proposal and has concluded that it is the most effective means of maximising shareholder value. The price of $2.05 per share provides all of GroPep's shareholders with the opportunity to realise cash for their investment at a substantial premium to recent trading prices."
GroPep's Chief Executive Officer, Mr Bob Finder, said the Proposal will generate significant benefits for the shareholders, customers and employees of GroPep. He added that "Novozymes is a leading global bioindustrial manufacturer that will bring extensive management, research and marketing capabilities to enhance GroPep's market access and boost development of our product portfolio."
Shareholder Information
Further information on the Proposal will be lodged with ASX and included on GroPep's website at www.gropep.com.au.
GroPep is being advised by TC Corporate as financial adviser and Blake Dawson Waldron as legal adviser.