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Sopra Steria Group: Filing of the Draft Simplified Public Tender Offer

Published : Monday, October 5, 2020, 8:14 am
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This communiqué does not constitute an offer to buy shares

The offer described below cannot be opened until it has been declared compliant by the Autorité des Marchés Financiers

PARIS--(BUSINESS WIRE)--Regulatory News:


Sopra Steria Group (Paris:SOP):

COMMUNIQUÉ – 5 OCTOBER 2020

FILING OF THE DRAFT SIMPLIFIED PUBLIC TENDER OFFER

for the shares of

Sodifrance

initiated by

Sopra Steria Group

presented by

Bryan, Garnier & Co

Presenting Bank and Underwriter

OFFER PRICE: €18 per Sodifrance share

OFFER DURATION: 10 trading days

The timetable for the simplified public tender offer will be set by the Autorité des Marchés Financiers (the “AMF”) in accordance with its General Regulation.

AMF - Autorité des Marchés Financiers

This communiqué was drafted by Sopra Steria Group and released in accordance with the provisions of Article 231-16, III of the AMF’s General Regulation.

THIS OFFER AND THE DRAFT INFORMATION MEMORANDUM ARE SUBJECT TO REVIEW BY THE AMF

This document is a free translation into English of the original French “Communiqué de presse”, referred to as the “Communiqué”. It is not a binding document. In the event of a conflict of interpretation, reference should be made to the French version, which is the authentic text.

IMPORTANT NOTICE

Subject to the AMF’s compliance decision, following the simplified public tender offer covered by the draft information memorandum filed with the AMF on 5 October 2020 (the “Draft Information Memorandum”), the mandatory delisting procedure set forth in Article L. 433-4, II of the French Monetary and Financial Code and in Articles 237-1 et seq. of the AMF’s General Regulation will be initiated, insofar as the conditions are already met. Any Sodifrance shares not tendered to the simplified public tender offer will be transferred to Sopra Steria Group in return for a cash consideration of €18 per Sodifrance share, net of any costs.

The Draft Information Memorandum is available on the websites of the AMF (www.amf-france.org) and Sopra Steria Group (www.soprasteria.com) and may also be obtained free of charge from:

Sopra Steria Group

6 avenue Kléber

75116 Paris (France)

Bryan, Garnier & Co

26 avenue des Champs-Elysées

75008 Paris (France)

In accordance with Article 231-28 of the AMF’s General Regulation, the information relating to the characteristics, in particular legal, financial and accounting-related, of Sopra Steria Group will be filed with the AMF and made available to the public no later than the day before the opening of the simplified public tender offer. A press release will be published to inform the public of the manner in which this information is made available.

1. OVERVIEW OF THE OFFER

Pursuant to Title III of Book II and, more specifically, Article 233-1, 2° and Article 234-2 of the AMF’s General Regulation, Sopra Steria Group, a French société anonyme with capital of €20,547,701 having its registered office at PAE Les Glaisins, Annecy-le-Vieux, 74940 Annecy, France, registered in the Annecy Commercial and Companies Register under number 326 820 065, and whose shares are admitted to trading on the Euronext Paris regulated market (“Euronext Paris”) under ISIN FR0000050809 (“Sopra Steria” or the “Initiator”), irrevocably offers to the shareholders of Sodifrance, a French société anonyme with capital of €5,870,000 having its registered office at Avenue Saint-Vincent, Parc d’Activité la Bretèche, 35760 Saint-Grégoire, France, registered in the Rennes Commercial and Companies Register under number 383 139 102, and whose shares are admitted to trading on Segment C of the Euronext Paris regulated market under ISIN FR0000072563 (“Sodifrance” or the “Company”), to acquire all their Sodifrance shares at a price of €18 per share (the “Offer Price”) through a simplified public tender offer as described below (“the Offer”).

In accordance with the provisions of Article 234-2 of the AMF’s General Regulation, the Initiator is filing this Offer after indirectly exceeding the threshold of 30% of the Company’s capital and voting rights as a result of the Acquisition of a Controlling Interest (as defined in Section 1.1.1 of this document) on 16 September 2020. At the date of the Draft Information Memorandum, the Initiator indirectly holds 3,425,144 shares and 6,850,288 voting rights in the Company, representing 94.03% of its share capital and 96.87% of its voting rights1.

Consequently, the Offer relates to all shares of the Company not directly or indirectly held by the Initiator at the date on which the Draft Offer is filed – that is, to the Initiator’s knowledge, 217,613 shares, representing 5.97% of the Company’s share capital and 3.13% of its voting rights.

To the Initiator’s knowledge, there are no rights, equity securities or financial instruments that may give access, immediately or in the future, to the Company’s share capital or voting rights.

The Offer is mandatory in nature and will be completed under the simplified procedure pursuant to the provisions laid down in Articles 233-1 et seq. of the AMF’s General Regulation. The Offer will be open for a period of ten (10) trading days.

The shareholders should note that, since the Offer will be completed under the simplified procedure, it cannot be reopened pursuant to Article 232-4 of the AMF’s General Regulation.

The Draft Information Memorandum has been drawn up by the Initiator. In accordance with the provisions laid down in Article 231-13 of the AMF’s General Regulation, the Offer is presented by Bryan, Garnier & Co (the “Presenting Bank”), which underwrites the content and irrevocability of the Initiator’s undertakings in connection with the Offer.

The Initiator reserves the right to purchase, on- or off-market, any Sodifrance shares in accordance with the provisions of Article 231-38 of the AMF’s General Regulation. In particular, the Initiator reserves the option of purchasing any block of Sodifrance shares, subject to the proviso that, pursuant to the provisions of Article 231-39 of the AMF’s General Regulation, all trades must be completed at the Offer Price.

Insofar as the Initiator holds more than 90% of the Company’s share capital and voting rights, the Initiator intends to ask the AMF, in accordance with Article L. 433-4, II of the French Monetary and Financial Code and Articles 237-1 et seq. of the AMF’s General Regulation, to implement a mandatory delisting procedure such that any Sodifrance shares not tendered to the Offer are transferred to the Initiator (the “Mandatory Delisting”). Under the Mandatory Delisting, any Sodifrance shares not tendered to the Offer will be transferred to the Initiator in return for a cash consideration equal to the Offer Price, i.e. €18 per share, net of any costs.

1.1 Background to and reasons for the Offer

1.1.1 Background to the Offer

Following a competitive process to dispose of the Sodifrance group, Sopra sent a letter of intent on 30 January 2020 confirming its interest in a tie-up.

Over the period from November 2019 to May 2020, the Initiator had access to a limited amount of information about the Company under a “data room” procedure. To the Initiator’s knowledge, all information disclosed to it by the Company was disclosed in accordance with AMF recommendations on data room procedures laid down in the guide to ongoing disclosure and management of inside information (AMF – DOC-2016-08).

On 20 February 2020, Sopra Steria entered into an agreement to negotiate exclusively with the majority shareholders of Sodifrance with a view to indirectly acquiring 3,425,144 Sodifrance shares (corresponding to 94.03% of the Company’s share capital and 96.87% of its voting rights at that date) (“Acquisition of a Controlling Interest”) by purchasing 100% of the share capital and voting rights of (i) HP2M, a société par actions simplifiée (French simplified limited company) having its registered office at Avenue Saint-Vincent, Parc d’Activité la Bretèche, 35760 Saint-Grégoire, France, registered in the Rennes Commercial and Companies Register under number 503 665 325 (“HP2M”), and (ii) Strateg’e. Boss, a société par actions simplifiée (French simplified limited company) having its registered office at 2 Rue Régnier, 44000 Nantes, France, registered in the Rennes Commercial and Companies Register under number 794 273 680 (“Strateg’e. Boss”).

Sopra Steria would indirectly acquire a block of shares from the main shareholders of HP2M and Strateg’e. Boss corresponding to a prix par transparence (transparency-based price) of €17.16 per Sodifrance share and two other blocks of shares from two HP2M shareholders at a higher price, pursuant to pre-existing contractual agreements, corresponding to a transparency-based price of €17.92 and €17.99 per Sodifrance share, respectively.

This exclusive negotiation agreement was the subject of a press release issued by Sopra Steria on 21 February 2020 setting out the key terms of the proposed transaction.

The Company and Sopra Steria initiated procedures to inform and consult their employee representative bodies (“IRP” in French). The Company and Sopra Steria completed these procedures on 20 April 2020 and 25 June 2020, respectively. Their IRP were in favour of the planned Acquisition of a Controlling Interest.

On 9 July 2020, Sopra Steria and the majority shareholders of Sodifrance entered into a share sale agreement relating to the Acquisition of a Controlling Interest by Sopra Steria (the “Share Sale Agreement”). This agreement was the subject of a press release issued by Sopra Steria that same day.

On 31 July 2020, the Company’s Supervisory Board, on the advice of its ad hoc committee, appointed Finexsi, represented by Olivier Courau, as independent appraiser (the “Independent Appraiser”), in accordance with the provisions laid down in Article 261-1 I, 1°, 2° and 4°; II and III of the AMF’s General Regulation.

The conditions precedent stipulated in the Share Sale Agreement (including authorisation by the French Competition Authority) having been met, on 16 September 2020 Sopra Steria indirectly acquired 3,425,144 Sodifrance shares representing 6,850,288 voting rights in the Company, as a result of which it held 94.03% of the Company’s share capital and 96.87% of its voting rights2.

In a press release dated 16 September 2020, Sopra Steria announced that it had completed the Acquisition of a Controlling Interest and confirmed its intention to complete the Offer at a price of €18 per share.

1.1.2 Reasons for the Offer

The Offer forms part of a plan to create a leading French player in digital services for insurers and social security providers, a sector with strong growth potential in which Sopra Steria has ambitious plans, and to consolidate Sopra Steria’s position as a major player in the banking sector.

Sopra Steria intends, working closely with Sodifrance’s employees, to become a strategic partner for clients, drawing in particular on Sodifrance’s skills and technological expertise in modernising legacy applications.

The Initiator intends to ask the AMF to implement the Mandatory Delisting once the Offer has concluded. Given the Company’s current ownership structure and thin trading in its shares, maintaining the listing of Sodifrance shares is no longer justified.

Furthermore, in enabling it to withdraw its shares from trading on a regulated market, the Mandatory Delisting will free the Company from the legal and regulatory requirements applicable to companies whose shares are admitted to trading on Euronext Paris.

1.1.3 Declaration of threshold crossings and intentions

In accordance with the provisions of Article L. 233-7 et seq. of the French Commercial Code, in letters to the AMF and the Company dated 22 September 2020, Sopra Steria declared that, due to the Acquisition of a Controlling Interest on 16 September 2020, it had exceeded all the thresholds set out by law and under the Articles of Association up to 90% of the Company’s share capital and 95% of its voting rights, and declared its intentions concerning the Company.

These declarations were covered in a notice published by the AMF on 24 September 2020 (reference 220C3861).

1.1.4 Current breakdown of the Company’s share capital

To the Initiator’s knowledge, at the date of the Draft Information Memorandum, the Company’s share capital and voting rights broke down as follows:

Shareholders

Share capital held

Theoretical voting rights held3

Number of shares

% of capital

Number of voting
rights

% of voting
rights

Sopra Steria4

3,425,144

94.03%

6,850,288

96.87%

Free float

217,613

5.97%

221,396

3.13%

Total

3,642,757

100%

7,071,684

100%

To the Initiator’s knowledge, there are no rights, equity securities or financial instruments which may give access, immediately or in the future, to the Company’s share capital or voting rights.

1.1.5 Regulatory authorisations

The Offer is not subject to any pending regulatory approval; nevertheless, it should be noted that the Draft Offer remains subject to review by France’s financial markets regulator (Autorité des Marchés Financiers).

It should also be noted that, as part of the Acquisition of a Controlling Interest, authorisation by the French competition authorities with regard to merger control was obtained on 10 August 2020.

1.2 Intentions of the Initiator for the next twelve months

1.2.1 Strategy and industrial, commercial and financial policy

The strategic tie-up between Sodifrance and Sopra Steria forms part of the strategy to create a leading French player in digital services for insurers and social security providers, and to consolidate Sopra Steria’s position as a major player in the banking sector.

The tie-up with Sodifrance will allow Sopra Steria to attain leadership in the insurance and social security sector in France, with a business volume of about €200 million, while acquiring new clients and strengthening existing client relationships. It will expand Sopra Steria Group’s offering in this sector, combining consulting in response to business-specific challenges, software solutions for personal insurance and technological and digital expertise.

The know-how and technological expertise acquired by Sodifrance in the modernisation of information systems and data migration in particular represents a very significant gain for Sopra Steria, enabling it to provide a comprehensive offering to its major clients with a recognised business consulting position, a strong footprint in application systems, positions in infrastructure and expertise in the industrial transformation of legacy systems and data migration.

Given the increasing prominence of issues relating to social security and insurance as well as financing the economy, especially in light of past, current and future reforms, this proposed acquisition is particularly important and represents a major opportunity for Sopra Steria Group’s activities in France with a view to strengthening its offering in these business sectors and fields.

The highly complementary geographies of Sopra Steria and Sodifrance should help to strengthen the regional coverage of business activities in France, reinforcing Sopra Steria’s strong local footprint – featuring nearly 40 locations in France – and reaffirming its position as a global player operating locally in France.

1.2.2 The Company’s management and corporate bodies

Following the Acquisition of a Controlling Interest, the composition of the Company’s Supervisory Board and Management Board was changed to reflect the Company’s new share ownership structure.

At the date of the Draft Information Memorandum, the Company’s Supervisory Board consisted of the following members:

- Vincent Paris, Chairman of the Supervisory Board;

- Anne-Laure Mazin;

- Anita Bertin, Independent Director;

- Pascal Leroy, Independent Director;

- Étienne du Vignaux;

- Kathleen Clark-Bracco; and

- Yvane Bernard-Hulin.

Anne-Laure Mazin, Anita Bertin and Pascal Leroy have already stated that they intend to resign as members of the Supervisory Board after the close of the Offer to allow for the renewal of the entire Supervisory Board.

At the date of the Draft Information Memorandum, Cyril Malargé served as Chairman of the Management Board, while the other two members of the Management Board were as follows:

- Yann Tréal;

- Michel Goncalves.

1.2.3 Employment guidelines

Given that the Offer fits within the Company’s strategy to pursue and develop its business activities, it should not have any particular impact on the Company's employment policy.

This transaction is in line with the Company’s management policy in terms of labour relations and human resources.

1.2.4 Merger prospects

Sopra Steria Group will proceed with the integration of the Company during the first half of 2021 within the structure of Sopra Steria’s “France” reporting unit.

As such, subject to prior information/consultation with the relevant IRP (employee representative bodies), if applicable, the Initiator will restructure the Sodifrance group and will in particular dissolve the legal entities making up the Sodifrance group following the transfer of all assets and liabilities to Sopra Steria, in accordance with Article 1844-5 of the French Civil Code.

1.2.5 Listing of the Company’s shares

Subject to the AMF’s compliance decision, at the close of the Offer, the Initiator intends to request the initiation of the mandatory delisting procedure provided for in Article L. 433-4, II of the French Monetary and Financial Code and Articles 237-1 et seq. of the AMF’s General Regulation, insofar as the conditions are already met.

The Mandatory Delisting will apply to Sodifrance shares other than those held indirectly by the Initiator. It will be made in return for a consideration paid to the relevant shareholders at the Offer Price.

The Mandatory Delisting will result in the delisting of Sodifrance shares from Euronext Paris.

1.2.6 Dividend distribution policy

At the close of the Offer, Sodifrance’s dividend policy will continue to be determined by its management bodies in accordance with the law and the Company’s Articles of Association, and according to the dividend capacity, financial position and financial requirements of the Company and its subsidiaries.

1.2.7 Projected synergies

Synergies are projected at the date of the Draft Information Memorandum. The complementarity of the Company’s and the Initiator’s offerings should generate revenue synergies, particularly in the Insurance sector and more generally for the Initiator’s “France” reporting unit. Cost synergies are estimated at €4.6 million on an annual basis starting in the second year, for an implementation cost of €3.8 million.

1.2.8 Benefits of the tie-up for the Company and shareholders

The strategic tie-up between Sodifrance and Sopra Steria will propel the Company into a new phase of its development with an ambitious business plan, which will unlock even more value for the Company’s clients.

Sopra Steria’s corporate plan and positioning with major clients in France provide a good opportunity for Sodifrance to gain access to their key vertical markets, where transformation stakes are set to play out. Sodifrance’s staff will have an opportunity to build up their technological expertise and upgrade their skills in their clients’ vertical markets, collaborating within a learning-focused multi-sector environment, which has multiple synergies with consulting, cloud and cybersecurity.

Sopra Steria’s organisation by vertical market and region is well-positioned to welcome and integrate Sodifrance’s staff within a coherent geographic and sector-based rationale that respects each individual’s skill sets. Sopra Steria’s Digital Expertise Centre will also be able to provide a highly stimulating incubator for Sodifrance’s technology experts.

The Offer will allow the Company’s minority shareholders to obtain full and immediate liquidity for their shares.

The shareholders of Sodifrance who tender their shares to the Offer will benefit from a premium of 6.7%, 6.9% and 7.3%, respectively, on the basis of the average volume-weighted share price of the 60, 180 and 250 stock market trading days preceding the announcement of the Offer.

The Offer Price represents a 3.2% discount on the basis of the last quoted closing Sodifrance share price on 20 February 2020 (the last trading day before the announcement of the intention to file the Offer).

A summary of elements allowing the Offer Price to be assessed is provided in Section 3 of this communiqué.

A fairness opinion will be issued by the Independent Appraiser on the fairness of the financial conditions of the Offer. The full text of this fairness opinion will be included in the Information Memorandum in Response which will be published by the Company.

1.3 Agreements likely to have a significant influence on the assessment of the Offer or its outcome

On 16 September 2020, Franck Mazin entered into a consulting service agreement with the Initiator for the purposes of assisting and advising the Initiator in managing the transition and operational integration of Sodifrance, particularly in light of his in-depth knowledge of the Company acquired during his 20 years as Chairman of Sodifrance’s Management Board.

This agreement was entered into for a period of 12 months and provides for payment, as consideration for consulting services rendered, at a daily rate of €5,448 excl. VAT, with three days of services per calendar week.

In addition, Franck Mazin will be bound by (i) a non-solicitation agreement in relation to both Sodifrance and Sopra Steria employees for the entire term of the agreement and for one year following its expiry or termination and (ii) a duty of loyalty for the entire term of this consulting service agreement.

The Initiator is not aware of the existence of other agreements and is not party to any other agreement in connection with the Offer or that would be likely to have a significant influence on the assessment of the Offer or its outcome. In particular, there are no commitments to tender, or undertake not to tender, shares to the Offer.

2. CHARACTERISTICS OF THE OFFER

2.1 Terms of the Offer

In application of the provisions of Article 231-13 of the AMF’s General Regulation, the Presenting Bank, acting on behalf of the Initiator, filed on 5 October 2020 the Draft Offer with the AMF in the form of a simplified public tender offer for the Sodifrance shares not already held by Sopra Steria, as well as the Draft Information Memorandum. In accordance with Article 231-13 of the AMF’s General Regulation, the Presenting Bank underwrites the content and the irrevocability of the undertakings made by the Initiator under the Offer.

The Offer is mandatory and will be carried out under the simplified procedure in accordance with the provisions of Articles 233-1-2 of the AMF’s General Regulation.

The Initiator irrevocably undertakes to purchase from the Company’s shareholders all the shares covered by and to be tendered to the Offer at a price of €18 for a period of ten (10) trading days.

Any Sodifrance shares covered by the Offer but not tendered to the Offer will be transferred to the Initiator via the Mandatory Delisting to be launched after the Offer closes in return for a cash consideration of €18 per Sodifrance share, net of all costs.

This Offer and the Draft Information Memorandum are subject to review by the AMF.

2.2 Number of shares that can be tendered to the Offer

As stated in Section 1 of the communiqué, the Initiator indirectly held 3,425,144 of the Company’s shares and 6,850,288 of its voting rights at the date of the Draft Information Memorandum, or 94.03% of the share capital and 96.87% of the Company’s voting rights.

In accordance with Article 231-6 of the AMF’s General Regulation, the Offer is for all the Company’s shares already in issue and not yet held by the Initiator at the date on which the Draft Offer is filed, that is, to the Initiator’s knowledge, 217,613 shares, or 5.


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Sopra Steria Group


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