2021

2021 Open
2021 Open

Recommended Offer for Nucleus Financial Group plc

9 February 2021

RECOMMENDED CASH OFFER

for

Nucleus Financial Group plc

 by

James Hay Holdings Limited

(an indirect wholly owned subsidiary of IFG Group Limited, the parent company of the James Hay Group)

Summary

The Boards of James Hay Holdings Limited ("James Hay Holdings") and Nucleus Financial Group plc ("Nucleus") are pleased to announce that they have reached agreement on the terms of a recommended all cash offer to be made by James Hay Holdings, pursuant to which James Hay Holdings is to acquire the entire issued and to be issued share capital of Nucleus (the "Acquisition"). The Acquisition is intended to be effected by means of a court-sanctioned scheme of arrangement between Nucleus and the Nucleus Shareholders under Part 26 of the Companies Act 2006 (the "Scheme").

Under the terms of the Scheme, which is subject to the Conditions and further terms set out in Appendix 1 of this Announcement, and to the full terms and conditions to be set out in the Scheme Document, Nucleus Shareholders will be entitled to receive:

188 pence in cash for each Nucleus Share

The Acquisition values the share capital of Nucleus at approximately £144.62 million on a fully diluted basis.

The price offered by James Hay Holdings for the Acquisition of 188 pence per Nucleus Share (the "Offer Price") represents a premium of approximately:

  • 41.89 per cent. to the Closing Price per Nucleus Share of 132.5 pence on 1 December 2020 (being the last Business Day prior to the commencement of the Offer Period);
  • 58.68 per cent. to the volume weighted average price per Nucleus Share of 118.5 pence in the 3 months to 1 December 2020 (being the last Business Day prior to the commencement of the Offer Period);
  • 35.53 per cent. to the volume weighted average price per Nucleus Share of 138.7 pence in the 12 months to 1 December 2020 (being the last Business Day prior to the commencement of the Offer Period); and
  • 12.24 per cent. to the Closing Price per Nucleus Share of 167.5 pence on 8 February 2021 (being the Latest Practicable Date).

Background to and reasons for the Acquisition

The Acquisition combines the James Hay Group, a specialist pensions innovator with a 40-year track record of providing retirement solutions to larger financial adviser firms, with Nucleus' reputation as an award-winning, adviser-led, financial planning and investment platform for small to medium-sized adviser firms. The combination creates the capability to service the entire adviser market with a wide range of financial planning and retirement needs, including leading SIPP and drawdown features among a broad range of tax wrappers (including ISAs, GIAs, onshore and offshore bonds).

James Hay and Nucleus have strong and trusted reputations in the UK platform market, with a service-driven approach that will be an integral part of the Combined Group's high-tech, high-touch service proposition and philosophy post-transaction.

Following the Acquisition, James Hay Holdings intends to merge the operations of Nucleus with the James Hay Group to create a leading financial planning and retirement-focused adviser platform with c£45 billion of AUA and scale, enabling greater investment in technology, products and service to meet the needs of advisers and their clients.

The James Hay Group is indirectly owned by the Epiris Funds together with select members of the James Hay Group management. 

Recommendations

The Nucleus Directors, who have been so advised by Shore Capital and Craven Street Capital as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. Shore Capital and Craven Street Capital are providing independent financial advice to the Nucleus Directors for the purposes of Rule 3 of the Code. In providing their advice to the Nucleus Directors, Shore Capital and Craven Street Capital have taken into account the commercial assessments of the Nucleus Directors.

Accordingly, the Nucleus Directors intend to recommend unanimously that the Scheme Shareholders vote in favour of the Scheme at the Nucleus Court Meeting and that Nucleus Shareholders vote in favour of the Resolution at the Nucleus General Meeting (or in the event that the Acquisition is implemented by way of an Offer, to accept such Offer) as the Nucleus Directors who hold Nucleus Shares have irrevocably undertaken to do or, as they have otherwise irrevocably undertaken to direct (and procure that) their nominees do, in respect of their own beneficial holdings amounting in aggregate to 1,011,371 Nucleus Shares, representing approximately 1.32 per cent. of Nucleus' issued share capital as at the Latest Practicable Date.

Further details of these irrevocable undertakings are set out at paragraph 12 and Appendix 3 to this Announcement.

Irrevocable undertakings

In addition to the irrevocable undertakings from the Nucleus Directors described above, James Hay Holdings has received an irrevocable undertaking from Sanlam to vote, or procure votes, in favour of the Scheme at the Nucleus Court Meeting and the Resolution at the Nucleus General Meeting (or, in the event that the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer), in respect of 39,914,760 Nucleus Shares in aggregate, representing approximately 52.19 per cent. of Nucleus' issued share capital as at the Latest Practicable Date.

In addition, certain other Nucleus Shareholders have irrevocably undertaken to vote, or procure votes, in favour of the Scheme at the Nucleus Court Meeting and the Resolution at the Nucleus General Meeting (or, in the event that the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer), in respect of their own beneficial holdings totalling 1,806,851 Nucleus Shares, representing in aggregate approximately 2.36 per cent. of Nucleus' issued share capital as at the Latest Practicable Date. 

Accordingly, in aggregate with the irrevocable undertakings received from the Nucleus Directors, as at the date of this Announcement, James Hay Holdings has received legally binding irrevocable undertakings to vote, or procure the voting, in favour of the Scheme at the Nucleus Court Meeting and the Resolution at the Nucleus General Meeting (or in the event that the Scheme is implemented by way of an Offer, to accept or procure acceptance of the Offer) in respect of a total of 42,732,982 Nucleus Shares representing, in aggregate, approximately 55.88 per cent. of Nucleus' existing issued ordinary share capital as at the Latest Practicable Date.

Further details of these irrevocable undertakings are set out at paragraph 12 and Appendix 3 to this Announcement.

General

It is intended that the Scheme will be implemented by way of a court-sanctioned scheme of arrangement between Nucleus and the Nucleus Shareholders under Part 26 of the Companies Act 2006, further details of which are contained in the full text of this Announcement and which will be set out in the Scheme Document. However, James Hay Holdings reserves the right, with the consent of the Panel, to implement the Scheme by way of a takeover offer (as defined in Part 28 of the Companies Act 2006). 

The Scheme will be subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document, including the approval of the Scheme by the Scheme Shareholders and the sanction of the Scheme by the Court.   The Conditions also include the receipt of approval by the FCA. 

The Scheme Document will include full details of the Scheme, together with notices of the Nucleus Court Meeting and the Nucleus General Meeting and the expected timetable, and will specify the action to be taken by Scheme Shareholders. It is expected that the Scheme Document will be despatched to Nucleus Shareholders on or about 5 March 2021. 

In order to become effective, the Scheme must be approved by a majority in number of Scheme Shareholders present and voting and entitled to vote at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Nucleus Shares voted by such Scheme Shareholders. In addition, a special resolution to approve amendments to Nucleus' articles of association to ensure that, if the Scheme is approved at the Nucleus Court Meeting, any Nucleus Shares issued after the Scheme Record Time will automatically be acquired by James Hay Holdings on the same terms as under the Scheme must be passed by Nucleus Shareholders representing at least 75 per cent. of votes cast at the Nucleus General Meeting.

The Scheme is expected to become effective in the second quarter of 2021, subject to the satisfaction or waiver of the Conditions and certain further terms set out in Appendix 1 to this Announcement and as stated in the following paragraph.

If any dividend and/or other form of capital return or distribution is authorised, declared, made or paid by Nucleus in respect of Nucleus Shares on or after the date of this Announcement and with a record date prior to the Effective Date, James Hay Holdings reserves the right to reduce the consideration payable in respect of each Nucleus Share held by the amount of all or part of any such dividend and/or other form of capital return or distribution, except where Nucleus Shares are or will be acquired pursuant to the Acquisition on a basis which entitles James Hay Holdings to receive such dividend, other distribution or return of capital and retain it. If James Hay Holdings exercises this right and any such reduction takes place, Nucleus Shareholders shall be entitled to receive and retain that dividend, return of capital or other distribution. Any reduction of the consideration payable under the Acquisition pursuant to this right shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Acquisition. 

The global COVID-19 pandemic is restricting the ability of Governmental Entities around the world to conduct their normal operations. James Hay Holdings expects that Governmental Entities will not be operating according to their normal schedules during the upcoming period and it may, therefore, take longer for the Conditions to be satisfied. Accordingly, any dates in respect of the expected timetable for the Acquisition set out in this Announcement are indicative, subject to change (by agreement between James Hay Holdings and Nucleus and, where required, the Court) and provided by way of guidance only. James Hay Holdings shall keep the Nucleus Shareholders notified of any updates or changes to the expected timetable as additional guidance is released. Further details regarding the expected timetable will be contained in the Scheme Document.

Commenting on the Acquisition, David Ferguson, CEO of Nucleus, said:

"Since we launched in 2006 we've always put the customer centre stage and while that has made us a little bit different it's carried us to £17.4 billion in AUA and to a point where the sentiment of our users and our people has never been better. Becoming part of this enlarged group gives us a key role in a much bigger story where we can create a leading independent platform of scale with a high tech, high touch proposition and philosophy. I think the combination of our people's talents and the size of the opportunity can see us carefully navigate the roadmap to deliver on this collective medium-term goal. I look forward to getting to know our new colleagues and moulding a group culture that is centred on doing the right thing and building a market-defining product that really delivers for advisers and their clients."

Commenting on the Acquisition, Richard Rowney, CEO of the James Hay Group, said:

"We are excited to be announcing the acquisition of Nucleus, which on completion will create a leading, independent, adviser platform, with c£45 billion of AUA.  The two businesses have complementary areas of expertise and common beliefs about the importance of independence and only serving the adviser market. 

We admire much about Nucleus and the skills within its team, and look forward to working with them to better serve the growing needs of advisers. By joining forces, we can combine Nucleus' reputation for great digital user-experience and James Hay's pension specialism, creating greater strength and a platform with the scale to invest and deliver real value for advisers and their clients."

Commenting on the Acquisition, Angus Samuels, Chairman of Nucleus, said:

"The Board of Nucleus is pleased to recommend James Hay Holdings' cash offer for the Company. The offer reflects the quality of the business and represents an opportunity for shareholders to exit their holding in cash at a significant premium to the pre-offer share price.  Going forward, the Board believes that in joining with James Hay, Nucleus will be part of a combined group that will have the scale and resources to support its continued growth against the backdrop of a highly competitive marketplace. The Nucleus Board therefore unanimously recommends that shareholders vote in favour of the resolutions relating to the Acquisition."

Commenting on the Acquisition, Bill Priestley, Chief Investment Partner of Epiris, said:

"The combination of the James Hay and Nucleus businesses is a compelling opportunity to create one of the largest adviser platforms in the UK wealth management sector. We are delighted to be supporting James Hay on this acquisition, a transaction which not only is transformational for the business, but also will deliver significant benefits to both James Hay's and Nucleus' advisers and clients. Following the acquisition, we believe the combined group will be well positioned to take advantage of further growth opportunities as the market continues to evolve."

This summary should be read in conjunction with the full text of this Announcement and the Appendices.

The Scheme will be subject to the Conditions and further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. The sources and bases for certain financial information contained in this Announcement are set out in Appendix 2.  Appendix 3 contains details of the irrevocable undertakings received in relation to the Scheme that are referred to in this Announcement. Appendix 4 contains definitions of certain terms used in this summary and this Announcement.

Enquiries:

Investor Enquiries

Fenchurch Advisory Partners LLP
(Financial Adviser to the James Hay Group)
+44 (0) 207 382 2222
Graham Marchant
Richard Locke
Josh Needham

Media Enquiries

TB Cardew
(PR Adviser to the James Hay Group)
Tom Allison (+44 (0) 7789 998020)
Shan Willenbrock (+44 (0) 7775 848537)

Nucleus
Nucleus Financial Group plc
David Ferguson, CEO
Stuart Geard, Chief Financial Officer
+44 (0)131 226 9800

Investor Enquiries

Shore Capital
(Joint Financial and Rule 3 Adviser, Nominated Adviser and Corporate Broker to Nucleus)
+44 (0) 20 7408 4090
Hugh Morgan
Edward Mansfield
Daniel Bush

Craven Street Capital
(Joint Financial and Rule 3 Adviser to Nucleus)
+44 (0) 20 3890 8654
Soondra Appavoo
Donald Sinton

Media Enquiries

Camarco
(PR Adviser to Nucleus)
+44 (0) 20 3757 4994
Jennifer Renwick
Jake Thomas

Burges Salmon LLP are retained as legal advisers for Nucleus.
Macfarlanes LLP are retained as legal advisers for the James Hay Group.

 

Download: pdf version
< Back