Company Announcements

Arm Holdings plc - Post-Offer Undertakings

Source: RNS
RNS Number : 8744S
SoftBank Group Corp.
06 October 2017
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY) IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

6 October 2017

 

Post-offer undertakings in relation to the acquisition of Arm Holdings plc by SoftBank Group Corp.

Report in compliance with Rule 19.5(h) of the Takeover Code

 

Background

On 18 July 2016, the boards of directors of Arm Holdings plc ("Arm") and SoftBank Group Corp. ("SoftBank") announced that they had reached agreement on the terms of a recommended all cash offer for the entire issued and to be issued share capital of Arm by SoftBank (the "Acquisition") to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006 (the "Scheme"). On 5 September 2016, Arm and SoftBank announced that the Scheme had become effective in accordance with its terms and the entire issued and to be issued share capital of Arm became owned by the SoftBank Group (the "Effective Date").

In relation to the Acquisition, Arm has given post-offer undertakings under Rule 19.5 (formerly Rule 19.7) of the Takeover Code (the "Post-Offer Undertakings"), full details of which were set out in section 4 of the letter from the Arm chairman in the scheme circular dated 3 August 2016 (the "Scheme Circular"), a copy of which is attached to this announcement.

The post-offer undertaking set out in limb (d) of the Post-Offer Undertakings was satisfied by the announcement made by Arm on 8 September 2016.

Pursuant to Rule 19.5(e) of the Takeover Code, the HQ and Employee Post-Offer Undertakings are binding commitments upon each of Arm and SoftBank - each of Arm and SoftBank must comply with the terms of the HQ and Employee Post-Offer Undertakings and must complete any course of action it has committed to within the relevant time periods.

Each of Arm and SoftBank are obliged to submit reports to the Panel. Arm submitted a report to the Panel on 5 October 2017 and the following is an excerpt from that report:

"This report is provided in accordance with Rule 19.5(h) of the Takeover Code and the requirements set forth in the Scheme Circular relating to the HQ and Employee Post-Offer Undertakings, pursuant to which Arm must submit regular written reports in relation to Arm's compliance with the Post-Offer Undertakings following the Effective Date.

Unless otherwise defined in this report, capitalised terms in this report shall have the meanings given to them in the Scheme Circular.

Report

1.         As at the Effective Date, the number of Employees in the Arm Group was as follows:

(A)     the total number of UK Arm Group Employees was 1,749, of which 1,341 (76.67%) were Technical Employees and the remaining were Non-Technical Employees;1

(B)       the total number of Non-UK Arm Group Employees was 2,651, of which 2,220 (83.74%) were Technical Employees and the remaining were Non-Technical Employees;1

(C)       the total number of UK Arm Group Employees who were Part-Time Employees was 2 (being 0.11% of the total UK Arm Group Employees); and

(D)     the total number of UK Arm Group Employees who were Full-Time Employees was 1,747 (being 99.89% of the total UK Arm Group Employees).

2.       As at the first anniversary of the Effective Date, the number of Employees in the Arm Group was as follows:

(A)     the total number of UK Arm Group Employees was 2,173, of which 1,692 (77.86%) were Technical Employees and the remaining were Non-Technical Employees;

(B)       the total number of Non-UK Arm Group Employees was 3,330, of which 2,845 (85.44%) were Technical Employees and the remaining were Non-Technical Employees;

(C)       the total number of UK Arm Group Employees who were Part-Time Employees was 0 (being 0% of the total UK Arm Group Employees);

(D)     the total number of UK Arm Group Employees who were Full-Time Employees was 2,173 (being 100% of the total UK Arm Group Employees);

(E)       the total number of UK Arm Group Employees who were eligible to satisfy the UK Employee Post-Offer Undertaking was 2,173;

(F)       the total number of Qualifying Employees who were UK Arm Group Employees was 2,173, of which 1,692 (77.86%) were Technical Employees and the remaining were Non-Technical Employees; and

(G)     the total number of Qualifying Employees who were Non-UK Arm Group Employees was  3,330, of which 2,845 (85.44%) were Technical Employees and the remaining were Non-Technical Employees.

For the purposes of this report, "Qualifying Employees" means the UK Arm Group Employees who are determined by SoftBank with the agreement of the Supervisor to count towards the satisfaction of limb (ii) of the Technical Employee Post-Offer Undertaking and the Non-UK Arm Group Employees who are determined by SoftBank with the agreement of the Supervisor to count towards the satisfaction of limb (ii) of the Technical Employee Post-Offer Undertaking.

3.         As at the Effective Date:

(A)     the Arm Group occupied 9 buildings in Cambridge, being Buildings Arm 1, 2, 3 & 6 at the Peterhouse Technology Park, Building CPC1 at Capital Park, Building City House, Building Eastbrook, Building 100 and Building 200 at Rustat House; and

(B)       110 Fulbourn Road, Cambridge, Cambridgeshire CB1 9NJ (inclusive of Buildings Arm 1, 2, 3 & 6 at the Peterhouse Technology Park) was publicly designated as the Arm Group's global headquarters and was the registered office of Arm.

4.         As at the first anniversary of the Effective Date:

(A)      the Arm Group occupied 11 buildings in Cambridge, being Buildings Arm 1, 2, 3 & 6 at the Peterhouse Technology Park, Building CPC1 at Capital Park, Building Eastbrook, Building 100 and Building 200 at Rustat House, Building at 90 Fulbourn Road, Building Systems House and Building Maxwell Centre; and

(B)       110 Fulbourn Road, Cambridge, Cambridgeshire CB1 9NJ (inclusive of Buildings Arm 1, 2, 3 & 6 at the Peterhouse Technology Park) was publicly designated as the Arm Group's global headquarters and was the registered office of Arm.

5.      This report is submitted to the Panel in accordance with Rule 19.5(h) of the Code and has been approved by the board of directors of Arm."

Enquiries:

Arm                                                                                                      +44 (0) 12 2340 0400
Graham Budd, Chief Operating Officer
Ian Thornton, Head of Investor Relations

Phil Hughes, Director Public Relations                           

 

Brunswick (PR Adviser to Arm)                                                            +44 (0) 20 7404 5959

Sarah West

Ambre Tanty-Lamothe                          

 

 

 

Note:

1.   Adjusted from information previously announced in November 2016 following review by Grant Thornton as Supervisor. These adjustments are not considered to be material. Prior to the recategorisation, the total number of UK Arm Group Technical Employees was 1,342 and the total number of Non-UK Arm Group Employees was 2,652, of which 2,227 (83.97%) were Technical Employees and the remaining were Non-Technical Employees.

 

 

 

APPENDIX A - section 4 of the letter from the Arm chairman in the Scheme Circular

 

4. Post-Offer Undertakings

SoftBank undertakes that:

(a) by and at the end of the period of five years from the Effective Date, in order to enable Arm to continue to develop leading-edge technology in the UK, it will have increased the total number of UK Arm Group Employees to at least double the total number of UK Arm Group Employees as at the Effective Date (the "UK Employee Post-Offer Undertaking");

(b) by and at the end of the period of five years from the Effective Date, it will have increased the total number of Non-UK Arm Group Employees from the number as at the Effective Date (the "Non-UK Employee Post-Offer Undertaking" and, together with the UK Employee Post-Offer Undertaking and the Technical Employee Post-Offer Undertaking, the "Employee Post-Offer Undertakings");

(c) during the period of five years from the Effective Date, the Arm Group will maintain its global headquarters in Cambridge (the "HQ Post-Offer Undertaking" and, together with the Employee Post-Offer Undertakings, the "HQ and Employee Post-Offer Undertakings");

(d) as soon as reasonably practicable following the Effective Date (and, in any event, within 45 days after the Effective Date), it will procure that Arm also makes post-offer undertakings pursuant to Rule 19.7 of the Code in the terms of each of the HQ and Employee Post-Offer Undertakings, without qualifications or conditions; and

(e) by and at the end of the period of five years from the Effective Date, the relative proportion of Technical Employees to Non-Technical Employees will be broadly in line with historical trends experienced by Arm (this paragraph (e) being the "Technical Employee Post-Offer Undertaking"), meaning that with respect to:

i.   the total number of UK Arm Group Employees and the total number of Non-UK Arm Group Employees, at least (i) 70 per cent. of the UK Arm Group Employees; and (ii) 70 per cent. of the Non-UK Arm Group Employees will in each case be Technical Employees on the fifth anniversary of the Effective Date; and

ii.  the UK Arm Group Employees who are determined by SoftBank with the agreement of the Supervisor (as defined below) to count towards the satisfaction of the UK Employee Post-Offer Undertaking and the Non-UK Arm Group Employees who are determined by SoftBank with the agreement of the Supervisor to count towards the satisfaction of the Non-UK Employee Post-Offer Undertaking, at least (i) 70 per cent. of those UK Arm Group Employees; and (ii) 70 per cent. of those Non-UK Arm Group Employees will in each case be Technical Employees on the fifth anniversary of the Effective Date, (together the "Post-Offer Undertakings", as interpreted and defined below).

 

Interpretation

For the purposes of the interpretation of the UK Employee Post-Offer Undertaking and the Technical Employee Post-Offer Undertaking:

·   in the past the Arm Group has developed through a combination of organic growth and strategic acquisitions and SoftBank expects this to continue. The Employee Post-Offer Undertakings may be satisfied by a combination of acquisitions, graduate recruitment and hiring provided that at least 25 per cent. of the UK Arm Group Employees who are determined to count towards the satisfaction of the UK Employee Post-Offer Undertaking and are not UK Arm Group Employees as at the Effective Date must have become UK Arm Group Employees otherwise than through acquisitions of businesses or companies by the Arm Group. Any UK Arm Group Employees who are not UK Arm Group Employees as at the Effective Date and have become UK Arm Group Employees through acquisitions of businesses or companies by the Arm Group from SoftBank Group shall be excluded for the purposes of determining the number of UK Arm Group Employees at the relevant Measurement Point. The foregoing sentence shall not apply to a business or company employing those UK Arm Group Employees that was acquired by SoftBank Group after the Effective Date and was subsequently acquired by Arm Group within the following twelve months, to the extent that the relevant UK Arm Group Employees were (i) Employees of the acquired business or company on the date acquired by SoftBank, or (ii) first employed by the SoftBank Group between the date of such acquisition and the date of the transfer of the business or company to the Arm Group;

·    SoftBank expects to transfer limited numbers of Employees who are employed by SoftBank Group to the Arm Group over time. To the extent that the number of such Employees who are UK Arm Group Employees at the relevant Measurement Point (each, a "SoftBank Transferee") exceeds 100, the number of SoftBank Transferees for the purposes of determining the number of UK Arm Group Employees shall be deemed to be 100; and

·    to the extent that the number of Part-Time Employees who are UK Arm Group Employees exceeds 20 per cent. of the total number of UK Arm Group Employees at the relevant Measurement Point, any such excess Part-Time Employees who are UK Arm Group Employees shall be excluded for the purposes of determining the number of UK Arm Group Employees at the relevant Measurement Point for the purposes of determining the satisfaction of the UK Employee Post-Offer Undertaking and limb (ii) of the Technical Employee Post-Offer Undertaking (but not for the purposes of determining the satisfaction of limb (i) of the Technical Employee Post-Offer Undertaking).

 

Current Employee numbers

As at 30 June 2016, there were 4,227 Arm Group Employees broken down as follows:

·   UK Arm Group Employees: 1,695 (40.1 per cent.) of which 1,294 (76.3 per cent.) were Technical Employees and 401 (23.7 per cent.) were Non-Technical Employees;

·    Non-UK Arm Group Employees: 2,532 (59.9 per cent.) of which 2,057 (81.2 per cent.) were Technical Employees and 475 (18.8 per cent.) were Non-Technical Employees;

·    UK Arm Group Employees who are Part-Time Employees: 2 (0.1 per cent.); and

·    UK Arm Group Employees who are Full-Time Employees: 1,693 (99.9 per cent.).

A breakdown of the number of:

·    UK Arm Group Employees who are Full-Time Employees;

·    UK Arm Group Employees who are Part-Time Employees;

·    Non-UK Arm Group Employees; and

·    the relevant proportions of Technical Employees to Non-Technical Employees,

in each case as at the Effective Date, will be used as the basis for the Employee Post-Offer Undertakings following agreement with the Supervisor and will be publicly announced as soon as reasonably practicable following the Effective Date (and, in any event, within 90 days following the Effective Date).

 

HQ Post-Offer Undertaking

In order for the Arm Group to be considered to be maintaining its global headquarters in Cambridge and therefore complying with the HQ Post-Offer Undertaking:

1.   Arm Group must occupy one or more buildings in Cambridge; and

2.   one of those buildings must be publicly designated as the Arm Group's global headquarters and be the registered office of Arm.

 

Background and monitoring

The Post-Offer Undertakings constitute "post-offer undertakings" for the purposes of Rule 19.7 of the Code. The Post-Offer Undertakings are not subject to any qualifications or conditions. The post-offer undertakings to be given by Arm will also constitute "post-offer undertakings" for the purposes of Rule 19.7 of the Code when given. Each of SoftBank and Arm will need to comply with the terms of its respective post-offer undertakings for the periods of time specified in the Post-Offer Undertakings and complete any courses of action committed to by the dates specified in the Post-Offer Undertakings.

SoftBank has appointed (and will procure that Arm appoints) Grant Thornton UK LLP (the "Supervisor") to monitor SoftBank and Arm's compliance with the Post-Offer Undertakings. The Supervisor has agreed a work plan with the Panel to monitor compliance with the Post-Offer Undertakings.

 

Definitions

For the purposes of the Post-Offer Undertakings, capitalised terms are defined as follows:

"Arm Group Employee" means an Employee of Arm or any member of the Arm Group;

"Arm Group" means Arm and its subsidiaries from time to time;

"Employee" means a person who is a permanent employee (being a person who has a contract of employment) excluding, for the avoidance of doubt, employees with fixed-term contracts, fixed-term workers, consultants, contractors, agency workers, casual workers (including zero-hour workers), volunteers, and secondees from third parties;

"Full-Time Employee" means any Employee who is not a Part-Time Employee;

"Measurement Point" means the Effective Date, each anniversary of the Effective Date until the fifth anniversary of the Effective Date and 31 March 2021 or at such other date(s) as the Panel may specify;

"Non-UK Arm Group Employee" means an Arm Group Employee other than a UK Arm Group Employee;

"Non-Technical Employees" means Employees who are not Technical Employees;

"Part-Time Employee" means any Employee who is contracted to work for less than 20 hours per week;

"SoftBank Group" means SoftBank and its subsidiaries from time to time, excluding the members of the Arm Group;

"UK Arm Group Employee" means an Arm Group Employee who is employed by a UK-incorporated member of the Arm Group and is ordinarily based permanently in the UK; and

"Technical Employees" means Employees employed as engineers, scientists, researchers, programmers, developers, IT, testing, quality assurance, and other technical Employees who work on the research, creation, maintenance, deployment and support of (i) semiconductor IP and related hardware, services, tools and software products; (ii) software products, applications and services; (iii) open source software utilised by the Arm ecosystem; (iv) customer service and support both office and field based; (v) technical marketing; and/or (vi) development, test and operations infrastructure, in each case, as determined by Arm subject to the agreement of the Supervisor, and any other Employees from time to time who are employed in roles that are reasonably determined by Arm, subject to the agreement of the Supervisor and the Panel, to be technical roles.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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