Sponsored by TCI International Inc.
09 Sep 21. Science Group notes that TP Group plc (“TP Group”) has posted a Circular (the “Circular”) to its shareholders for the requisitioned General Meeting in relation to the constitution of the TP Group Board. The date of the meeting is 1 October 2021. At close of business on 8 September 2021, Science Group owned 209,388,987 shares in TP Group, equivalent to 26.9% of the issued voting share capital. Science Group is the largest shareholder in TP Group and owns more shares than the aggregate of the irrevocable undertakings (25.4%) obtained by the Board of TP Group in relation to the General Meeting.
The Board of TP Group make a number of statements which Science Group considers to be misrepresentative. The TP Group Board also notably avoids accepting any responsibility for the poor financial performance of the business, the failure of corporate governance and the destruction of shareholder value in recent years. Indeed, the announcement by TP Group on 7 September and the shareholder Circular allocate a disproportionate amount of commentary to wholly unrelated matters to try to distract TP Group shareholders from the failures of the TP Group Board.
Science Group also wishes to clarify that, contrary to the perception portrayed by the TP Group Board, the General Meeting requisitions are simply to replace two non-executive directors who have presided over the substantial deterioration in shareholder value and have failed to provide the corporate governance reasonably expected of their role by TP Group shareholders. At no time has Science Group indicated or inferred in any way that it intends to remove the newly appointed Chief Executive or the Finance Director.
The TP Group Board should cease the scaremongering and accept their responsibility for the poor performance of TP group in recent years. It is farcical to suggest that Science Group’s investment one month ago will “undermine the stability of TP Group’s businesses” after (i) the poor financial performance of TP Group resulting in the going concern commentary in the TP Group 2020 Annual Report; (ii) the inconsistent strategy related to TPG Maritime; and (iii) the abrupt departure of the former CEO.
Science Group believes that the honourable course of action of any Chairman/director, who has presided over such a destruction in value and failure of governance, is to resign and to effect a smooth transition to a reconstituted Board, avoiding further costs for the company and disruption for all TP Group stakeholders.
Science Group Withdrawn Offer for TP Group
The Board of TP Group also misrepresents the background to the withdrawn potential offer by Science Group. Prior to acquiring any shares, Science Group approached TP Group initially regarding a strategic investment and later a possible merger/acquisition. Following the initial purchase of shares in TP Group, Science Group repeatedly tried to engage in dialogue with the TP Group Board. Despite the poor track record of TP Group, and the potential substantial premium of 67% (to the closing TP Group share price on the trading day prior to Science Group investment), the Board of TP Group, refused to engage in any meaningful dialogue.
The Science Group indicative offer was always subject to certain pre-conditions including the receipt of satisfactory due diligence. As previously announced, The TP Group Board were unwilling to provide access to due diligence information unless certain conditions were agreed which were unacceptable to Science Group. As a result, the Science Group potential offer was withdrawn on 3 September 2021, denying TP Group shareholders a potential liquidity event at a substantial premium.
Furthermore, the TP Group Board has incorrectly suggested that Science Group would have been unable to fund the acquisition of TP Group. It is quite normal that acquisition funding is arranged in parallel with discussions between parties. In accordance with standard practice, Science Group and its advisors provided TP Group with customary assurances which the TP Group Board and its advisors inexplicably rejected.
It is therefore noteworthy that following the withdrawal of the indicative offer for TP Group, on 7 September 2021 Science Group completed an over-subscribed placing (“Placing”) of new shares to raise approx. £17.8m, net of costs. The Placing was completed at a premium to the Science Group closing share price, a very strong message of confidence from institutional investors. This Placing strengthened Science Group’s existing cash resources, which at 31 August 2021 were £17.2m, at which time Science Group already owned 24% of TP Group. In addition, as announced on 6 September 2021, Science Group is exploring extending its bank facilities and, with a strong track record of profitability and cash flow, additional facilities are anticipated to be available. In summary, it is, and always was, readily apparent that the indicative offer could have been funded by Science Group if the TP Group Board had cooperated and the due diligence was satisfactory.
The Board of TP Group also makes a number of inferences which do not reflect the protections inherent in the UK City Code on Takeovers and Mergers (the “Code”). Despite the lengthy rhetoric in the Circular, TP Group has failed to define any example where Science Group has not complied with the provisions of the Code, as applicable. The restrictions and exceptions related to any future potential offer were set out in the Science Group announcements on 24 August 2021 and 3 September 2021.
In summary, for the avoidance of any doubt and contrary to the inferences made by the TP Group Board, the General Meeting is not related to any offer or potential offer for TP Group by Science Group or any other party. The Science Group potential offer was withdrawn on 3 September 2021. The General Meeting requisitions are simply to replace two non-executive directors who have presided over the substantial deterioration in TP Group shareholder value and have failed to provide the appropriate level of corporate governance reasonably expected of their role by TP Group shareholders.
Science Group Strategic Investment and General Meeting
The strategic investment model formed the basis of the initial approach to TP Group and on 16 August 2021, just one week after making the initial investment, Science Group informed shareholders of both companies that the strategic investment model was increasingly likely and this scenario was consistently reiterated in subsequent announcements.
As the largest shareholder in TP Group, the Science Group strategy is to manage its investment in an active manner. To that end, Science Group requisitioned the Board of TP Group to call a general meeting of TP Group shareholders to consider the constitution of the TP Group Board. Science Group again reiterates that the General Meeting requisitions are simply to replace two non-executive directors who have have failed to provide the corporate governance expected of their role. At no time has Science Group indicated or inferred in any way that it intends to remove the newly appointed Chief Executive or the Finance Director and the majority of the TP Group directors would remain unchanged.
With regard to the current incumbents who are proposed to be replaced, Mr McCree was appointed a non-executive director on 1 October 2014 and Chairman on 1 January 2017. Mr Jeremy Warner-Allen was appointed as a non-executive director on 2 March 2017. Since Mr McCree’s appointment as Chairman up to 6 August 2021 (the last trading day prior to the Science Group investment), the TP Group share price had declined by 64.6%. For reference the FTSE AIM All-Share index increased by 49.3% during the same period. After such destruction of value, the honourable course of action is for Mr McCree and Mr Warner-Allen to resign and effect a smooth transfer.
With regard to the nominated directors, Mr Ratcliffe was appointed Chairman of Science Group plc (then called Sagentia plc) on 15 April 2010. In contrast to the poor performance of TP Group, (i) since Mr Ratcliffe’s appointment in 2010, the Science Group share price has increased by 1,163.9% and (ii) between 1 January 2017 and 6 August 2021 (ie the same reference points as above for Mr McCree) the Science Group share price has increased by 179.9%. Mr Ratcliffe and Mr Bertram are experienced directors of listed companies who have a track record of delivering value to shareholders. If appointed, the experience of Mr Ratcliffe and Mr Bertram would add significant value to TP Group and benefit all TP Group stakeholders.
Science Group, the largest shareholder in TP Group, encourages all shareholders to vote in favour of the resolutions to (i) remove Mr McCree and Mr Warner-Allen as directors of TP Group plc, and (ii) appoint Mr Ratcliffe and Mr Bertram as directors of TP Group plc.
31 Aug 21. Scott Ferguson’s Sachem Head builds stake in Meggitt. A fresh name has been added to the list of players looking to profit from the bidding war for aerospace and defence company Meggitt, with the Sachem Head hedge fund taking a stake of almost 1%.
The Times reported that the fund, which was behind the push for Whitbread to sell its Costa Coffee business, has amassed the holding through derivatives.
It comes after Meggitt agreed to the 800p-per-share takeover offer from US-based Parker-Hannifin earlier in August, before another American company TransDigm swooped in with an unsolicited 900p-per-share bid.
The Takeover Panel in London gave TransDigm a 14 September ‘put up or shut up’ deadline to either make a formal offer, or abandon its bid.
In 2018, Sachem Head made the first calls for Whitbread to offload its Costa operations after building a stake in the company, before activist investment giant Elliott jumped on the bandwagon.
That pressure led to the Premier Inn owner selling Costa Coffee to the Coca-Cola Company for £3.9bn several months later.
Sachem Head, led by managing partner Scott Ferguson, also built up a stake in security giant G4S amid the bidding war between Allied Universal and GardaWorld, which the former won in February of this year.
The Times said Sachem Head had sold down its stake in Meggitt from a peak of 1.7% earlier in August, but said it was just one of several hedge funds looking to profit from the battle for the defence company.
It named Davidsom Kempner, Pentwater and Farallon as being among the firms that have built up holdings recently. (Source: Sharecast)
07 Sep 21. Excelitas Technologies Completes Acquisition of PCO AG. Excelitas Technologies Corp., a leading industrial technology manufacturer focused on delivering innovative, market-driven photonic solutions, completed the acquisition of PCO AG, based in Kelheim, Germany on Friday, September 3, 2021. PCO is a leading manufacturer and innovator in digital imaging for a wide range of scientific and industrial applications.
“Excelitas is proud to add PCO to our expanding portfolio of sensing, illumination, and optical technologies. Globally recognized for its broad variety of superior camera systems that define the leading edge of imaging technology, PCO now provides our OEM customers with a deeper range of end-to-end photonic solutions in the life science and high-performance industrial markets,” said Michael Ersoni, Excelitas Executive Vice President, Commercial SBU.
“Over the past few decades, PCO has repeatedly set benchmarks in scientific camera development,” said Luitpold Kaspar, COO of PCO AG. “We take extreme pride in being the leading technological pioneer in the field of scientific CMOS cameras. We see this acquisition as an excellent opportunity to present our products more broadly through the extensive global reach of Excelitas Technologies. We look forward to a common path of growth with our new ownership and will continue to pioneer new benchmarks in camera technology.”
Excelitas acquired 100 percent of PCO AG shares from founder Dr. Emil Ott. PCO will continue to operate from its state-of-the-art manufacturing facilities in Kelheim, Germany, expanding both Excelitas’ technological scope, as well as geographic footprint in Europe, North America and Asia.
“We are convinced that in Excelitas, we have found a strong partner who – especially in the OEM business – complements our experience from over 30 years in high-tech camera development. We look forward to a successful cooperation that will manifest and strengthen our position in Kelheim and the world over,” said Alexander Gruenig, CTO of PCO AG.
The acquisition of PCO AG is the latest in a series of strategic acquisitions by Excelitas Technologies since its founding in 2010. It is the fourth such acquisition since Excelitas was acquired by AEA Investors (New York, NY, USA) in December 2017.
03 Sep 21. Italy’s Leonardo aims to list DRS unit when market conditions right. Italian defence group Leonardo (LDOF.MI) still aims to list its U.S. unit DRS when the right market conditions are in place, Chief Executive Alessandro Profumo said on Friday.
The state-controlled group postponed an initial public offering of a minority stake in DRS in March, due to uncertainty over U.S. defence spending and investors’ concerns about a potential rise in interest rates to fight a surge inflation. read more
“We have filed for the listing of DRS and we keep updating the documents for the IPO … when market conditions for a successful transaction are there, we will do it,” Profumo told reporters on the sidelines of an annual event in Cernobbio, on Lake Como.
The Italian group had offered 22% of DRS at a price of $20 to $22 per share.
“The valuation’s range for the unit remains unchanged,” Profumo said, adding the group could test the IPO market again, in the coming months.
Profumo said the group still planned to sell its small automation business and declined to comment on a possible disposal of its OTO Melara unit, which makes defence systems for ships.
A source familiar with the matter told Reuters last month that Italian shipbuilder Fincantieri (FCT.MI) was talking to Leonardo about a possible acquisition of OTO Melara. read more
Any tie-up between Fincantieri and OTO would require the approval of both the Italian government and state lender CDP, which is an investor in the shipbuilder, another source said.
Profumo also said Leonardo would present a plan for its Aerostructure business, which produces parts of aircraft for Boeing (BA.N) and Airbus (AIR.PA), by the end of the year.
The division has been suffering from a fall in demand and is expected to burn through cash this year as some of its plants are operating under their production capacity. (Source: Reuters)
07 Sep 21. Meggitt tumbles as TransDigm says it won’t make an offer. Meggitt shares tumbled on Tuesday after US aerospace manufacturer TransDigm said it does not plan to make an offer for the London-listed defence and aerospace engineer.
TransDigm chairman W. Nicholas Howley said: “We have long admired and studied the Meggitt business and believed that a combination between the two companies could provide value to investors of both companies.
“However, based on the quite limited due diligence information that was made available and the resulting uncertainties, TransDigm could not conclude that an offer of 900p per Meggitt share would meet our long-standing goals for value creation and investor returns.”
Howley said that TransDigm and its advisers put “substantial” time, effort, resources and expense into evaluating a potential transaction.
“We reached a memorandum of understanding with the Meggitt Pension Plan trustees, arranged the necessary financing for the acquisition which we anticipated would position us roughly in the range of leverage levels that we have used historically for larger acquisitions, and communicated our willingness to make commitments to HM Government comparable to those offered by the other bidder for Meggitt.
“However, consistent with our disciplined approach to capital allocation, we make acquisitions only when we see a clear path to achieving our investment return goals with a reasonable degree of certainty.”
Meggitt announced last month that it had received an unsolicited takeover approach from TransDigm. This came just a week after the company agreed to be bought by US rival Parker-Hannifin for £6.3bn, or 800p a share.
01 Sep 21. Launching into space? Not so fast. Insurers balk at new coverage. An ever-swelling amount of space debris is threatening satellites that hover around Earth, making insurers leery of offering coverage to the devices that transmit texts, maps, videos and scientific data, industry sources said.
Thousands of new satellites are being launched into areas where orbital rubbish has been accumulating since early space missions nearly 65 years ago. The surging collision risks have left the handful of insurers that offer satellite coverage pulling back or exiting the market, executives and analysts said.
“This is a real issue for insurance,” said Richard Parker, co-founder of Assure Space, a unit of AmTrust Financial.
Over a year ago, the company stopped providing spacecraft insurance in the Low Earth Orbit (LEO) where most satellites operate. The few policies it has sold since then exclude collision damage.
“It may start to get difficult to get that type of coverage in the near future as more insurers realize that this is a significant risk that we can’t even get our arms around,” Parker told Reuters.
There are 8,055 satellites roaming Earth’s orbits, 42% of them inactive, according to Seradata, which tracks the statistics. Most operate in the LEO, which extends 2,000 kilometers, or 1,243 miles, beyond Earth.
The number of active satellites has jumped 68% from a year ago and more than 200% from five years ago.
Much of the new activity has come from billionaire Elon Musk’s SpaceX, as it expands its Starlink broadband network. read more
SpaceX did not reply to requests for comment. As a privately held company, it does not disclose whether its satellites are insured.
Other major companies including Google, Apple and Amazon also rely on satellites to transmit data, as do telecom providers, government agencies and universities working on space research, insurance sources said.
Space coverage has been a lucrative niche for insurers, which took in $475m in gross premiums to cover satellites, rockets and unmanned space flights last year and paid just $425m in losses, according to Seradata.
Space premiums are 10-20 times aviation premiums, said Peter Elson, CEO of insurance broker Gallagher Aerospace.
“This is a risky business in the first place,” he said.
MESS IN SPACE
The insurance dilemma underlines a greater problem: no one is
Government agencies track thousands of pieces of debris, including inside a “graveyard orbit” where old geostationary orbit (GEO) satellites are sent to die with their last bits of fuel, 36,000 kilometers, or 22,370 miles into space.
LEO satellites are much smaller than GEO satellites. Typically the size of a small refrigerator, they need $500,000 to $1m worth of coverage, far below the $200m to $300m for those in the GEO, industry experts said.
Historically, policies have protected devices against loss, failure or damage from launch through their orbiting life, but not revenue losses from outages. Operators could add liability coverage in case one satellite damages another or re-enters the atmosphere in a way that causes damage or injury on the ground.
About half of new satellite launches now have insurance, said Denis Bousquet, an executive in AXA XL’s space business. Industry sources expect more policies to exclude collision coverage and fewer satellites to have insurance at all.
“The concentrations of debris and increasing numbers of satellites being deployed are increasing the potential for collision,” said Charles Wetton, underwriting manager for space policies at insurer Global Aerospace.
Only 11 spacecraft have suffered a partial or total failure due to suspected debris strikes over the past decade, according to Seradata, making insurer worries largely theoretical for now.
Yet because insurers predict risks over the life of current and future policies, space underwriters fret over doomsday scenarios years ahead.
Wetton cited the possibility of a “Kessler effect,” named for NASA space debris expert Don Kessler who developed the theory in 1978. It anticipates LEO becoming so crowded that there is a cascade of collisions.
There are no signs such a situation is imminent, but it would render entire orbits uninsurable, Wetton said.
Assure Space’s Parker said he is confident a major collision will occur within the next three years, rendering insurance nearly impossible to obtain.
New insurers may enter the market to alleviate supply-demand strains. Until then, industry experts said companies, universities and government agencies will likely bear more financial responsibility.
Taxpayers also may also end up on the hook more often.
In June, the Export-Import Bank of the United States (EXIM), approved $80.7m in financing for a SpaceX launch as well as a launch and in-orbit insurance for Spanish communications network Hispasat SA.
“The availability of EXIM’s financing enables SpaceX and other U.S. exporters to remain competitive,” said EXIM Acting First Vice President and Vice Chairman James Cruse. (Source: Reuters)
TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.