11 January 2016 Insurance

Xchanging recommends shareholders accept CSC offer

Outsourcing company Xchanging has recommended its shareholders accept technology firm Computer Sciences Corporation (CSC)’s offer to acquire the firm.

On 9 December 2015, CSC announced a unanimously recommended cash offer for Xchanging at a price of 190 pence per share.  As stated in CSC's offer document, each of the Xchanging directors holding Xchanging shares has accepted CSC's offer in respect of his own beneficial holdings (representing, in aggregate, approximately 0.46 percent of the Xchanging shares in issue on 8 January 2016).

On 23 December 2015, CSC announced it had purchased 9.99 percent of Xchanging's shares from Capita  and therefore owns or has irrevocable undertakings, other commitments and a letter of intent to accept its offer in respect of 141,424,246 Xchanging shares, representing approximately 57.06 percent of the Xchanging shares in issue on 8 January 2016.

The first closing date of the offer from CSC is 1 pm (London time) on 15 January 2016 at which point, if it has not received acceptances from shareholders representing at least 75 percent of the Xchanging shares to which its offer relates, CSC will be entitled either to lapse its offer or to extend the offer period. CSC's offer remains conditional on certain regulatory and anti-trust clearances.

On 16 November 2015, Xchanging announced that it had received an approach from Ebix regarding an indicative proposal to acquire the entire issued and to be issued share capital of Xchanging for 175 pence per share in cash and that Xchanging had commenced discussions with Ebix.

Accordingly, Ebix (as well as CSC) was set a deadline of 5pm. on 9 December 2015 by which to announce a firm offer for Xchanging or to announce it would not make an offer. The panel on takeovers and mergers) ruled on 9 December 2015, that CSC's offer resulted in Ebix being set a new deadline of 5pm on 6 February 2016 (being the 53rd day following publication of CSC's offer document) to announce a firm intention to make an offer for Xchanging or to announce it would not make an offer.

However, despite the significant amount of time that has been available to Ebix, Ebix has not confirmed to Xchanging that they will be able to make a superior offer for Xchanging or provided evidence that they would be able to finance such an offer for Xchanging. Given the very limited engagement that Ebix or its advisers have had with Xchanging to date, there remains no certainty that Ebix will announce a firm intention to make an offer.

Accordingly, the Xchanging board is currently unable to express any confidence in the likelihood of a superior cash offer from Ebix.

Xchanging said shareholders should be aware that if CSC does not receive at least 75 percent. acceptances by 1pm (London time) on Friday 15 January 2016 and decides to lapse its offer rather than extend it, and Ebix does not subsequently make an offer for Xchanging, then (absent a third party offer) there will be no takeover offer for Xchanging capable of being accepted by shareholders.

The board of Xchanging said has a high degree of confidence in the future prospects of Xchanging , however it continues to recommend that Xchanging shareholders accept the offer from CSC for the reasons set out in CSC's offer document, including the significant premium it implies (representing a premium of approximately 81 percent to the average closing price per Xchanging share for the three month period ended 2 October 2015), and to do so by no later than 1pm (London time) on Friday 15 January 2016.

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