United Malt signs exclusivity deed with Malteries Soufflet to acquire 100% UMG shares

Key Highlights:

• United Malt Group has signed a process and exclusivity deed with Malteries Soufflet.
• Each share is under process and exclusivity deed to acquire all ordinary shares at AU$5.00 per share.
• The Indicative Proposal of AU$5.00 in cash per UMG share represents a 45.3% premium to the closing price on 24 March 2023.

On 28 March 2023, United Malt Group Limited (ASX: UMG) announced that it has signed a process and exclusivity agreement with Malteries Soufflet SAS.

Malteries Soufflet SAS manufactures malt products. It specialises in agricultural products, cereals, oilseeds, dairy products, lentils, rice, and vegetables. Malteries Soufflet serves customers in Europe.

United Malt Group and Malteries Soufflet signed the deed following Malteries Soufflet submitted a conditional, non-binding, and indicative proposal to acquire entire UMG ordinary shares on issue for AU$5.00 per share in cash via a scheme of arrangement.

As per the Proposal, the indicative proposal price will be adjusted for any dividend declared or paid by United Malt to the holders of United Malt Shares before implementing the potential Transaction.

The Indicative Proposal of AU$5.00 in cash per UMG share represents a 45.3% premium to the previous closing price of UMG shares of AU$3.44 on the ASX (as of 24 March 2023).

More about the Indicative Proposal:

The Indicative Proposal follows an unsolicited method from Malteries Soufflet & its main shareholder, the InVivo Group, to UMG concerning a possible combination of UMG & Malteries Soufflet. After a period of initial engagement, the UMG board determined that the Proposal is in the best interest of UMG shareholders to provide limited, non-public information about United Malt to Malteries Soufflet and InVivo on a confidential and nonexclusive basis.

What next?

After careful consideration of the indicative Proposal (including consultation with its financial as well as legal advisers), the UMG Board universally determined that it is in the best interests of UMG Shareholders as a whole for United Malt to engage with and provide due diligence access to Malteries Soufflet to assist it in providing a binding proposal concerning the potential Transaction to the United Malt Board.

In the Proposal, Malteries Soufflet said that it would progress the Proposal at an improved price only if UMG agrees to certain exclusivity restrictions. Therefore, UMG signed the Process Deed with Malteries Soufflet and allowed Malteries Soufflet to conduct due diligence on an exclusive basis for a period beginning on the date of the Process Deed and finishing 10 weeks from the time that is 48 hours after the due diligence information requested by Malteries Soufflet has been substantially provided. At the same time, UMG must use its reasonable endeavours to give this information to Malteries Soufflet in a virtual data room within 2 weeks after the date of the Process Deed. Also, both parties agreed to work together towards entering into a scheme implementation agreement.

Also, UMG agreed to some customary exclusivity restrictions. It includes no shop, no talk, no due diligence, and notification obligations that apply during the exclusivity period. The Process Deed also comprises a matching-rights regime regarding any superior proposal received by UMG during the exclusivity period.

Other than these, UMG agreed to refund Malteries Soufflet for some costs that it incurs regarding the Potential Transaction (counting in undertaking its due diligence investigations plus negotiating the scheme implementation contract), up to a max of AU$5.0 million, in certain situations. These situations include:

1. Malteries Soufflet provides a fully documented, financed, and binding offer (via an executed scheme implementation deed that has been negotiated in good faith with UMG and mirrors the conditions of the indicative Proposal, in conjunction with other essential documentation) in the 10-business day period following the conclusion of the exclusivity period, and UMG chooses not to continue with the likely Transaction.

2. UMG enters into an arrangement to give effect to a competing proposal, or the UMG Board recommends a competing takeover bid during the exclusivity period.

Stock Information:

At AEDT 2.:40 PM, UMG shares are trading at AU$4.525, up 31.540% from the previous close

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