INSIDE INFORMATION: Caverion Board expects to withdraw its recommendation from North Holdings 3 Oy’s offer and recommend Crayfish BidCo Oy’s offer, subject to North Holdings 3 Oy’s matching right
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.
The Board of Directors of Caverion Corporation (the “Board”) announced on 9 March 2023 that it will issue its recommendation of the respective tender offers to acquire all of the issued and outstanding shares in Caverion Corporation (“Caverion”) that are not held by Caverion or any of its subsidiaries (the “Shares" or individually a “Share”) announced by North Holdings 3 Oy (the “Bain Consortium”) on 24 January 2023 (the “Bain Consortium Offer”) and Crayfish BidCo Oy (“Triton”) on 24 February 2023 (the “Triton Offer”) as soon as possible and in any event no later than five (5) business days prior to the expiration of the offer period for the Bain Consortium Offer. The Bain Consortium includes as members Security Trading Oy, Fennogens Investments S.A. and Corbis S.A. (the “Consortium Shareholders”) who together own approximately 26.7% of the Shares.
As stated in the Board’s release on 9 March 2023, the Board has sought further information from the bidders and clarity on the following circumstances:
On 23 March 2023 Triton lowered the acceptance condition in its offer from 90% to 66 2/3% (such announcement by Triton attached as Appendix 1 to this release). The lowered acceptance condition in the Triton Offer means that the Consortium Shareholders are not able to prevent the acceptance condition in the Triton Offer from being fulfilled, based on their current shareholdings.
On the basis of the facts and information available to the Board as of this date, the Board expects to withdraw its recommendation for the Bain Consortium Offer and instead recommend the Triton Offer, unless the Bain Consortium presents an offer that is at least equally favourable to the shareholders of Caverion as the Triton Offer no later than on 4 April 2023, which is when the Bain Consortium’s right-to-match period expires under the combination agreement between the Bain Consortium and Caverion. The Board’s assessment of whether a potential enhanced offer from the Bain Consortium is at least equally favourable as the Triton Offer will be made by comparing the two offers as a whole, including from financial and deliverability points of view and taking into account also anticipated timing and regulatory aspects (the “Board’s Assessment”). The Chairman of the Board, Mats Paulsson, comments on the Board’s expectation to change its recommendation as follows:
“The Board has engaged with both bidders throughout the process in the interest of Caverion and all its shareholders. During the past months we have seen keen interest from two good offerors to acquire Caverion. We have been pleased to see a strong competition among them which has resulted in a series of increases and improvements of both offers. In addition to the prices offered by the bidders, the Board has throughout the process also been focused on the risks that the offers would not be completed. Now, with the most recent improvement by Triton of the Triton Offer by lowering its acceptance condition, the risk of the Triton Offer not completing has decreased. Therefore, based on the facts available to the Board as of the date of this announcement, the Board expects to change its recommendation to Triton on 5 April 2023 when the Bain Consortium’s right to match period has expired, unless the Bain Consortium has presented an offer that is at least equally favourable to the shareholders of Caverion as the Triton Offer.”
Summary and evaluation of the offers
In the Board’s view, based on the tender offer documents published and the announcements made by each offeror in relation to the respective tender offers prior to this date, the two offers have the following key summary features:
|Bain Consortium Offer||Triton Offer|
|Existing ownership & conditional share purchase agreements||The Consortium Shareholders approximately own 26.7 % of the Shares.
Antti Herlin, Hisra Consulting and Finance Oy and Autumn Spirit Oü, which are not part of the Bain Consortium but are related parties to the Consortium Shareholders and together represent 0.48% of all outstanding Shares and votes in Caverion, have irrevocably undertaken to accept the Bain Consortium Offer.
The Shares held by the Consortium Shareholders represent together with irrevocable undertakings approximately 27.14% of the Shares.
The irrevocable undertakings that the Bain Consortium had earlier from Elo Mutual Pension Insurance Company, Ilmarinen Mutual Pension Insurance Company, Mandatum Life Insurance Company Limited Varma Mutual Pension Insurance Company and Veritas Pension Insurance Company Ltd. have ceased to be in effect as a result of the Triton Offer.
|Triton currently owns 9.9% of the Shares and has entered into conditional share purchase agreements to acquire a further 20.0% of the Shares. The Shares held by Triton represent, together with the conditional share purchases, approximately 29.99% of the Shares.
Conditional share purchases concerning approximately 10.0% of all Shares in Caverion may be terminated by either party if a third party announces a competing public tender offer for the Shares with a cash consideration payable immediately at completion being at least equal to or exceeding, as applicable, the threshold of EUR 9.50 and Triton does not match or exceed the consideration offered in such competing offer within a certain period of time.
|Price||Offer price of (i) EUR 8.00/Share to be paid in cash in connection with completion (“Cash Consideration”) or (ii) a fixed cash payment of EUR 8.50/Share in nine (9) months from the completion (“Alternative Consideration” and together with the Cash Consideration, the “Bain Consortium Offer Price”).||EUR 8.95/Share to be paid in cash in connection with completion (the “Triton Offer Price”).|
|Expected timeline to completion||The Bain Consortium Offer is set to expire on 31 March 2023, unless extended, with completion trades for the Cash Consideration expected in May 2023. The Alternative Consideration is expected to be paid in February 2024.||The offer period for the Triton Offer is set to expire on 17 May 2023, unless extended. Triton has further stated that it expects its offer to complete during Q3/2023 or Q4/2023. Based on an assessment by the Board’s legal advisor, the Board expects that the offer could likely be completed between October 2023 and February 2024. However, it is possible that relevant merger clearances would not be obtained within the estimated timeframe or at all.|
|Key conditions and risks||
In addition to the summary above, the Board would also like to specifically highlight to Caverion’s shareholders the following risks associated with the Triton Offer that may lead to its non-completion, if any of the risks materialise, it may lead to one or more of the conditions in the Triton Offer failing to be fulfilled prior to the Triton Long Stop Date, in which case Triton may allow its tender offer to lapse with no tender offer available to be accepted and no offer price being paid to Caverion’s shareholders. It should be noted that if the Triton Offer does not complete, there may not be any alternative ongoing or future public offers for the Shares, which may negatively impact Caverion’s share price.
The Board’s recommendation
On the basis of the facts and information available to the Board as of this date, the Board expects to change its recommendation to Triton, unless the Bain Consortium presents an offer that in the Board’s Assessment is at least equally favourable to the shareholders of Caverion as the Triton Offer no later than on 4 April 2023.
The recommendation would be changed on 5 April 2023 after the Bain Consortium’s eight (8) business day right to match period has expired under the combination agreement between the Bain Consortium and Caverion.
The Board’s expectation to change its recommendation to the Triton Offer has been based on the following assessments and considerations:
In comparing the two offers as a whole (including the offer price and risks relating to each offer), the Board considers the Triton Offer Price to be sufficiently higher compared to the Bain Consortium Offer Price to outweigh the higher risks included in the Triton Offer and, therefore, the Triton Offer to be more attractive to shareholders than the Bain Consortium Offer.
Background on the Board’s engagement with both bidders and FIN-FSA made in the interest of all Caverion shareholders
Throughout the tender offer process, the Board has engaged with both bidders and provided them access to due diligence and the opportunity to negotiate a potential combination agreement:
In addition, the Board has made a thorough assessment and has held discussions with the FIN-FSA on the potential to require both bidders to present “best and final” offers in accordance with Chapter 11, Section 17, subsection 3 of the Securities Markets Act (746/2012, as amended), i.e. a deadline set as an administrative order by the FIN-FSA after which the bidders may no longer revise their offers. While the Board’s assessment is that the current facts and circumstances do not provide sufficient grounds for invoking said mechanism, the Board continuously re-assesses the situation in this regard. It should be noted that the “best and final” construct described above has not previously been used in Finland.
Nasdaq Helsinki, key media, www.caverion.com
Caverion is a public limited liability company incorporated under the laws of Finland with its shares listed on the official list of Nasdaq Helsinki. Caverion is a Northern & Central European-based expert for smart and sustainable built environments, enabling performance and people's well-being. Caverion offers expert guidance during the entire life cycle of buildings, infrastructure or industrial sites and processes: from design & build to projects, technical and industrial maintenance, facility management as well as advisory services. At the end of December 2022, there were almost 14,500 professionals serving customers at the service of Caverion Group in 10 countries.
THIS STOCK EXCHANGE RELEASE MAY NOT BE RELEASED OR OTHERWISE DISTRIBUTED, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.
THIS STOCK EXCHANGE RELEASE IS NOT A TENDER OFFER DOCUMENT OR A SUPPLEMENT DOCUMENT TO TENDER OFFER DOCUMENT AND AS SUCH DOES NOT CONSTITUTE AN OFFER OR INVITATION TO MAKE A SALES OFFER. IN PARTICULAR, THIS STOCK EXCHANGE RELEASE IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES DESCRIBED HEREIN, AND IS NOT AN EXTENSION OF THE TENDER OFFER, IN, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA. INVESTORS SHALL ACCEPT THE TENDER OFFER FOR THE SHARES ONLY ON THE BASIS OF THE INFORMATION PROVIDED IN THE TENDER OFFER DOCUMENT AND THE POSSIBLE SUPPLEMENT DOCUMENTS TO THE TENDER OFFER DOCUMENT. OFFERS WILL NOT BE MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE EITHER AN OFFER OR PARTICIPATION THEREIN IS PROHIBITED BY APPLICABLE LAW OR WHERE ANY TENDER OFFER DOCUMENT OR REGISTRATION OR OTHER REQUIREMENTS WOULD APPLY IN ADDITION TO THOSE UNDERTAKEN IN FINLAND.
THE TENDER OFFER IS NOT BEING MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW AND THE TENDER OFFER DOCUMENT AND RELATED ACCEPTANCE FORMS WILL NOT AND MAY NOT BE DISTRIBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAWS OR REGULATIONS. IN PARTICULAR, THE TENDER OFFER IS NOT BEING MADE, DIRECTLY OR INDIRECTLY, IN OR INTO, OR BY USE OF THE POSTAL SERVICE OF, OR BY ANY MEANS OR INSTRUMENTALITY (INCLUDING, WITHOUT LIMITATION, FACSIMILE TRANSMISSION, TELEX, TELEPHONE OR THE INTERNET) OF INTERSTATE OR FOREIGN COMMERCE OF, OR ANY FACILITIES OF A NATIONAL SECURITIES EXCHANGE OF, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA. THE TENDER OFFER CANNOT BE ACCEPTED, DIRECTLY OR INDIRECTLY, BY ANY SUCH USE, MEANS OR INSTRUMENTALITY OR FROM WITHIN, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA AND ANY PURPORTED ACCEPTANCE OF THE TENDER OFFER RESULTING DIRECTLY OR INDIRECTLY FROM A VIOLATION OF THESE RESTRICTIONS WILL BE INVALID.
THIS STOCK EXCHANGE RELEASE HAS BEEN PREPARED IN COMPLIANCE WITH FINNISH LAW, THE RULES OF NASDAQ HELSINKI LTD AND THE HELSINKI TAKEOVER CODE AND THE INFORMATION DISCLOSED MAY NOT BE THE SAME AS THAT WHICH WOULD HAVE BEEN DISCLOSED IF THIS STOCK EXCHANGE RELEASE HAD BEEN PREPARED IN ACCORDANCE WITH THE LAWS OF JURISDICTIONS OUTSIDE OF FINLAND.
Information for shareholders of Caverion in the United States
Shareholders of Caverion in the United States are advised that the Shares are not listed on a U.S. securities exchange and that Caverion is not subject to the periodic reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is not required to, and does not, file any reports with the U.S. Securities and Exchange Commission (the "SEC") thereunder.
The tender offer will be made for all of the Shares. Caverion is domiciled in Finland, and is subject to Finnish disclosure and procedural requirements. The tender offer is made in the United States pursuant to Section 14(e) and Regulation 14E under the Exchange Act, subject to the exemption provided under Rule 14d-1(c) under the Exchange Act, for a Tier I tender offer (the "Tier I Exemption"), and otherwise in accordance with the disclosure and procedural requirements of Finnish law, including with respect to the tender offer timetable, settlement procedures, withdrawal, waiver of conditions and timing of payments, which are different from those of the United States. In particular, the financial information included in this stock exchange release has been prepared in accordance with applicable accounting standards in Finland, which may not be comparable to the financial statements or financial information of U.S. companies. The tender offer is made to Caverion's shareholders resident in the United States on the same terms and conditions as those made to all other shareholders of Caverion to whom an offer is made. Any informational documents, including this stock exchange release, are being disseminated to U.S. shareholders on a basis comparable to the method that such documents are provided to Caverion's other shareholders.
As permitted under the Tier I Exemption, the settlement of the tender offer is based on the applicable Finnish law provisions, which differ from the settlement procedures customary in the United States, particularly as regards to the time when payment of the consideration is rendered. The tender offer, which is subject to Finnish law, is being made to the U.S. shareholders in accordance with the applicable U.S. securities laws, and applicable exemptions thereunder, in particular the Tier I Exemption. To the extent the tender offer is subject to U.S. securities laws, those laws only apply to U.S. shareholders and will not give rise to claims on the part of any other person. U.S. shareholders should consider that the offer price for the tender offer is being paid in EUR and that no adjustment will be made based on any changes in the exchange rate.
To the extent permissible under applicable law or regulations, the Offeror and its affiliates or its brokers and its brokers' affiliates (acting as agents for the Offeror or its affiliates, as applicable) may from time to time after the date of this stock exchange release and during the pendency of the tender offer, and other than pursuant to the tender offer, directly or indirectly purchase or arrange to purchase Shares or any securities that are convertible into, exchangeable for or exercisable for Shares. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. To the extent information about such purchases or arrangements to purchase is made public in Finland, such information will be disclosed by means of a press release or other means reasonably calculated to inform U.S. shareholders of Caverion of such information. In addition, the financial advisers to the Offeror may also engage in ordinary course trading activities in securities of Caverion, which may include purchases or arrangements to purchase such securities. To the extent required in Finland, any information about such purchases will be made public in Finland in the manner required by Finnish law.
Neither the SEC nor any U.S. state securities commission has approved or disapproved the tender offer, passed upon the merits or fairness of the tender offer, or passed any comment upon the adequacy, accuracy or completeness of the disclosure in relation to the tender offer. Any representation to the contrary is a criminal offence in the United States.
The receipt of cash pursuant to the tender offer by a U.S. holder of Shares may be a taxable transaction for U.S. federal income tax purposes and under applicable U.S. state and local, as well as foreign and other, tax laws. Each holder of Shares is urged to consult its independent professional advisers immediately regarding the tax and other consequences of accepting the tender offer.
To the extent the tender offer is subject to U.S. securities laws, those laws only apply to U.S. holders of Shares and will not give rise to claims on the part of any other person. It may be difficult for Caverion's shareholders to enforce their rights and any claims they may have arising under the U.S. federal securities laws, since the Offeror and Caverion are located in non-U.S. jurisdictions and some or all of their respective officers and directors may be residents of non-U.S. jurisdictions. Caverion shareholders may not be able to sue the Offeror or Caverion or their respective officers or directors in a non-U.S. court for violations of the U.S. federal securities laws. It may be difficult to compel the Offeror and Caverion and their respective affiliates to subject themselves to a U.S. court's judgment.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY U.S. STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE TENDER OFFER, PASSED ANY COMMENTS UPON THE MERITS OR FAIRNESS OF THE TENDER OFFER, PASSED ANY COMMENT UPON THE ADEQUACY OR COMPLETENESS OF THE TENDER OFFER DOCUMENT OR PASSED ANY COMMENT ON WHETHER THE CONTENT IN THE TENDER OFFER DOCUMENT IS CORRECT OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.
Bank of America Europe DAC, Stockholm branch, a subsidiary of Bank of America Corporation, is acting exclusively for Caverion and no one else in connection with the Bain Consortium Offer and the Triton Offer, and will not be responsible to anyone other than Caverion for providing the protections afforded to its clients or for providing advice in relation to the Bain Consortium Offer, the Triton Offer or any matter or arrangement referred to in this stock exchange release.