Royal Bank of Scotland Group PLC, via wholly-owned, indirect subsidiary RBS BidCo, will acquire cloud-based accounting solutions provider FreeAgent Holdings PLC for roughly £53 million.
The bank announced March 27 that it will acquire all the current and to-be-issued ordinary share capital of FreeAgent, which is listed on the Aim submarket of the London Stock Exchange, for an implied 86.0% premium to the closing price per FreeAgent Holdings share of 64.5 pence as of March 26, the last business day prior to announcement of the offer.
FreeAgent shareholders, under the scheme of arrangement, in terms of Part 26 of the Companies Act, are entitled to 120 pence for each share held, RBS said.
RBS BidCo has received irrevocable undertaking in support of the deal from shareholders who own 50.7% of FreeAgent's issued ordinary share capital.
Part of the payment to FreeAgent shareholders — around 23.5% of the due consideration — will be fulfilled by the issue of RBS BidCo shares approximately equivalent to 5% of the entity's issued share capital. These shares will not carry voting or dividend rights.
RBS said it will operate FreeAgent as an independent member of RBS Group, retaining FreeAgent's existing management and keeping its headquarters in Edinburgh.
More than 10,000 RBS customers had already signed up to use the FreeAgent solution through an existing commercial partnership between RBS and FreeAgent. RBS said the acquisition would give FreeAgent access to the bank's financial resources to help it grow further, and also help support RBS' "market-leading position in business banking."
The acquisition is subject to approval from the U.K. Financial Conduct Authority.
CMS Cameron McKenna Nabarro Olswang LLP is legal adviser to RBS Group and RBS BidCo, while FreeAgent Holdings has engaged Dentons UK and Middle East LLP as legal advisers.
BofA Merrill Lynch is exclusive financial adviser to RBS Group and RBS BidCo. Nplus1 Singer Advisory LLP is financial adviser and broker for FreeAgent Holdings.