Companies - application to sanction a scheme of arrangement.
Before : |
T. J. Le Cocq, Esq., Deputy Bailiff, and Jurats Grime and Sparrow |
Between |
Shire Plc |
Representor |
And |
Takeda Pharmaceutical Company Limited |
Respondent |
IN THE MATTER OF A REPRESENTATION BY SHIRE PLC
AND IN THE MATTER OF ARTICLE 125 OF THE COMPANIES (JERSEY) LAW 1991
Advocate S. J. Alexander for the Representor.
Advocate J. W. Angus for the Respondent.
judgment
the deputy bailiff:
1. This is an application brought by Shire Plc ("Shire") to sanction a scheme of arrangement dated 12th November, 2018, ("the Scheme") to facilitate the terms of a recommended cash and share offer by Takeda Pharmaceutical Company Limited ("Takeda") pursuant to Article 125 of the Companies (Jersey) Law 1991 ("the Law").
2. As is usual in such cases, the matter was first brought before the Court for directions and by its order of 5th November, 2018, the Court ordered that Shire be at liberty to convene a Court meeting pursuant to Article 125(1) of the Law for the purposes of considering and, if appropriate, approving the Scheme (the Court meeting). Further orders were made concerning the timing and location of the Court meeting, the notification of shareholders, proxies and the reporting back to the Court of the results of the Court meeting.
3. Essentially the Scheme is designed to facilitate the terms of a recommended cash and share offer by Takeda for the entire issue and to be issued ordinary share capital of Shire. The reasons for proposing the Scheme were explained in the Chairman's letter forming part of the Scheme circular sent to shareholders and in the explanatory statement also circulated as part of that circular.
4. Pursuant to the Scheme, the Scheme shareholders (being the holders of ordinary shares of £0.05 pence each in the capital of Shire) will exchange each of their shares for $30.33 in cash and either .839 new shares of common stock with no par value in the capital of Takeda or, subject to making a valid election, 1.678 of an American depositary share issued under the Takeda deposit agreement as explained in the Scheme circular. As a result of the Scheme, Takeda would become the new parent company of Shire.
5. There are three stages in the process by which a scheme of arrangement under Article 125 of the Law becomes binding upon its shareholders. In Representation of CPA [2010] JRC 011 the Court stated:-
"(i) First there is an application under Article 125(1) for an order that a meeting of shareholders or creditors if necessary be called. It is at this stage that the Court should consider whether or not to summon separate class meetings and if so, who should be summoned to each meeting. The Court will not look at the merits at this stage (see Re Telewest Communications Plc [2004] EWHC 92).
(ii) Second, the scheme proposals are put to the court-convened meeting and are approved by a majority by number representing 3/4ths of the voting rights of members present and voting in person or by proxy.
(iii) Third, and assuming the requisite approval at such meeting is given, the Court exercises its discretion as to whether to sanction the arrangement: see Re National Bank Ltd [1966] 1 All ER 1006 at 1012 approved by the Royal Court in Re Telewest Finance (Jersey) Limited [2004] JRC 109."
6. By its order of 5th November, 2018, the Court ordered that there should be a single meeting. There did not need to be a meeting of creditors in these circumstances as the Scheme related solely to the members of Shire and the position of the creditors would remain unaffected.
7. The Court meeting has duly taken place and the Court has before it, in addition to the affidavit of Susan Kilsby sworn on 30th October, 2018, in support of the original representation, a second affidavit of Susan Kilsby of 5th December, 2018, reporting on the Court meeting. In addition there is an affidavit from Lisa Elizabeth Graham sworn on 28th November, 2018, relating to the service of notice for the Court meeting, an affidavit of Jo Cottrell of 28th November, 2018, relating also to the service of notice and, lastly, an affidavit of Thomas Bailey Shropshire Junior of Linklaters LLP sworn on 10th December, 2018, in relation to certain matters under the United States Securities Act 1933.
8. Accordingly, it now falls for us to determine whether the Scheme should be sanctioned. The Court applies a well-established three-fold test on such occasions, namely:-
(i) Whether the provisions of the Law have been complied with;
(ii) Whether the class of shareholders to be affected by the proposed Scheme was fairly represented by those who attended the meeting and whether the statutory majority acted bona fide and without coercing the minority in order to promote interest adverse to those of the class who they may purport to represent; and
(iii) Whether the arrangement is such that an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve.
9. In the light of the affidavit evidence provided to us and particularly that contained in Susan Kilsby's second affidavit we are satisfied that the provisions of the law have been met.
10. There is only one class of shareholders and the evidence before us is that at the Court meeting 95.63% of the shareholders by number (1,028 out of 1,075) who attended the meeting in person or by proxy voted in favour of the Scheme (47 shareholders by number voting against). Those voting in favour of the Scheme represented 99.81% by value of the shares being 608,080,536 out of a total of 609,246,197. It is clear that the Scheme will affect all of the shareholders equally and no shareholders who voted to approve the Scheme seem to benefit in some manner that was not available to those who did not vote.
11. No one attended before us at this hearing to oppose the order sought by Shire and we are accordingly satisfied that there was a fair representation of shareholders at the Court meeting and that a very substantial majority voted in favour of the Scheme.
12. There is no evidence before us to suggest that the statutory majority are not acting intelligently and honestly and in our judgment requirement (iii) is also met. We have not detected anything that might be considered to be a blot upon the Scheme.
13. We were taken through some of the amendments to the Scheme by Advocate Alexander and they appear to us to be unobjectionable.
14. Advocate Angus on behalf of Takeda confirms, as indeed does a letter sent by that company to Shire, that the conditions precedent have either been fulfilled or waived and undertakes on behalf of his client to be bound by the terms of the Scheme.
15. Lastly, we note that Takeda will be intending to rely upon an exemption in the United States Securities Act 1933 and as we have said this has been brought to our attention and referred to in the affidavit of Mr Shropshire referred to above. This is not the first time that the Court has considered an affidavit in these terms in connection with that provision of United States law and we repeat the wording of the Court in the Representation of Vallar Plc [2011] JRC 125 in which the Court said:-
"It is obviously not a matter for us to make any finding in that respect but we do record that on the face of it the relevant conditions appear to have been met."
16. Accordingly we approve the Scheme.
Authorities
Companies (Jersey) Law 1991.