LONDON, UK: Silverwood Brands plc, an enterprise company established to invest primarily in branded consumer businesses, has signed a conditional share purchase agreement (SPA) for the acquisition by the Company of Balmonds Skincare Ltd, a UK based skincare company that manufactures cosmetic skincare products primarily for consumers who suffer from skin conditions such as eczema, psoriasis and dermatitis.
Balmonds’ product line is made from natural ingredients that work to protect and hydrate sore and inflamed skin.
The proposed acquisition of Balmonds (“Acquisition”) constitutes a reverse takeover under the AQSE Growth Market Rules and as such will require the approval of Shareholders which will be sought at a general meeting of the Company convened for 9.00 a.m. on 14 June 2022 at VSA Capital’s offices at Park House, 16-18 Finsbury Circus, London EC2M 7EB (“General Meeting”).
The Admission Document relating to the Acquisition (including the Notice of General Meeting and Form of Proxy) has been published on the Company’s website at www.silverwoodbrands.com on Friday 20 May 2022 and is being posted to Shareholders today.
Details of the Acquisition
On 20 May 2022, the Company entered into a conditional sale and purchase agreement with Andrew Gerrie and Alison Hawksley (the “Principal Vendors”) to acquire their respective shareholdings in Balmonds for a consideration of up to 6,811,389 new Ordinary Shares with a deemed price of 85p per share (“Consideration Price”).
The combined shareholdings of the Principal Vendors in Balmonds is equal to 85 per cent of the issued share capital. The Company is entitled to acquire the remaining 15 per cent. of the issued share capital of Balmonds from the other shareholders in Balmonds (the “Minority Vendors”) on the same terms pursuant to “drag along provisions” in the articles of association of Balmonds except the Company may choose to expedite the acquisition process by agreement with the Minority Vendors.
The total consideration payable to the Minority Vendors will be up to 1,202,010 new Ordinary Shares with a deemed price of 85p per share.
The total consideration for the Acquisition amounts to up to approximately £8,000,000 and will be satisfied via the issue and allotment of up to 8,013,399 new Ordinary Shares (“Consideration Shares”) to the Principal Vendors and the Minority Vendors (together the “Vendors”) pro rata to their holdings in Balmonds at the Consideration Price.
The Consideration Shares comprise 4,808,039 new Ordinary Shares to be allotted and issued to the Vendors at the time of Admission (the “Initial Consideration Shares”) and up to 3,205,360 Ordinary Shares to be allotted and issued to the Vendors after the satisfaction of certain performance and other criteria (the “Deferred Consideration Shares”).
The Deferred Consideration Shares shall be issued on or around the third anniversary of Admission subject to certain conditions including the applicable Vendors remaining employed by Balmonds and certain performance targets being satisfied. The number of Deferred Consideration Shares to be issued to the Vendors will calculated on a straight line basis and agreed formula.
As part of the Acquisition, the Company conditionally acquired a shareholder loan (the “Balmonds Shareholder Loan”) advanced to Balmonds by Andrew Gerrie and Alison Hawksley (the “Balmonds Loan Holders”). In consideration of the Balmonds Loan Holders agreeing to novate the Balmonds Shareholder Loan to the Company, 1,398,365 new Ordinary Shares at a price equivalent to the Consideration Price (the “Loan Shares”) will be issued to the Balmonds Loan Holders on or around Admission subject to Admission and completion of the Acquisition.
Because the Directors of the Company are also shareholders and as a result of the relationships of the board members and certain Shareholders, a concert party will be formed as a result of the Acquisition (the “Concert Party”). Further information on the Concert Party is given below.
On completion of the Acquisition, the Concert Party will hold 8,445,140 Ordinary Shares on Admission, representing approximately 73.2 per cent. of the Enlarged Share Capital. Under Rule 9 of the Takeover Code, the Concert Party would normally then be obliged to make a general offer to all Shareholders (other than the Concert Party) to acquire all the Ordinary Shares not owned by the Concert Party. The Panel has agreed to waive this obligation (“Rule 9 Waiver”) subject to the approval by Independent Shareholders of the Rule 9 Waiver (on a poll) at the General Meeting. The Acquisition is therefore also subject to the approval of the Rule 9 Waiver by the Independent Shareholders.
Approval by the Shareholders will be sought at a General Meeting convened for 9.00 a.m. on 14 June 2022 at VSA Capital’s offices at Park House, 16-18 Finsbury Circus, London EC2M 7EB.