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RECOMMENDED VOLUNTARY CASH OFFER TO ACQUIRE ALL SHARES IN FUNCOM BY TENCENT
The Netherlands and China, 22 January 2020. Tencent Holdings Limited (“Tencent”) (through an indirectly owned subsidiary, the “Offeror”) and Funcom SE (“Funcom”) today announce that the Offeror will launch a recommended offer to acquire all of the shares of Funcom not owned by the Offeror through a voluntary cash offer of NOK 17.00 per share (the “Offer”). Both the Management Board and the Supervisory Board of Funcom (the “Boards”) have unanimously decided to recommend Funcom’s shareholders to accept the Offer. The recommendation is based on a thorough process where the independence of the decision-making has been carefully safeguarded, inter alia as the Supervisory Board members affiliated with Tencent have not participated in the deliberations and decision-making of the Supervisory Board related to the Offer and the recommendation from the Supervisory Board and the Management Board. The recommendation by the Boards is supported by an independent fairness opinion provided by Pareto Securities AS. Funcom is listed on the Oslo Stock Exchange. The Offeror is an indirectly owned subsidiary of Tencent, and Tencent is listed on the Hong Kong Stock Exchange.
The Offeror and Funcom have entered into a transaction agreement (the “Transaction Agreement”) regarding an acquisition of Funcom by the Offeror. Under the terms of the Transaction Agreement, the Offeror will put forward a recommended voluntary cash offer to acquire the entire issued share capital in Funcom for NOK 17.00 per share in cash. The Offer values the total share capital of Funcom at NOK 1.33 billion on a fully diluted basis.
Funcom has successfully developed and published around 30 game titles across several genres and game platforms and has a strong IP portfolio and pipeline of games. Following the acquisition, there are no planned changes to Funcom management, staffing or structure with the Company remaining an independent business.With the support of Tencent, Funcom will be able to fully capitalise on inherent capabilities and upside potential:
(i) Tencent’s prior experience in working with Western companies such as Epic, Fatshark, Riot, Sharkmob, Supercell and Ubisoft, proving its capabilities in spearheading cooperation with its partners that maximise mutual value and benefits;
(ii) Funcom also has valuable capabilities and insights into the Western core games market that Tencent plans to leverage within its international expansion plan; and
(iii) The transaction will further a) provide Funcom with the necessary resources to focus on key and high potential games and IPs such as Conan and Dune; b) expand the possibilities for Funcom’s key IPs in the mobile platforms through cooperation with Tencent; and c) strengthen Funcom with Tencent’s extensive operational leverage and insights, for example know-how in game-as-a-service and in-game operations
Rui Casais, Funcom’s CEO and Chairman of the Management Board, commented: “We have a great relationship with Tencent as our largest shareholder and we are very excited to be part of the Tencent team. We will continue to develop great games that people all over the world will play, and believe that the support of Tencent will take Funcom to the next level. Tencent will provide Funcom with operational leverage and insights from its vast knowledge as the leading company in the game space.”
Steven Ma, Senior Vice President of Tencent, commented: “We are impressed by Funcom’s strengths as a developer of open-world multiplayer, action and survival games. Funcom has a strong track-record in developing new titles with long life spans. We are glad to deepen our relationship with Funcom and look forward to collaborating with Funcom to deliver more exciting and enjoyable game experiences to fans worldwide.”
ABOUT THE OFFER
The Offer price represents a premium of 27.3% to the closing price of the shares on 21 January 2020, and a 26.9% and 28.8% premium over the volume weighted average price of Funcom shares for the 1-month and 3-month period ending on 21 January 2020, respectively. The Offer price is further 8% higher than the purchase price paid by Tencent to long-time majority shareholder KGJ Capital AS on 30 September 2019, following a structured trade sale process. The Offer will be financed with cash at hand.
If the Offeror, during a period from the date of the Transaction Agreement and 6-months after the settlement of the Offer acquires shares at a higher price than the Offer Price in any transaction other than a share issue by Funcom, including through a mandatory offer or squeeze out procedure, the consideration in the Offer shall be adjusted to be equal to such higher acquisition price.
The Offer will be subject to customary closing conditions for takeovers, including but not limited to the following conditions:
(i) The Offer shall at or prior to the expiration of the Offer Period have been accepted by shareholders of Funcom representing more than 90% of the issued and outstanding share capital and voting rights of Funcom on a fully diluted basis, which shall include all shares that Funcom would be required to issue if all of the approximately 4.1 million employee options which are in the money were exercised;
(ii) No material adverse change in Funcom until the completion of the Offer;
(iii) Funcom shall have conducted its business in all material respects in the ordinary course and in accordance with contractual obligations, applicable laws, regulations and decisions of public authorities; and
(iv) The Boards shall not have qualified, amended or withdrawn their recommendation of the Offer.
The complete details of the Offer, including all terms and conditions, will be contained in an offer document (the “Offer Document”) to be sent to Funcom’s shareholders following review and approval by the Oslo Stock Exchange pursuant to Chapter 6 of the Norwegian Securities Trading Act. The offer period is expected to start on or about 5 February 2020 and last five (5) weeks from the date of approval of the Offer Document, subject to any extension by Offeror (“Offer Period”). The Offeror must publicly announce that the conditions for closing of the Offer have been met or waived at the latest 24:00 CET on 15 April 2020. Shareholders are urged to read the Offer Document when it is available as it will contain important information, including the unanimous recommendation from the Management Board and Supervisory Board of Funcom.
FULL SUPPORT AND RECOMMENDATION
The Boards fully and unanimously support the Offer and recommend that Funcom’s shareholders accept the Offer and vote in favour of the resolutions relating to the Offer at the upcoming extraordinary general meeting of Funcom, to be held during the Offer Period. In their decision-making, the Boards have taken the interests of all stakeholders, including the minority shareholders, into full consideration. The Boards have concluded that the Offer is fair to Funcom’s shareholders from a financial point of view and in the best interests of Funcom, the sustainable success of its business and clients, employees, shareholders and other stakeholders. The Boards have reached this conclusion having given due and careful consideration to the strategic, financial and social aspects and consequences of the Offer, supported by the fairness opinion provided by Pareto Securities AS.
The Boards have the right to withdraw its recommendation of the Offer, subject to certain conditions, inter alia, in the event a superior competing offer is made that is not matched by the Offeror within five (5) business days after the Offeror received notice thereof, but such matching period shall not in any event expire later than two (2) trading days before the expiry of the Offer Period. Withdrawal, amendment or qualification of the recommendation from the Boards will trigger an obligation for Funcom to reimburse Offeror’s expenses incurred in connection with the transaction up to an amount of NOK 5 million if the Offer is not completed.
The Offer will not be made in any jurisdiction in which the making of the Offer would not be in compliance with the laws of such jurisdiction. This notification does not in itself constitute an offer. The Offer will only be made on the basis of the Offer Document and can only be accepted pursuant to the terms of such document. This announcement also serves to fulfil the Offeror’s announcement obligation under section 6-19 (3), first sentence of the Norwegian Securities Trading Act.
Given that Funcom’s registered office is in the Netherlands and the shares are listed in Norway, the Offer will partly be governed by Norwegian law and partly by Dutch law. Matters of a legal nature related to the offer process, including questions concerning the compensation offered in connection with the Offer, and in particular the Offer price, the offer procedure, information on the Offeror’s decision to present an Offer, the content of the Offer Document and publication of the Offer, will be dealt with under Norwegian law, and the Oslo Stock Exchange will be the competent authority to approve the Offer Document to be prepared by the Offeror. Matters of a legal nature related to information to employees of Funcom, the position statement, and company law questions, including matters concerning the thresholds at which mandatory offer obligations are triggered, possible exemptions from the obligation to present an offer and exceptions from the mandatory offer obligation, will be dealt with pursuant to the laws of the Netherlands.
J.P. Morgan is acting as financial advisor and Baker McKenzie and AGP Advokater AS (Norway) are acting as legal advisors to Tencent in connection with the Offer. ABG Sundal Collier ASA is acting as financial advisor and Advokatfirmaet CLP DA (Norway) and Weidema van Tol (The Netherlands) are acting as legal advisors to Funcom in connection with the Offer.
For further information, please contact:
Funcom Investor Relations
Funcom is an independent developer and publisher of computer and console games. Funcom was founded in 1993 and listed on the Oslo Stock Exchange in 2005. Funcom became one of the pioneers of massively multiplayer online role-playing games (“MMORPG”) when Funcom released the PC game Anarchy Online. Over the course of its history, Funcom has developed and published around 30 game titles across several genres and gaming platforms. Currently, Funcom holds a broad portfolio of both released games and owned content, with high-degree control of its IPs. Funcom’s key active game portfolio includes Conan Exiles, Mutant Year Zero, Secret World Legends, Conan Unconquered as well other games such as Age of Conan, Anarchy Online, The Park, Hide & Shriek and The Longest Journey.
Tencent uses technology to enrich the lives of Internet users. Tencent’s communications and social platforms, Weixin and QQ, connect users with each other and with digital content and services, both online and offline, making their lives more convenient. Tencent’s targeted advertising platform helps advertisers reach out to hundreds of millions of consumers in China. Tencent’s FinTech and business services support its partners’ business growth and assist their digital upgrade. Tencent invests heavily in talent and technological innovation, actively promoting the development of the Internet industry. Tencent was founded in Shenzhen, China, in 1998. Shares of Tencent (00700.HK) are listed on the Main Board of the Stock Exchange of Hong Kong.
This is a joint public announcement by Funcom and Tencent and contains inside information as meant in the European Market Abuse Regulation (596/2014) and the Norwegian Securities Trading Act section 3-2 and is further subject to the disclosure requirements according to Section 5-12 of the Norwegian Securities Trading Act.
This announcement is for information purposes only and does not constitute an offer, or any solicitation of any offer, to buy or subscribe for any securities.
The Offer and the distribution of this announcement and other information in connection with the Offer may be restricted by law in certain jurisdictions. Neither Tencent nor Funcom assume any responsibility in the event there is a violation by any person of such restrictions. Persons into whose possession this announcement or such other information should come are required to inform themselves about and to observe any such restrictions.
The Offer is subject to disclosure and procedural requirements of the Kingdom of Norway, which are different from those in the United States. In addition, the payment and settlement procedures with respect to the Offer will comply with the relevant Norwegian rules, which differ from the United States payment and settlement procedures.
This release contains certain forward-looking statements within the meaning of the securities laws and regulations of various international, federal, and state jurisdictions. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding the Offer, future plans and objectives of Funcom, the Offeror or Tencent Holdings Limited are forward-looking statements that involve risk and uncertainties. There can be no assurances that such statements will prove to be accurate and actual results could differ materially from those anticipated in such statements.
THE OFFER WILL NOT BE MADE IN ANY JURISDICTION IN WHICH MAKING OF THE OFFER WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. THIS ANNOUNCEMENT DOES NOT IN ITSELF CONSTITUTE AN OFFER. THE OFFER WILL ONLY BE MADE ON THE BASIS OF THE OFFER DOCUMENT AND CAN ONLY BE ACCEPTED PURSUANT TO THE TERMS OF SUCH DOCUMENT.