Rosen’s Diversified, Inc.
Recommended all cash offer, as part of a Formal Sale Process auction, for Collagen Solutions plc by Rosen’s Diversified, Inc., effected by way of a contractual offer.
United States / UK
In early April 2020, Strand Hanson was appointed by Rosen’s Diversified, Inc. (“RDI”) to act as Financial Adviser in relation to the assessment and execution of a potential recommended all cash offer for the entire issued and to be issued share capital of Collagen Solutions plc (the “Company” or “Collagen”) (the “Offer”), under the provisions of the City Code on Takeovers and Mergers (the “Code”).
RDI, a large, family owned and controlled business, involved in food production, agrichemicals and distribution, was, at this time, Collagen’s largest shareholder, owning c.19% of the issued share capital, and also had an existing commercial relationship with the Company pursuant to a supply agreement.
On 16 April 2020, Collagen announced, inter alia, the commencement of a formal sale process under the Code (the “FSP”) to review the various strategic options available to it to maximise value for shareholders.
RDI participated in the FSP and, following several stages of due diligence and negotiation, was ultimately chosen as the preferred bidder. The Offer was formally launched in August 2020, structured as a contractual offer, with irrevocable undertakings (both in hard and soft formulations) from shareholders representing 42.8% of the issued share capital, including six of seven of the substantial shareholders and all of the Collagen Board (save for RDI’s board representative).
On 20 October 2020, the Offer was declared wholly unconditional and, in November 2020, RDI had received valid acceptances in excess of 90% of the shares to which the Offer related, thereby allowing it to commence the compulsory squeeze out process under the Companies Act 2006.
Strand Hanson led the transaction negotiation and execution process for RDI, in respect of both the FSP and, following RDI’s emergence as the preferred bidder, the execution of the Offer. Critical to achieving preferred bidder status was ensuring both the speed and accuracy of RDI’s response to the demands of each stage of the FSP, whilst protecting RDI’s position and strategic options, as an existing shareholder in Collagen, particularly should RDI not become the preferred bidder.
Fundamental to this was Strand Hanson’s strong relationship with Collagen’s advisers, which had been strengthened via frequent interaction during the FSP, and, in addition, Strand Hanson’s relationship with certain of its significant shareholders (other than RDI).
Throughout the transaction, the advisory team tactically utilised elements of the Takeover Code Rules, the Companies Act and the AIM Rules, in order to best position the client, particularly within the detailed and drawn out FSP negotiations.
This tactical approach was driven by the need to offer the seller deal certainty, whilst ensuring that our client, the buyer, retained flexibility and the ability to respond quickly to rapidly evolving circumstances, including the actions of other potential bidders and potentially dissenting shareholders. Price negotiation, offer structure, irrevocable undertakings, due diligence and the cash confirmation process were all critical elements of this, alongside the quality of relationship between Strand Hanson and Collagen’s advisers and shareholders.