Pagero Group AB (publ) (“Pagero”) to make a recommended cash offer to acquire Tungsten Corporation plc (“Tungsten”)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY RESTRICTED JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. THIS PUBLICATION IS NEITHER AN OFFER TO BUY OR SELL NOR AN INVITATION TO TENDER OR OFFER TO BUY OR SELL SHARES.

The boards of directors of Tungsten and Pagero are pleased to announce that they have agreed the terms of a recommended all cash offer to be made by Pagero to acquire the entire issued and to be issued ordinary share capital of Tungsten at a price of 48 pence per share (the “Offer”). The Offer values the entire issued and to be issued ordinary share capital of Tungsten at approximately £61.49 million on a fully diluted basis. The Tungsten Directors unanimously intend to recommend that Tungsten Shareholders accept or procure the acceptance of the Offer. Tungsten’s ordinary shares are quoted on the AIM market operated by the London Stock Exchange.

Highlights

• The Pagero Board believes that the Offer represents a compelling opportunity to acquire a well-established global provider of supplier automation and electronic document distribution solutions, for digitising the invoicing process, which would serve to strengthen Pagero’s position, particularly in the U.S. and U.K. markets.
• The combination of Pagero and Tungsten will result in increased resources both within sales execution and R&D, focusing on growth opportunities and product development.
• The acquisition is expected to create certain synergies and cost savings, thereby creating possibilities for additional investments in the enlarged group’s business.
• It is intended that the acquisition will be implemented by way of a contractual takeover offer under the U.K. Companies Act, pursuant to which the shareholders of Tungsten will receive 48 pence in cash per share, valuing the entire issued and to be issued ordinary share capital at £61.49 million on a fully diluted basis.
• Herald Investment Management Limited, Odey Asset Management LLP and Samson Rock Capital LLP, have irrevocably undertaken to accept the Offer in respect of, in aggregate, 45,901,378 Tungsten Shares representing approximately 36.27 per cent. of Tungsten’s existing issued ordinary share capital.
• The Offer is being financed through a combination of the existing cash resources of Pagero and debt in the form of senior secured floating rate notes issued by Pagero to certain noteholders initially represented by Hedda Manager AB as noteholders’ agent.

Pagero’s vision is to make the buying and selling process easy and convenient for businesses and it aims to build the world’s largest open business network for communication between companies. In addition to ensuring compliance with local rules and regulations, its network benefits customers in terms of increased productivity, efficiency and cost savings, as well as access to complete and accurate data. Digitisation, combined with an ability to validate, correct and visualise data, opens up new opportunities for process automation, increased control and traceability, whilst reducing risk and delivering sustainability/environmental benefits. Pagero serves customers in over 140 countries across multiple industry sectors, including healthcare, aviation, manufacturing, public sector and technology, with more than 30 offices and over 600 employees globally.

In order to enhance its market position, presence and customer experience, Pagero is pursuing an ambitious development strategy, involving both strong organic growth and selective international expansion through targeted acquisitions. The Pagero Board believes that the Offer represents a compelling opportunity to acquire a well-established global provider of supplier automation and electronic document distribution solutions, for digitising the invoicing process, which would serve to strengthen Pagero’s global position, particularly in the U.S. and U.K. markets, extend the reach of its smart business network and improve its overall offering through, inter alia, the addition of Tungsten’s proven capabilities within P2P.

Commenting on the Offer, Tony Bromovsky, Chairman of Tungsten, said: “The Board of Tungsten is pleased to recommend Pagero’s cash offer for Tungsten which represents an increase of 6 pence to Kofax’s offer of 42 pence per Tungsten Share and an approximate 65.52 per cent. premium to the undisturbed share price on 13 December 2021. This Offer provides our shareholders with even greater value in cash for their shares, as well as providing Tungsten with a strong and complementary partner to invest in our product development and enhance our offering for our global customer base.”

Commenting on the Offer, Bengt Nilsson, CEO of Pagero, said: “Pagero’s acquisition of Tungsten, when fully integrated, will create a business of significant scale and potential in the smart business networks and electronic document interchange space and enhance global career opportunities for employees of both entities who are key to our ongoing success. With highly complementary offerings and capabilities and access to Tungsten’s industry expertise and highly skilled workforce, the combination will reinforce Pagero’s already robust position in the U.S. and U.K. markets, whilst Tungsten’s wider international presence and operational resources will also provide an enhanced platform and cross-selling opportunities to accelerate the enlarged group’s future growth, investment and reach in other key regions where increasing regulation around digitalisation and the use of e-invoicing offers significant potential for long-term value creation.

“Our recommended Offer also provides Tungsten Shareholders with the certainty of a cash exit, in full, at a substantial and attractive premium, including to that of the offer from Project California Bidco Limited and over the price of a Tungsten Share prior to the commencement of the Offer Period and against a backdrop of continued global macroeconomic uncertainty.”

Transaction rationale

• Market position
  • The acquisition will serve to strengthen Pagero’s position in the U.S. and U.K. markets.
  • Extends the reach of Pagero’s smart business network and improves its overall offering.
• Innovation
  • Increases resources within both sales execution and R&D.
• Attractive financial impact
  • Creates certain cost savings and synergies.

About Tungsten

Tungsten is the world’s largest compliant business transaction network. A leading global electronic invoicing and purchase order transactions network, Tungsten’s mission is centred on enabling a touchless invoice process allowing businesses around the globe to gain maximum value from their invoice process.

Tungsten processes invoices for 60 per cent. of the FTSE 100 and 68 per cent. of the Fortune 500 constituents. It enables suppliers to submit tax compliant e-invoices in 54 countries, and last year processed transactions worth over £220 billion for organisations such as Caesars Entertainment, Computacenter, GlaxoSmithKline, Kraft Foods, Mohawk Industries, Mondelēz International, Procter & Gamble, Shaw Industries, Unilever and the U.S. Federal Government.

Founded in 2000 and headquartered in London, Tungsten has offices in the U.S., Bulgaria and Malaysia, employing over 227 people.

In its audited financial statements for its financial year ended 30 April 2021, Tungsten reported revenue of £36.1 million (2020: £36.8 million), a loss for the year of £34.7 million (2020: £26.0 million) and net assets of £56.2 million (2020: £86.8 million).

Transaction terms & structure

• Pagero has reached agreement with the Tungsten board on the terms of an offer to acquire the entire issued and to be issued ordinary share capital of Tungsten at a price of 48 pence per share, in cash, which values the entire issued and to be issued ordinary share capital of Tungsten at approximately £61.49 million on a fully diluted basis.
• The Offer represents a premium of approximately 65.52 per cent. to the Closing Price per Tungsten Share of 29.00 pence on 13 December 2021 (being the last Business Day prior to the commencement of the Offer Period), and a premium of approximately 14.28 per cent. to the cash consideration of 42 pence per Tungsten Share under the terms of the Kofax Offer made on 25 April 2022.
• The Offer, intended to be effected by way of a contractual takeover offer under Part 28 of the UK Companies Act, will be subject to customary closing conditions.
• The board of directors of Tungsten has confirmed its unanimous intention to recommend that Tungsten Shareholders accept or procure the acceptance of the Offer.
• The transaction is expected to become or be declared unconditional in the second half of 2022.

Financing

The cash consideration payable to Tungsten Shareholders by Pagero under the terms of the Offer will be financed by a combination of:

• the existing cash resources of Pagero; and
• debt in the form of senior secured floating rate notes issued by Pagero to certain noteholders initially represented by Hedda Manager AB as noteholders’ agent pursuant to the terms and conditions dated 29 April 2022 entered into between Pagero as issuer and Hedda Manager AB as noteholders’ agent, which will initially be (i) secured by a pledge of the shares in Pagero’s subsidiary, Pagero AB, pursuant to and in accordance with the terms of a pledge agreement dated 2 May 2022 between Pagero as pledgor and certain secured parties represented by Hedda Manager AB as agent and (ii) guaranteed by Pagero AB pursuant to and in accordance with the terms of a guarantee agreement dated 29 April 2022 between Pagero, Pagero AB as guarantor and Hedda Manager AB as notholders’ agent,

the proceeds of which, in each case, have been placed in an escrow account with J.P. Morgan Chase Bank, N.A., London Branch (the “Escrow Account”) and are subject to the terms of an escrow agreement dated 2 May 2022 (including a term requiring that enough cash be maintained in the Escrow Account to allow Pagero to satisfy the cash consideration payable by Pagero to Tungsten Shareholders in connection with the Offer unless and until the Offer terminates or lapses in accordance with its terms).

In accordance with Rule 2.7(d) of the UK Takeover Code, Strand Hanson, financial adviser to Pagero, is satisfied that sufficient resources are available to Pagero to satisfy in full the cash consideration payable to Tungsten Shareholders under the terms of the Offer.

Further information in relation to the financing of the Offer will be set out in the Offer Document.

Further details on the Offer can be found in the separate joint announcement by Pagero and Tungsten issued today pursuant to Rule 2.7 of the UK Takeover Code (the “Announcement”). Capitalised terms used but not defined in this announcement shall have the respective meanings given to them in the Announcement.

Pagero has retained Strand Hanson Limited as financial adviser, and White & Case as legal adviser in connection with the Offer.

Certified adviser

Erik Penser Bank är Certified Adviser och nås på +46 (0) 8-463 83 00 och [email protected].

For additional information, please contact:

Bengt Nilsson, CEO

E-mail: [email protected]

Jan-Olof Ohlsson, CFO

E-mail: [email protected]

This information is information that Pagero Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation No. 596/2014. The information was submitted for publication, through the agency of the contact person set out above, at 11.15 a.m. CET on 9 May 2022.

About Pagero

Pagero provides a Smart Business Network that connects buyers and sellers for automated, compliant and secure exchange of orders, invoices, payment instructions and other business documents. With an open network and a wide range of value-added apps, Pagero helps businesses streamline their order-to-cash and purchase-to-pay processes while unlocking the full potential of accurate and reliable business data. All of this, regardless of location, industry, size or systems.

Pageros aktie handlas på Nasdaq First North Growth Market under kortnamn PAGERO med ISIN SE0016830517.

IMPORTANT NOTICES

This announcement is not intended to and does not constitute an offer to purchase any securities, or an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer to purchase or sell securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Offer will be made solely by means of certain offer documentation, which will contain the full terms and conditions of the Offer, including details of how it may be accepted.

The release, publication or distribution of this announcement in or into certain jurisdictions other than the United Kingdom or Sweden may be restricted by law. Persons who are not resident in the United Kingdom or Sweden or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Offer disclaim any responsibility or liability for the violation of such restrictions by any person.

To the extent this press release contains forward-looking statements, such statements do not represent facts and are characterised by the words “will”, “expect”, “believe”, “estimate”, “intend”, “aim”, “assume” or similar expressions. Such statements express the intentions, opinions or current expectations and assumptions of Pagero. Such forward-looking statements are based on current plans, estimates and forecasts which Pagero has made to the best of its knowledge, but which do not claim to be correct in the future. Forward-looking statements are subjects to risks and uncertainties that are difficult to predict and usually cannot be influenced by Pagero. It should be kept in mind that the actual events or consequences may differ materially from those contained in or expressed by such forward-looking statements.