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Andrew Heath, CEO of Spectris, :

‘Oxford Instruments is a quality company and the strategic and financial rationale for a combination of our businesses is highly compelling. However, with the invasion of Ukraine, the world has changed since our proposed offer was made regarding a combination of our businesses, bringing a high degree of uncertainty to the economic outlook around the world. While we believe this combination is a great opportunity for both companies, the timing is no longer right and we have brought our discussions to a close. The appalling events in Ukraine are extremely distressing. Though we have no businesses in Ukraine, we are doing everything we can to help colleagues whose families are impacted and support the relief effort for the people of Ukraine.’

Spectris had approached Oxford Instruments with a series of proposals throughout February 2022, with the most promising proposal valuing each Oxford Instruments share at £31. On the terms of the possible cash and shares offer, each Oxford Instruments shareholders would receive £19.50 in cash as well as £11.50 in new ordinary Spectris shares for each Oxford Instruments share, to be issued on the basis of an exchange ratio (see: Takeover approach for Oxford Instruments from rival Spectris sends shares surging). Despite the proposal from Spectris being unsolicited, Oxford Instruments appeared to be pleased with the terms, so much so that the board that it would be minded to recommend the offer to shareholders should it become firm. 

The deal was set to create a new FTSE 100 high-tech manufacturing powerhouse with a combined market capitalisation of over £4.5bn, news of which was received positively by the market. Following the announcement on 28 February 2022, Oxford Instruments’ share price surged 30% to £26.65 per share. However following the termination of the deal, the company’s share price plummeted 25%, trading 15% below levels prior to the offer.

Reacting to Spectris’ decision to terminate the deal, Oxford Instruments :

‘The proposal was unsolicited and the Board continues to believe that Oxford has a clear and compelling strategy to achieve growth and create value for shareholders over the medium-term.’

The collapse of the deal is one of the first significant UK takeovers to be affected by the conflict in Ukraine. Under Rule 2.6(a) of the Takeover Code (Code), Spectris had until 28 March 2022 (the ‘put up or shut up’ (PUSU) deadline) by which it was required to announce whether or not it had a firm intention to make a formal offer. However, the company decided to pull out ahead of the PUSU deadline due to the significant uncertainty in global economic conditions created by the war in Ukraine, believing that the timing was no longer right.

Rule 2.8 of the Code imposes certain post-offer restrictions once a potential offeror makes a ‘no intention to bid’ statement (see Practice Note:  (a subscription to Lexis®PSL Corporate is required)). Now that Spectris has withdrawn its potential offer, neither Spectris, nor any person who is affiliated or subsequently acting in concert with Spectris, will be able to do any of the following for a period of six months: 

• announce a firm or possible offer for Oxford Instruments
• acquire any interest in Oxford Instruments shares (more than 30%) which would trigger a mandatory offer under Rule 9 (see Practice Note:  (a subscription to Lexis®PSL Corporate is required))
• acquire any interest in, or procure an irrevocable commitment in respect of, Oxford Instruments shares which would in aggregate carry 30% or more of the voting rights of Oxford Instruments
• make any statement that raises or confirms the possibility that an offer might be made for Oxford Instruments
• agree to purchase, or make any statement which raises or confirms the possibility that it is interested in purchasing assets which are significant in relation to Oxford Instruments (see Practice Note:  (a subscription to Lexis®PSL Corporate is required))

However, Spectris may be released from the post-offer restrictions and make a possible or firm offer for Oxford Instruments within a period of six months subject to the consent of the Takeover Panel, the agreement of the board of Oxford Instruments, the announcement of a firm intention to make an offer for Oxford Instruments by a third party, a Rule 9 waiver or a reverse takeover announced by Oxford Instruments.