Noble Investments PLC Acquisition of The Fine Art Auction Group Limited

Posted: 18th December 2012 09:37

The Directors of Noble are pleased to announce that on 18 December 2012 Noble, the international rare coin, banknote, medal and stamp dealer and auctioneer, made an offer ("Offer") to acquire the whole of the issued and to be issued ordinary and preferred share capital of TFAAG ("the TFAAG shares"). Irrevocable undertakings to accept the Offer, and corresponding acceptances, were received from shareholders holding approximately 82% in nominal value of the TFAAG shares, as a result of which Noble completed the acquisition of those shares.
The Offer comprises a cash offer for the TFAAG shares, with a share alternative, and is open for acceptance until 18 January 2013, after which Noble intends to use the relevant provisions set out in the TFAAG articles of association to acquire compulsorily any outstanding shares in respect of which the Offer has not been accepted. 
TFAAG, through its 'Dreweatts' business which dates back to 1759, provides fine arts, antiques, jewellery and collectibles auctioneering and valuation services.  Regular programmes of auctions are held at its salerooms at Donnington Priory, Bristol and Godalming as well as at other ad hoc UK locations. Since June 2011 it has also been conducting auctions in Mayfair following its acquisition of the 'Bloomsbury Auctions' business which specialises in rare books, manuscripts and contemporary works on paper.
The maximum value of the consideration payable pursuant to the Offer (valuing the consideration shares at £1.70 each) will not exceed £5.48 million, comprising initial consideration of up to approximately £2.75 million and deferred consideration of up to approximately £2.73 million.
The initial consideration is being satisfied through a combination of cash, of up to approximately £1.03 million, and new ordinary shares, of up to approximately £1.72 million valued at 170p. 182,353 of these new ordinary shares will only be issued in December 2014 subject to any claims under warranties. In addition, certain of TFAAG's management shareholders have also agreed to subscribe for a further 158,823 new ordinary shares at 170p per share.
The new ordinary shares being issued in respect of the initial consideration will not rank for the final dividend in respect of Noble's year ended 31 August 2012 and they may not be sold, other than in exceptional circumstances, for at least one year.
Application is being made for admission to trading on AIM of 708,477 new ordinary shares in respect of the undertakings and acceptances already received and the 158,823 new ordinary shares agreed to be subscribed. Admission is expected to take place on 24 December 2012.
The deferred consideration of up to approximately £2.73 million becomes due (a) up to approximately £1.08 million of new ordinary shares, at 170p per share, or instead up to approximately £0.79 million in cash (at the TFAAG shareholders' option), dependent on TFAAG achieving material growth in EBITDA in the year ending 31 August 2013, (b) up to approximately £1.08 million of new ordinary shares, at 170p per share, or instead up to approximately £0.79 million in cash (at the TFAAG shareholders' option), dependent on TFAAG maintaining material growth in EBITDA in the year ending 31 August 2014 and (c) up to approximately £0.57 million in cash dependent on achievement above an agreed aggregate EBITDA target for the two years ending 31 August 2014.
In its audited accounts for the year ended 31 December 2011, TFAAG reported turnover of £6,800,690, earnings before interest, tax, depreciation and amortisation ("EBITDA") of £1,006,495 and profit before tax of £525,772. Net assets at 31 December 2011 were £1,128,358.
The two senior executive officers of TFAAG, Stephan Ludwig (director and executive chairman) and Peter Floyd (company secretary and chief financial officer) have joined the board of Noble, as Executive Director and Group Finance Director, respectively, with immediate effect. Each of their appointments shall continue unless or until terminated by either party giving the other not less than six months' prior notice in writing, expiring on or after 18 December 2014. The service agreements provide for an annual salary of £100,000 for a 4 day working week for Mr Ludwig and £125,000 for Mr Floyd. Further information concerning their appointment is contained in the RNS announcement of today's date.
Commenting on the acquisition, Managing Director Ian Goldbart said:
"I am delighted that we have completed the acquisition of TFAAG. The combination of the Dreweatts, Bloomsbury, Apex Philatelic and Baldwin's brands creates a significant force in the auction market and dramatically expands Noble's current product range and in-house team of specialists. TFAAG's auctions comprise the key disciplines of antique furniture, traditional and contemporary art, jewellery, watches, silver, antiquarian books, ancient and modern manuscripts, Asian and European ceramics and a comprehensive range of collectibles. The enlarged Group, including our existing overseas auctions in New York and Hong Kong, produced well over £50m in hammer during 2012. I would like to take this opportunity to welcome Stephan and Peter to the Noble board and look forward to working with them in the future as we build upon recent achievements.  
Stephan Ludwig, TFAAG's Executive Chairman, also commented: "Noble's acquisition of Dreweatts and Bloomsbury Auctions delivers a UK 'top 5' generalist auctioneer as well as a market leading presence in the rare books and works on paper sector. I am thrilled to be joining this dynamic group and exploring the unrivalled potential our complementary businesses have to diversify the range of services we can provide to our customers.  As the only publically listed auctioneer of fine art and collectibles, Noble is well placed to exploit its market position.".

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