De La Rue agrees takeover deal

· It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (although Bidco reserves the right to effect the Acquisition by way of a Takeover Offer, with the consent of the Takeover Panel and subject to the terms of the Co-operation Agreement).

· Under the terms of the Acquisition, which will be subject to the Conditions, certain further terms set out in Appendix I and to the full terms and conditions which will be set out in the Scheme Document, each De La Rue Shareholder will be entitled to receive:

130 pence in cash per De La Rue Share

· The Acquisition values the entire issued and to be issued share capital of De La Rue at approximately £263 million.

· The Acquisition Price represents a premium of approximately:


o 19 per cent. to the Closing Price of 110 pence per De La Rue Share on 11 December 2024 (being the last Business Day before the commencement of the Offer Period);

o 38 per cent. to the Closing Price of 94 pence per De La Rue Share on 14 October 2024 (being the last Business Day before the announcement of the sale of the Authentication Division); and

o 30 per cent. to the Volume Weighted Average Price during the ninety-day period ended 11 December 2024 (being the last Business Day before the commencement of the Offer Period).

· If any dividend or other distribution in respect of the De La Rue Shares is declared, paid or made on or after the date of this Announcement, Bidco reserves the right to reduce the consideration payable for each De La Rue Share under the terms of the Acquisition by the amount per De La Rue Share of such dividend or distribution, in which case any reference in this Announcement to the consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced. In such circumstances, De La Rue Shareholders would be entitled to retain any such dividend or distribution.



Background to and reasons for the Acquisition

· Atlas believes that the acquisition of De La Rue represents an attractive opportunity to build on its portfolio of manufacturing and key infrastructure businesses.

· Established 211 years ago, De La Rue is trusted by governments and central banks, providing solutions that protect their supply chains and cash cycles from counterfeiting and illicit trade. With operations in five continents, customers in 140 countries and solutions that include advanced track and trace software, security document design, banknotes, brand protection labels, tax stamps, security features and passport bio-data pages, De La Rue brings unparalleled knowledge and expertise to its partnerships and projects.

· De La Rue's business is currently made up of two reportable divisions: Currency and Authentication. The Currency Division designs and manufactures highly secure banknotes and banknote components that are optimised for security, manufacturability, cash cycle efficacy and public engagement. De La Rue is the only fully integrated provider of polymer substrate, security features and banknotes, supplying to over half of the issuing authorities around the world, and has a number of deep and trusted relationships.

· On 15 October 2024, De La Rue announced that it has entered into an agreement to sell its Authentication Division, which (as announced on 7 April 2025) is expected to complete on 1 May 2025.

· Atlas's core investment strategy is to acquire industrial companies which have a clear "reason to exist", but which may be under-appreciated by other owners or the public equity markets. Often this involves companies operating in mature markets with cyclical cash flows and/or limited growth prospects with which other investors are uncomfortable. De La Rue (following the sale of its Authentication Division) will be an industry leader, highly valued by its customers, but operates in a mature, competitive and cyclical industry. Atlas believes that a company with this type of earnings profile is best owned by a long-term investor which is prepared to accept earnings cyclicality and a challenging end market outlook.

· In addition, Atlas is experienced in investing in companies with significant stakeholder relationships, such as that between De La Rue and the Pension Trustee. As noted below, Atlas has entered into a Memorandum of Understanding with the Pension Trustee which it believes offers excellent protection to the members of the DLR DB Pension Scheme, while giving De La Rue the ability to operate its business outside of its current capital constraints, and operating alongside the support of a well-capitalised owner.

· Atlas believes that bringing De La Rue under private ownership will better position it for further investment, coupled with the benefits that accrue from being part of a scaled, better capitalised and actively growing business.

· The Acquisition follows the announcement by De La Rue on 4 February 2025 that it had decided to launch a formal sale process which has now successfully concluded. The Board of Directors of De La Rue carefully reviewed a number of other proposals with its advisers during the course of the formal sale process and has unanimously concluded that the Acquisition achieves the Board's critical objective of delivering an outcome that satisfactorily address the interests of all stakeholders.

Recommendation

· The De La Rue Directors, who have been so advised by Deutsche Numis as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the De La Rue Directors, Deutsche Numis has taken into account the commercial assessments of the De La Rue Directors. Deutsche Numis is providing independent financial advice to the De La Rue Directors for the purposes of Rule 3 of the Code.

· Accordingly, the De La Rue Directors intend to recommend unanimously that the De La Rue Shareholders vote or procure votes in favour of the Scheme at the Court Meeting and the Resolution to be proposed at the General Meeting (or, subject to the terms of the Co-operation Agreement and with the consent of the Takeover Panel, if Bidco exercises its right to implement the Acquisition by way of a Takeover Offer, to accept such offer), as the De La Rue Directors who hold De La Rue Shares (in a personal capacity or through a nominee) have irrevocably undertaken to do in respect of their own (and their connected persons') beneficial holdings of 690,912 De La Rue Shares (representing, in aggregate, approximately 0.35 per cent. of the De La Rue Shares in issue on 14 April 2025 (being the last Business Day prior to the date of this Announcement)) as well as any De La Rue Shares that the De La Rue Directors may acquire prior to the relevant time pursuant to the vesting or exercise, as the case may be, of non-tax advantaged options/awards granted under the De La Rue Share Plans.


Irrevocable undertakings and Letter of Intent

· In addition to the irrevocable undertakings from the De La Rue Directors referred to immediately above, Bidco has also received irrevocable undertakings to vote or procure votes in favour of the Scheme at the Court Meeting and the Resolution to be proposed at the General Meeting (or, if Bidco exercises its right to implement the Acquisition by way of a Takeover Offer, to accept such offer) from certain De La Rue Shareholders in respect of a total of 57,203,443 De La Rue Shares (held in a personal capacity or through a nominee) representing, in aggregate, approximately 29.13 per cent. of the De La Rue Shares in issue on 14 April 2025 (being the last Business Day prior to the date of this Announcement).

· Bidco has also received a non-binding letter of intent from Aberforth Partners LLP (acting on behalf of its discretionary clients) in respect of, in aggregate, 21,249,043 De La Rue Shares representing approximately 10.82 per cent. of the De La Rue Shares in issue on 14 April 2025 (being the last Business Day prior to the date of this Announcement), confirming its intention to vote in favour of the Scheme.

· In total therefore, as at the date of this Announcement, Bidco has received irrevocable undertakings or a letter of intent to vote or procure votes in favour of the Scheme at the Court Meeting and the Resolution to be proposed at the General Meeting (or, if Bidco exercises its right to implement the Acquisition by way of a Takeover Offer, to accept such offer) with respect to a total of 79,143,398 De La Rue Shares (representing approximately 40.30 per cent. of the De La Rue Shares in issue on 14 April 2025 (being the last Business Day prior to the date of this Announcement)) as well as any De La Rue Shares that the De La Rue Directors may acquire prior to the relevant time pursuant to the vesting or exercise, as the case may be, of non-tax advantaged options/awards granted under the De La Rue Share Plans.

· Further details of these irrevocable undertakings (including details of the circumstances in which they cease to be binding) are set out in Appendix III to this Announcement.

Information on Bidco and Atlas

· Bidco is a private limited company incorporated in England and Wales and is indirectly wholly-owned by funds managed and advised by Atlas. Bidco was formed for the purposes of the Acquisition and has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

· Founded in 2002 and based in Greenwich, Connecticut, USA, Atlas and its affiliates focus on long-term control investments in companies operating across industrial sectors where it has domain expertise, including printing, pulp and paper, automative components, food production, power generation and construction. Presently, Atlas and its affiliates have control investments in a diversified group of 27 manufacturing and distribution businesses which generate combined revenues of approximately US$18 billion annually and employ more than 57,000 people across 350 facilities worldwide. Atlas and its operating partners are deeply experienced industrialists with relationships and experience in Atlas's sectors of focus. Atlas has offices in the US, the UK and the Netherlands.

Timetable and Conditions

· It is intended that the Acquisition be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. The purpose of the Scheme is to provide for Bidco to acquire the entire issued and to be issued share capital of De La Rue. The Scheme will be put to De La Rue Shareholders at the Court Meeting and to De La Rue Shareholders at the General Meeting. In order to become Effective, the Scheme must be approved by a majority in number of the De La Rue Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted. The Resolution must also be approved by De La Rue Shareholders at the General Meeting. The General Meeting is expected to be held immediately after the Court Meeting.

· The Scheme will also need to be sanctioned by the Court. Finally, a copy of the Court Order must be delivered to the Registrar of Companies for registration, upon which the Scheme will become Effective.

· The Acquisition will be completed in accordance with the requirements of the Code and is subject to the Conditions and certain further terms set out in Appendix I, and to the full terms and conditions which will be set out in the Scheme Document. The Conditions include the receipt of regulatory approvals as further described in this Announcement.


· It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and the General Meeting, together with the associated Forms of Proxy, will be posted to De La Rue Shareholders within 28 days of this Announcement (or such later time as De La Rue, Bidco and the Takeover Panel agree) and the Court Meeting and the General Meeting are each expected to be held as soon as possible thereafter, giving the required notice for such meetings.

· The Acquisition is currently expected to be completed during the third quarter of 2025, subject to the satisfaction or (where applicable) waiver of the Conditions. An expected timetable of key events relating to the Acquisition will be provided in the Scheme Document.

Commenting on the Acquisition, Peter Bacon of Atlas, said:

"We are pleased to receive the unanimous recommendation from the Board of Directors of De La Rue for our offer, and look forward to welcoming De La Rue, its management and employees to the Atlas family. In De La Rue, we see a company that is an industry leader, but one which has faced multiple challenges in recent years. We believe that our strategic resources and capital will be able to support and enhance the De La Rue business going forward. As a private company, not bound by periodic public reporting, we will be able to focus on the optimal long-term strategy for De La Rue."

Commenting on the Acquisition, Clive Whiley, Chairman of De La Rue, said:

"I am very pleased for all De La Rue stakeholders today. In a little under two years since I joined De La Rue, we have made profound changes which have benefitted all stakeholders. This offer from Atlas being announced today is the final step in this successful process - through the stabilisation of that initial position, the strategic review and transactional action plan, and culminating in the disposal of the Authentication Division and ultimately this cash offer - securing full and complete value realisation and security for all of today's stakeholders across our financiers, pension trust, employees and shareholders. I wish to thank them all for their support through this period and I know that under Atlas ownership, De La Rue has a strong and stable future ahead."

Commenting on the Acquisition, Clive Vacher, Chief Executive Officer of De La Rue, said:

"De La Rue has undergone a fundamental transformation since 2020, in which we have successfully delivered on our Turnaround Plan to create more efficient and agile operations, while enhancing profitability in our industry-leading Currency business as demonstrated by the strength of our order book. Atlas is the right partner to take De La Rue into its next phase of growth. Most importantly, under Atlas's ownership we can ensure long-term stability for our customers and our people, and best position the business for its next chapter. I look forward to working closely with Atlas and both our teams to deliver on this exciting opportunity for De La Rue."