REG - Archimed SAS Instem plc - Rule 19.6(b) Update and Rule 19.6(c) Confirmation

InstemAnnouncement

20/11/2024 08:15

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RNS Number : 8169M  Archimed SAS  20 November 2024

FOR IMMEDIATE RELEASE

THE FOLLOWING ANNOUNCEMENT IS BEING MADE PURSUANT TO THE REQUIREMENTS OF RULES
19.6(B) AND 19.6(C) OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE")
WHICH, AMONG OTHER THINGS, REQUIRES A PARTY TO AN OFFER TO MAKE AN
ANNOUNCEMENT AT THE END OF A PERIOD OF 12 MONTHS FROM THE DATE ON WHICH THE
OFFER PERIOD ENDED CONFIRMING WHETHER IT HAS TAKEN, OR NOT TAKEN, THE COURSE
OF ACTION SET OUT IN ITS STATED INTENTIONS

 

20 November 2024

 

ICHOR MANAGEMENT LIMITED

(a company controlled by funds managed by ARCHIMED SAS)

 

Rule 19.6(b) update and Rule 19.6(c) confirmation with respect to stated
post-offer intention statements for Instem Limited (formerly Instem plc)
("Instem")

 

Ichor Management Limited ("Bidco"), announces that, further to the completion
of its recommended cash acquisition of Instem, which was effected by way of a
scheme of arrangement under Part 26 of the Companies Act 2006, and which
became effective on 20 November 2023, it has taken certain courses of action
which differ from its statements of intention (the "Stated Intentions") made
pursuant to Rules 2.7(c)(viii) and 24.2 of the Code which were set out in its
announcement of 30 August 2023 and the scheme document published on 25
September 2023.

 

In the Stated Intentions, Bidco referred to, among other things, possible
headcount reductions in relation to a limited number of public company-related
functions that may be reduced in scope or become unnecessary.

 

Despite the strategic measures already implemented by Instem and announced by
Bidco on 27 June 2024 to navigate a challenging market environment, the
situation has continued to evolve, requiring further action to strengthen the
company's position.

 

Since the end of April, Instem has suffered from the combination of the
continuation of difficult market conditions and the impact of an extraordinary
cyber event impacting clients in key regions and product lines. This cyber
attack, which Instem suffered in early 2024, led to the deactivation of
certain customer-facing products and internal systems.  Only 81% of expected
renewals had been completed by July, resulting in a £2.3 million shortfall
for the first half of the year, and customer churn has been significant, with
43 cancellations by the end of July, 17 of which occurred between April and
July.

 

As a result of this topline underperformance, Instem forecasted EBITDA for the
year is now expected to be 43% below budget.

 

Instem has therefore taken the difficult decision to propose to reduce its
workforce by approximately 30%, primarily in the Delivery, Product, and
Technology divisions. This has affected 116 positions in India and the US,
with the relevant headcount reductions being implemented during October
2024.  In addition, there are 40 to 50 positions at risk in the UK and
France, where consultation processes are currently ongoing that are expected
to complete in November or December 2024.  The outcome in those countries is
subject to the relevant consultation processes.

 

Bidco has duly confirmed in writing to the Panel on Takeovers and Mergers in
accordance with the requirements of Rule 19.6(c) of the Code that, save as
stated in this announcement and in the announcement made by Bidco on 27 June
2024, it has complied with its post-offer statements of intent made pursuant
to Rules 2.7(c)(viii) and 24.2 of the Code, which were set out in its
announcement of 30 August 2023 and the scheme document published on 25
September 2023.

 

Enquiries:

Vincent
Guillaumot
Tel: +33 4 81 11 35 33

Brian Sheridan

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