Capita plc (LSE:CPI) made a non-binding conditional proposal to acquire Xchanging plc (LSE:XCH) for approximately £350 million in cash on August 11, 2015. Under the terms of the offer, Capita plc agreed to pay £1.4 per Xchanging share. The Board of Xchanging reviewed the proposal, concluded that it significantly undervalued Xchanging's existing business and its prospects, and notified Capita that it would need to increase its price significantly. As on August 25, 2015, Xchanging received a revised, non-binding conditional proposal from Capita at £1.45 per share in cash, which the Board concluded continued to significantly undervalue Xchanging's existing business and its prospects and unanimously rejected the revised proposal. On September 17, 2015, Xchanging received a further revised, non-binding conditional proposal from Capita at £1.55 per share in cash. On September 24, 2015, Xchanging received a further revised, non-binding conditional proposal from Capita at £1.6 per share in cash.

Capita plc entered into a £450 million bridge loan credit facility to finance the cash consideration. On September 29, 2015, the Board of Xchanging confirmed that it would be willing to recommend Capita's proposal and Capita was granted due diligence access. As of October 4, 2015, Xchanging shareholders are advised by the Board to retain their shares and to take no action. The offer is likely to be funded substantially from the net proceeds of a placing of new Capita shares. Capita has until November 2, 2015, to announce either a firm intention to make an offer. The offer is expected to be immediately earnings accretive for Capita and to deliver returns significantly in excess of Capita's cost of capital. In the absence of a higher offer, the Xchanging Directors intend unanimously to recommend that Xchanging Shareholders accept the offer.

It is intended that the offer be implemented by means of a takeover offer under the code. The offer period commenced on October 4, 2015 until whichever of the following dates shall be the later (a) 1.00 p.m. on 20 business days after the date of posting of the offer document (b) the date on which the offer lapses or is withdrawn; and (c) the date on which the offer becomes, or is declared, unconditional as to acceptances. Capita agreed to pay a break fee to Xchanging in the amount of £4 million. The deal is conditional upon valid acceptances being received in respect of not less than 90% Xchanging shares, US and German merger control clearances, other regulatory approvals and other third party clearances. If the offer becomes wholly unconditional and Capita receives acceptances under the offer in respect of not less than 90% of the Xchanging Shares, Capita intends to apply the provisions of sections 974 to 991 (inclusive) of the Companies Act 2006 to acquire compulsorily any outstanding Xchanging shares to which the offer relates not acquired, or agreed to be acquired, pursuant to the offer or otherwise. The deal is expected to close at or around the end of 2015/early 2016. The first closing date of Capita's offer remains 16 November 2015. As on November 6, 2015 Capita Plc has acquired a 9.99% stake in Xchanging. As on November 16, 2015, Capita had received valid acceptances of the offer in respect of 34.5 million Xchanging Shares, representing approximately 13.94%. The offer has been extended and will remain open for acceptances until November 30, 2015. Federal Trade Commission approved the transaction. As on November 30, 2015, Capita had received valid acceptances of the offer in respect of 34.7 million Xchanging Shares, representing approximately 14.01%. The offer has been extended and will remain open for acceptances until December 16, 2015.

David Wormsley, Charles Lytle and Edward McBride of Citigroup Global Markets Limited acted as financial advisor and joint corporate broker, Charles Wilkinson of Deutsche Bank AG acted as joint corporate broker and Andrew Lorenz and Nick Hasell of FTI Consulting acted as communications advisors to Capita. William Rucker, Cyrus Kapadia, and Olivier Christnacht of Lazard acted as financial advisors for Xchanging. Christopher Baird and James Rudd of Investec along with Peter Tracey and Neil Patel of Liberum acted as corporate brokers. Emma Burdett and Dan Yea of Maitland acted as financial public relations advisors in the transaction. Karen Davies, David Dowding and Harry Thimont of Ashurst LLP acted as legal advisors to Xchanging plc. Steve Nash of Eversheds LLP acted as legal advisor to Capita. Charles Wilkinson of Deutsche Bank AG acted as broker to Capita. Arindam Ghosh and Avaantika Kakkar of Khaitan & Co. acted as legal advisor to Capita.

Capita plc (LSE:CPI) cancelled the acquisition of Xchanging plc (LSE:XCH) on December 16, 2015. As of December 16, 2015, Capita had received valid acceptances of the offer in respect of 13,565,994 Xchanging shares, representing approximately 5.47% of the existing issued share capital of Xchanging. Further to the extension to the offer announced on November 30, 2015, the offer was subject to valid acceptances being received by no later than December 16, 2015 in respect of not less than 90% of the Xchanging shares to which the offer relates and of the voting rights attached to those shares. As this condition has not been satisfied, the offer has lapsed with immediate effect.