NEWS RELEASE

RECORDATI: MERGER BY ABSORPTION OF FIMEI S.P.A. AND ROSSINI INVESTIMENTI S.P.A. INTO RECORDATI S.P.A. APPROVED

  • Reverse merger by absorption of Fimei S.p.A. and Rossini Investimenti S.p.A. into Recordati S.p.A. approved by Board of Directors.
  • Objective - shortened chain of control and simplified corporate governance structure.
  • As a result of the merger, no variations of Recordati S.p.A.'s share capital and Articles of Association.
  • As a result of the merger, the shareholdings in Recordati S.p.A. of Rossini S.à r.l. (indirectly held by CVC Capital Partners VII Limited), currently equal to 51.820% of Recordati S.p.A.'s share capital, as well as those of the other shareholders, remain unchanged.
  • Reassignment to Rossini S.à r.l. of all Recordati shares held by Fimei against cancellation of all Rossini Investimenti shares held by Rossini S.à r.l. itself.
  • No effect on Recordati S.p.A.'s net financial position, capital allocation policy or strategy.
  • No recognition of goodwill or intangible assets arising from the transaction in Recordati S.p.A.'s financial statements.
  • Lower taxes due to transfer of tax benefits to Recordati S.p.A.. A non-recurring tax benefit of € 12.9 million (subject to tax ruling) and a recurring benefit estimated at € 1.3 million per year are expected.
  • The Board also approved the execution of a merger agreement with Rossini Luxembourg S.à r.l., providing customary representations and warranties and related indemnification obligations of the latter.
  • The merger, together with the merger agreement, - as major related party transaction - received unanimous favourable opinion from Control, Risks and Sustainability Committee of Recordati S.p.A., acting as Related Party Transactions Committee.
  • Completion of the merger is conditional upon approval by the extraordinary shareholders' meeting and favourable opinion on the fairness of the exchange ratio by the expert appointed by the Court.
  • Accounting and tax effective date referred to in the merger plan: 1 April 2021.

Milan, 1 October 2020 - The Boards of Directors of Rossini Investimenti S.p.A. ("Rossini Investimenti"), Fimei S.p.A. ("Fimei" and, together with Rossini Investimenti, the "Disappearing Companies") and Recordati S.p.A. ("Recordati" or the "Surviving Company" and, together with the Disappearing Companies, the "Participants in the Merger") - all subject to the management and coordination activity of Rossini Luxembourg S.à r.l. ("Rossini Luxembourg") - examined and approved [by unanimous vote of those present] the reverse merger by incorporation of Rossini Investimenti and Fimei into Recordati (the "Transaction" or the "Merger") and the documentation preparatory to implementation of the Merger, including the relevant merger plan (the "Merger Plan").

The Merger, together with the merger agreement described below, received the favourable opinion of Recordati's Control, Risk and Sustainability Committee (the "Committee"), which acts as the Related Party Transactions Committee pursuant to the regulations governing Related Party Transactions (the "Procedure").

RECORDATI INDUSTRIA CHIMICA E FARMACEUTICA S.p.A.

Sede Legale

VIA M. CIVITALI, 1

CAPITALE SOCIALE € 26.140.644,50 i.v.

20148 MILANO, ITALIA

REG. IMP. MILANO, MONZA, BRIANZA e LODI 00748210150

TEL. (39) 0248787.1

CODICE FISCALE/P. IVA 00748210150

FAX (39) 0240073747

R.E.A. MILANO 401832

Società Soggetta all'attività di Direzione e Coordinamento di Rossini Luxembourg S.àr.l

Participants in the Merger

Recordati

Recordati S.p.A., a company incorporated and existing under Italian law, with registered office at via Matteo Civitali no. 1, Milan, tax number, VAT number and registration number with the Milan-Monza-Brianza-Lodi Companies' Register: 00748210150, listed in the Milan Economic and Administrative Index under no. 401832, a company subject to the management and coordination activity of Rossini Luxembourg.

Fimei

Fimei S.p.A., a company incorporated and existing under Italian law, with registered office at via del Vecchio Politecnico no. 9, Milan, tax number and registration number with the Milan-Monza-Brianza- Lodi Companies' Register: 01001630159, VAT number 10042010156, listed in the Milan Economic and Administrative Index under no. 784291, a company subject to the management and coordination activity of Rossini Luxembourg.

As at today's date, Fimei holds shares representing 51.820% of the share capital of Recordati and the share capital of Fimei is held entirely by Rossini Investimenti.

Rossini Investimenti

Rossini Investimenti S.p.A., a company incorporated and existing under Italian law, with registered office at via del Vecchio Politecnico no. 9, Milan, tax number, VAT number and registration number with the Milan-Monza-Brianza-Lodi Companies' Register: 10428410962, listed in the Milan Economic and Administrative Index under no. 2530577, a company subject to the management and coordination activity of Rossini Luxembourg.

As at today's date, the share capital of Rossini Investimenti is held entirely by Rossini S.à r.l. ("Rossini Sarl").

Major related party transaction

As indicated in the above description of the Participants in the Merger, on the date of this press release:

  1. Rossini Investimenti directly and legally controls Fimei, holding 100% of its share capital;
  2. Fimei directly and legally controls Recordati, holding 51.820% of its share capital;
  3. all the Participants in the Merger are subject to the management and coordination activity of Rossini Luxembourg, pursuant to Articles 2497 et seq. of the Italian Civil Code.

Rossini Investimenti, Fimei and Rossini Luxembourg are therefore to be considered related parties of Recordati pursuant to letter (a)(i) of the definition of "Related Parties" in Annex 1 to the regulation adopted by Consob under resolution no. 17221 of 12 March 2010 and most recently amended by resolution no. 21396 of 10 June 2020 (the "OPC Regulations"). The Merger, together with the merger agreement, also constitutes a "major" related party transaction, pursuant to the OPC Regulations and the Procedure, insofar as at least one of the significance indicators set out in Annex 3 to the OPC Regulations exceeds the threshold of 5% (in particular, the "countervalue significance indicator" is 51.82% and the "assets significance indicator" is 112.43%).

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For the reasons set out above, the Committee was involved in the negotiation and investigation of the Merger, as well as the merger agreement, and in the approval of the proposed resolution to be submitted to the extraordinary shareholders' meeting of Recordati and, on 28 September 2020, expressed its reasoned favourable opinion on the existence of the interest of Recordati in carrying out the Transaction, as well as on the expediency and substantial correctness of the terms and conditions of the Transaction, pursuant to the OPC Regulations and the Procedure.

In addition, the information document referred to in Article 5 and Annex 4 of the OPC Regulations (the "Information Document") will be published within the deadlines and in accordance with the methods established pursuant to the law and regulations. It should also be noted that, although the Merger is to be considered significant also pursuant to Article 70 of the Issuers' Regulation, Recordati opted, with effect from 20 December 2012, to exercise its right to derogate from the obligations to publish the information documents prescribed for significant mergers, demergers, capital increases by means of the contribution of assets in kind, acquisitions and transfers, pursuant to Article 70, paragraph 8, and Article 71, paragraph 1-bis, of the Issuers' Regulation and, therefore, the preparation of the information document pursuant to Annex 3B of the Issuers' Regulation is not planned.

Finally, it should be noted that the Merger does not entail a public offering of securities and cannot be classed as a reverse merger pursuant to European Regulation 2017/1129 (the Prospectus Regulation), Article 117-bis of the TUF (Italian Consolidated Law on Finance) and IFRS 3, paragraph B.19; therefore, a prospectus does not have to be published.

Purpose of the Transaction

The main reasons underlying the decision to proceed with the Merger, with the consequent expediency of the Transaction for Recordati and for the entire group to which it belongs (the "Group"), are as follows:

  1. shortening the chain of control with respect to the operating companies and simplifying the Group's corporate structure, in line with national and international practice;
  2. reducing the administrative costs associated with maintaining the Disappearing Companies, with the consequent release of resources for the benefit of the entire Group;
  3. obtaining administrative synergies and synergies linked to fixed structural costs, as well as greater financial efficiency resulting from a shortening of the chain of control which will allow a faster recovery of dividend flows, and resulting in a lower tax cost as a consequence of the elimination of additional tax levels.

Furthermore, as a result of the Merger, Recordati will be able to enjoy the ACE tax benefits generated by Rossini Investimenti, as described in greater detail in the Merger Plan and the Information Document.

Terms and conditions of the Transaction

With reference to the methods of implementing the Merger, it is pointed out that the decision to proceed with the reverse merger by incorporation of the Disappearing Companies into Recordati will enable the Surviving Company to ensure the continuation of its contractual relations and to maintain the status of a listed company that it would otherwise have lost in the event of the merger of Recordati into Rossini Investimenti or Fimei.

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It should also be noted that the Participants in the Merger and Rossini Luxembourg today signed a merger agreement, containing certain representations and warranties given by Rossini Luxembourg with regard to the Disappearing Companies (concerning, inter alia, their accounting records, labour law and tax aspects, the absence of litigation pending or threatened in writing) and the relevant indemnity obligations in the event of their inaccuracy or untruthfulness (the "Merger Agreement").

Based on, (i) the consolidated half-year financial report as at 30 June 2020, prepared pursuant to Article 154-ter of the TUF and approved by the Board of Directors of Recordati on 30 July 2020 for the Surviving Company, and, (ii) for the Disappearing Companies, their balance sheets as at 30 June 2020, prepared pursuant to Article 2501-quater of the Italian Civil Code and approved by their Boards of Directors on 11 September 2020, used as reference financial data pursuant to and for the purposes of Article 2501-quater of the Italian Civil Code, as well as (iii) the other assumptions described in detail in the Merger Plan and in the Information Document, the Boards of Directors of the Participants in the Merger determined the following exchange ratio (the "Exchange Ratio"):

  • against cancellation (i) of the 10,000,000 shares representing the entire share capital of Fimei, all held by Rossini Investimenti, as well as (ii) of the 82,550,000 shares representing the entire share capital of Rossini Investimenti, all held by Rossini Sarl,
  • all the 108,368,721 ordinary shares of Recordati currently held by Fimei will be reassigned to Rossini Sarl, or a different number of ordinary shares of Recordati held by Fimei on the Effective Date, as defined below (in other words, as at the date hereof, Rossini Sarl would obtain 1.313 Recordati shares for each Rossini Investimenti share),

with third-party shareholders (i.e. other than Rossini Sarl, following the Merger, and the Surviving Company itself) maintaining the same number of ordinary shares of Recordati held by them as at such date.

The Merger will not entail any change in the share capital of the Surviving Company nor is any balancing cash payment planned.

It should also be noted that the balance sheet and earnings profile of the entity resulting from the Merger will be substantially in line with that of the Surviving Company at present and, in particular, the Merger will not alter the net financial position and, therefore, the investment capacity of Recordati or the strategy or its capital allocation policy.

The Exchange Ratio was assessed by the Committee, supported by Prof. Pietro Mazzola as independent financial advisor, which declared that such Exchange Ratio, as identified through the calculation method submitted to the Committee, can be deemed fair from a financial perspective; the advisor further identified the assumptions which would made equally fair a possible different value calculated if the number of Recordati shares held by Fimei at the Effective Date were different from that as at 30th June 2020.

It should also be noted that, on 1 September 2020, the management bodies of the Participants in the Merger filed a petition with the Court of Milan for the appointment of the expert pursuant to Article 2501-sexies of the Italian Civil Code, with the option, in accordance with Article 2501-sexies, paragraph 4 of the Italian Civil Code, to request from the court of the place where the company resulting from the merger is based the appointment of one or more joint experts, with the task of certifying, in their report, the appropriateness of the Exchange Ratio (the "Expert").

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Recordati S.p.A. published this content on 01 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 October 2020 16:24:02 UTC