CTI Engineering Co., Ltd. (TSE:9621) reached an agreement to acquire Waterman Group plc (LSE:WTM) for £43.1 million on May 9, 2017. Under the terms of the recommended cash offer, CTI will acquire each share of Waterman at a price of £1.4 per share. Further, CTI Engineering, as per conditional sale agreements and irrevocable undertakings, has agreed to acquire approximately 8.1 million shares from certain members of the Waterman management team, AB Traction and Hargreave Hale Limited at the offer price. CTI will also acquire 2.4 million Waterman shares subject to exercise of LTIP options. The cash consideration payable by CTI will be financed from its existing cash resources. CTI reserves the right to make an equivalent reduction in its offer price if Waterman announces, declares or pays any dividend or any other distribution to shareholders on or after the date of this announcement. Upon completion, Waterman's name will be retained and will remain operated and managed in London. Waterman will operate as a standalone, separate, business within the CTI Group and will be a separate reporting line within the CTI Group.

Nick Taylor, the current Chief Executive Officer of Waterman, will continue in this position and will report to the President and Representative Director of CTI, Kazuo Murata. If following the offer becoming unconditional in all respects and Waterman ceases to be a listed company then a new Management Board will be formed consisting of the Waterman Management Team together with several representatives of CTI. CTI has confirmed that it would ensure that the Waterman Board comprises at least two independent non-executive Directors if the offer becomes or is declared unconditional and when receives acceptances less than 75%. In such a case, CTI intends that Waterman's three non-executive Directors will remain in office for a period of time to be agreed. CTI will, however, nominate five new Directors to the Waterman Board, as appropriate, to reflect its controlling interest. Upon completion, Waterman will be headquartered in London.

The deal is subject to all material authorizations, orders, recognitions, grants, consents, licenses, confirmations, clearances, certificates, exemptions, permissions and approvals necessary or reasonably considered appropriate for or in respect of the offer or the proposed acquisition of all or any Waterman shares or other securities in, or control of, Waterman by CTI having been obtained from all appropriate third parties including central bank, government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, court, trade agency, professional association, institution, employee representative body, or any other such body. The offer is subject to CTI receiving valid acceptances which constitute more than 50% of Waterman shares. Waterman Directors unanimously intend to recommend that Waterman shareholders accept the offer.

If the offer becomes or is declared wholly unconditional, and CTI acquires Waterman shares which, together with the Waterman Shares held by CTI, carry at least 75% of the voting rights attaching to the Waterman shares, whether pursuant to the offer or otherwise, and subject to any requirements of the Listing Rules, CTI intends to procure that Waterman applies to the London Stock Exchange to cancel the listing of the Waterman shares. If CTI receives acceptances of 90% or more of the Waterman shares under offer, it intends to invoke its rights to acquire compulsorily, on the same terms of the offer, the remainder of the Waterman shares to which the offer relates. CTI reserves the right to elect, with the consent of the Panel and Waterman, to implement the offer by way of a court sanctioned scheme of arrangement, as an alternative to the offer. The mandatory offer has become unconditional in all respects. The offer will remain open for acceptance till June 8, 2017. As of June 13, 2017, CTI has acquired a 75.39% stake in Waterman and Waterman will make an application for cancellation of the trading in Waterman shares on London Stock Exchange. The offer will now close on June 22, 2017. As on June 21, 2017, CTI Engineering received valid acceptances in respect of approximately 92.03% shares of Waterman. As on June 22, 2017, CTI Engineering extended the offer period till July 6, 2017. On June 13, 2017, the company has received valid acceptances in respect of Waterman Shares. Waterman has made an application for cancellation and it is expected that such cancellation will be effective on July 13, 2017.

James Joyce and Nick Prowting of WH Ireland Limited and Gideon Franklin of Gideon Franklin Limited acted as financial advisors for CTI. Sandy Fraser and Lauren Kettle of Nplus1 Singer Advisory LLP acted as financial advisors and brokers to Waterman. Nick Bryans, Marianna Kennedy, Jake Hadfield, Rosie James, David Baxter, Rebecca Servian and Crowley Woodford of Ashurst acted as legal advisors to Waterman Group. Nigel Stacey of Gibson, Dunn & Crutcher LLP acted as legal advisor for Waterman Group plc.