IN THE MATTER OF ORTHO CLINICAL DIAGNOSTICS HOLDINGS PLC

This is an application under section 899 of the Companies Act 2006 for sanction of a scheme of arrangement under Part 26 of the Companies Act to effect the acquisition of the entire issued share capital of Ortho Clinical Diagnostics Holdings Plc by Coronado Topco Inc as part of a business combination with Quidel Corporation. The court applied the established four-part approach (compliance with statutory provisions; fair representation of the class at the meeting and absence of coercion; whether the scheme is one an intelligent and honest person might reasonably approve; and whether there is any blot or defect making the scheme unlawful or inoperative) as summarised in Re TDG plc.

The court was satisfied that the statutory requirements, including distribution of the Proxy Statement and explanatory statement in accordance with the convening order, had been complied with (sections 899 and 897, Part 26 CA 2006). Issues of class composition and numerosity raised at the convening hearing ([2022] EWHC 675 (Ch)) were addressed and there was no evidence that votes cast at the court meeting were promoting interests adverse to the class. The scheme received substantial shareholder support at the court meeting and the general meeting. The court found the transactional terms fully disclosed in the Proxy Statement and that the scheme was one an intelligent and honest person might reasonably approve. No blot or defect was identified and the court accepted undertakings given on behalf of the acquiring parties. The scheme was therefore sanctioned.

Background and parties: The Company is a United Kingdom public limited company, Ortho Clinical Diagnostics Holdings Plc, whose ordinary shares are traded on Nasdaq. The proposed transaction would combine the Ortho business with Quidel Corporation through a Delaware merger and a UK scheme of arrangement, creating Coronado Topco Inc as the new holding company with Topco listed on Nasdaq. The Scheme provides that each Scheme Share be acquired in consideration of 0.1055 Topco common shares and a cash payment of USD 7.14 funded to Topco by Quidel.

Nature of the application: An application under section 899 Companies Act 2006 for sanction of a Part 26 scheme of arrangement to effect the acquisition of the Company by Topco.

Procedural posture: A convening hearing was held before Michael Green J who granted permission to convene a single class meeting and gave directions dealing with class composition and numerosity ([2022] EWHC 675 (Ch)). The court meeting and a general meeting took place on 16 May 2022. This is the sanction hearing before Mr Justice Mellor.

Issues framed by the court:

• Whether statutory requirements under the Companies Act 2006 and the convening order had been complied with (including distribution of the Proxy Statement and explanatory materials).
• Whether the class was fairly represented at the meeting and free from coercion, including consideration of class composition and numerosity issues addressed at the convening hearing.
• Whether the Scheme was one that a member of the class acting in their own interest could reasonably approve (adequacy of disclosure and commercial fairness).
• Whether there was any blot or defect rendering the Scheme unlawful or inoperative.

Court’s reasoning and findings: The judge applied the four-part test (as summarised in Re TDG plc). He was satisfied on the evidence (witness statements dealing with distribution, voting, and meeting conduct) that the requirements of s.897 and other statutory provisions had been complied with. The meeting was properly constituted in accordance with directions given at the convening hearing; beneficial holders had been given the Proxy Statement and voting instructions were provided by intermediaries. The court accepted that the class was fairly represented and that there was no coercion of the minority or improper promotion of interests adverse to the class. On substance, the Proxy Statement fully set out the terms and commercial background; the judge concluded the Scheme was plainly one an intelligent and honest person might reasonably approve. No blot or defect making the Scheme unlawful or inoperative was identified. The court also noted ancillary matters (adjustment of employee options, advisory vote on certain executive compensation arrangements) and considered that these did not affect the validity of sanctioning the Scheme. Undertakings required from Topco and Quidel were accepted.

Relief granted: The court sanctioned the Scheme and ordered in the terms of the draft presented to the court.

This is a first instance sanction hearing. The court sanctioned the scheme of arrangement under section 899 Companies Act 2006. The rationale was that the statutory requirements and the directions made at the convening hearing had been complied with, the class was fairly represented at the meeting, the Scheme was one that an intelligent and honest person might reasonably approve given the full disclosure in the Proxy Statement, and there was no blot or defect rendering the Scheme unlawful or inoperative. The court also accepted the undertakings proffered by the acquiring parties.