Ten Entertainment Group PLC, Re

The court sanctioned a scheme of arrangement under Part 26 of the Companies Act 2006 to enable Neon Buyer Limited (Bidco) to acquire the entire ordinary share capital of Ten Entertainment Group PLC for 412.5 pence per share. The judge found that the statutory requirements had been complied with, that there was fair representation at the scheme meeting and no evidence of coercion, that the scheme was one which an intelligent and honest member might reasonably approve (having regard to the directors' unanimous recommendation, advice from financial advisers, full explanation in the scheme document and the consideration offered), and that there were no blots on the scheme. The court also noted irrevocable undertakings and letters of intent disclosed in the scheme document and accepted that they did not give rise to any class issue. On the undertaking from Bidco to be bound by the scheme and with outstanding conditions satisfied or waived, the scheme was sanctioned and the orders sought were made.

This was an application by Ten Entertainment Group PLC for sanction of a proposed scheme of arrangement under Part 26 of the Companies Act 2006 to implement a cash acquisition by Neon Buyer Limited (Bidco). The scheme offered 412.5 pence per share, valuing the issued and to be issued share capital at approximately £287 million and representing a circa 33.1% premium to the last trading price before the announcement.

The procedural history included a convening hearing before Deputy ICC Judge Agnello KC who directed a single class meeting. Proper notice was given and the court meeting took place on 11 January 2024. The chair's report recorded that the requisite majorities in number and in value approved the scheme (77.78% in number, 99.97% in value in favour) with a representative turnout. Three shareholders cast both for and against votes and the chair applied the approach in Re Equitable Life Assurance Society (No. 1) and Re Cardtronics PLC to treat those votes for purposes of the number test.

The court framed the issues by reference to the four familiar matters from Re TDG PLC: (1) statutory compliance; (2) fair representation at the meetings; (3) whether an intelligent and honest member might reasonably approve the scheme; and (4) whether there were any blots on the scheme. The judge examined minor timing defects in notices and accepted they were immaterial, considered the directors' unanimous recommendation and advisers' input, and noted the disclosure of irrevocable undertakings and non-binding letters of intent (including director undertakings) which did not create a class issue (citing Re Telewest Communications plc (No. 1)).

On those issues the court concluded that the statutory provisions had been complied with, the scheme had been fairly presented and explained, the commercial proposition to shareholders was reasonable given the premium offered, and there were no blots. With Bidco's undertaking to be bound and confirmation that outstanding conditions had been satisfied or waived, the court sanctioned the scheme and made the requested orders.

The court sanctioned the proposed scheme of arrangement and made the orders sought. The rationale was that the Part 26 statutory requirements had been met, the meeting had been fairly conducted with proper majorities, the scheme was one which an intelligent and honest member might reasonably approve (supported by the directors' unanimous recommendation and financial advice), disclosed irrevocable undertakings did not give rise to a class issue, and there were no blots on the scheme. On Bidco providing an undertaking to be bound and all other conditions having been satisfied or waived, sanction was appropriate.