Dods (Group) Plc : Acquisition

DODS (GROUP) PLC

("DODS" OR THE "COMPANY")

Proposed Placing to raise £11.0 million

Proposed acquisition of the DeHavilland Political Intelligence division of Emap Limited, approval of waiver of Rule 9 of the City Code and Re-admission to AIM

Dods, the AIM-listed supplier of political intelligence and training services, announces that the Company has conditionally agreed to acquire the business and certain assets of the DeHavilland Political Intelligence division of Emap Limited.

Highlights

· Transformational acquisition, enabling the Group to enhance its political intelligence services offering

· Consideration £12.8 million in cash

· Significant identifiable synergies, as well as potential cross-selling opportunities and benefits to customers

· Increase in revenues derived from subscription and digital based services and further proportional decline in dependence on magazine advertising

· Placing of 200,000,000 New Ordinary Shares to raise £11.0 million (before expenses) to fund consideration and acquisition strategy, including up to 111,421,556 New Ordinary Shares with Lord Ashcroft KCMG, resulting in his holding up to 42.9 per cent. of the Enlarged Share Capital of the Company

Commenting on the acquisition Gerry Murray, Chief Executive Officer, said:

"This acquisition is an excellent fit with our strategic development in digital information, further growing our digital subscriptions business.

DeHavilland comes with a high reputation for customer service and quality of information and will provide an ideal enhancement to our existing product portfolio.

The integration of this business with Dods' Monitoring will provide significant service improvements for all of the combined businesses' clients."

For further information please contact:

Dods (Group) plc +44 (0)20 7593 5500

Gerry Murray, Chief Executive

Rupert Levy, Finance Director

Cenkos +44 (0)20 7397 8900

Nicholas Wells / Adrian Hargrave

DODS (GROUP) PLC

("DODS" OR THE "COMPANY")

Proposed Placing to raise £11.0 million

Proposed acquisition of the DeHavilland Political Intelligence division of Emap Limited, approval of waiver of Rule 9 of the City Code and Re-admission to AIM

Introduction

The Board announces that Dods had entered into an agreement to acquire the business of the DeHavilland Political Intelligence division of Emap Limited for a cash consideration of £12.8 million, to be financed through banking facilities and the placing of 200,000,000 New Ordinary Shares at the price of 5.5 pence per share.

Pursuant to the AIM Rules for Companies, the acquisition of the Business is a reverse takeover and therefore requires the approval of the Shareholders. Lord Ashcroft KCMG has agreed to subscribe for up to 111,421,556 of the Placing Shares and his resultant holding is expected to be up to 42.9 per cent. of the Enlarged Share Capital. Pursuant to the City Code, Independent Shareholders are required to approve the Rule 9 Waiver, which allows Lord Ashcroft KCMG to acquire these New Ordinary Shares without making an offer for the Ordinary Shares he does not already own in the Company. In addition, the Company is seeking shareholder approval for other resolutions relating to the Placing, including the Capital Reorganisation.

Background to and reasons for the Proposals

Dods has undergone a period of significant reorganisation in the last few years, during which time it has disposed of various businesses, including its French pharmaceutical publishing business and its education division. Following this period of restructuring, the Board has decided that the Group should be focused on its political offering, in relation to the digital space, the organisation of events, research and publications. The Board announced on 1 July 2011, the acquisition of PoliticsHome and the Board believes that the acquisition of the Business is an important step in further enhancing the Group's offering in the political space.

The Acquisition will broaden Dods' offering in relation to political intelligence services. Dods also believes that there are significant synergies to be gained from this business combination, both through cost savings from system integration and from cross selling existing products to new customers. The Acquisition will further increase Dods' exposure to revenues from digital subscriptions and, concurrently, away from magazine advertising, which the Directors believe is in long-term structural decline.

Additionally, the Board believes that there are significant further bolt-on acquisition opportunities available to the Group and, following the Acquisition, to the Enlarged Group. The Board is currently in various stages of discussions with some of these potential counterparties and therefore considers it appropriate to seek additional financing to provide the Group with funds to help make acquisitions without further recourse to Shareholders. In order to fund the Acquisition and these further acquisition opportunities, the Company requires equity financing in addition to the bank funding for the Acquisition.

Finally the Board is proposing the Capital Reorganisation. Given the Company's current share price, it is necessary to issue the Placing Shares at a price below the current nominal value of 10 pence and therefore it is in the best interests of the Company to approve this proposal.

The Placing

The Company is proposing to raise approximately £11.0 million before expenses, by way of a placing by

Cenkos, as the Company's agent, of the Placing Shares at the Placing Price with Lord Ashcroft KCMG

and institutional investors. The Placing Shares will be issued fully paid, will represent approximately

56.8 per cent. of the Enlarged Share Capital and following allotment will rank pari passu in all respects

with the other New Ordinary Shares including the right to receive dividends and other distributions

thereafter declared, made or paid. The Placing Price represents a 7.3 per cent. premium to the closing mid market price of an Existing Ordinary Share of 5.125 pence on 11 January 2012 (being the latest practicable date prior to this announcement).

Due to the requirements of the VCT legislation, the Company will conduct the Placing in two tranches. The VCT Placing Shares will be offered to VCTs investing funds raised prior to 6 April 2006, and will be admitted in the First Admission. The General Placing Shares will be offered to other investors who will not be seeking relief under the VCT legislation, and will be admitted in the Second Admission.

Pursuant to the Placing Agreement, Cenkos has conditionally agreed with the Company, on and subject to the terms set out therein, to use its reasonable endeavours to procure investors to subscribe for the Placing Shares at the Placing Price. The Placing in respect of the First Admission Shares is conditional, inter alia, upon the Resolutions being passed at the Dods EGM, the Acquisition Agreement becoming unconditional in all respects except for Admission and not being terminated and the Placing Agreement becoming unconditional and not being terminated in accordance with its terms and First Admission taking place. The Placing in respect of the Second Admission Shares, is conditional, inter alia, upon the Resolutions being passed at the Dods EGM, the Acquisition Agreement becoming unconditional in all respects except for Admission and not being terminated and the Placing Agreement becoming unconditional and not being terminated in accordance with its terms and Second Admission taking place.

The Company has, under the Placing Agreement, given warranties in favour of Cenkos. In addition, the Company has given Cenkos an indemnity, typical for agreements of this type, which applies in certain circumstances.

Cenkos is entitled to terminate the Placing Agreement at its absolute discretion in certain specified circumstances prior to each of First Admission and Second Admission, including, inter alia, for a breach of the terms of the Placing Agreement in any material respect by the Company or if an event occurs or a matter arises prior to each of First Admission and Second Admission which renders any of the warranties untrue or incorrect in any material respect or in the event of force majeure arising.

Dispensation from Rule 9 of the City Code

The Directors believe that Lord Ashcroft KCMG's continued support of the Company and the commitment by him to invest in the Placing is necessary to ensure both the success of the Placing and completion of the Acquisition, which the Directors believe will be beneficial to all Shareholders.

Lord Ashcroft KCMG's commitment to take up Placing Shares gives rise to certain considerations and consequences under the City Code. Brief details of the Panel, the City Code and the protections they afford to Shareholders are described below.

The City Code is issued and enforced by the Panel. The Panel has been designated as the supervisory authority to carry out certain regulatory functions in relation to takeovers and its statutory functions are set out in and under Chapter 1 of Part 28 of the 2006 Act.

Under Rule 9, any person who acquires an interest (as defined under the City Code) in shares which, taken together with shares in which he is already interested (and in which persons acting in concert with him are interested), carry 30 per cent. or more of the voting rights of a company, is normally required by the Panel to make a general offer in cash to the shareholders of that company to acquire the balance of the shares not held by such person (or group of persons acting in concert) at not less than the highest price paid by him (or any persons acting in concert with him) for any such shares within the 12 months prior to the announcement of the offer.

In addition, Rule 9 provides that, when any person (together with any persons acting in concert with him) is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company, but does not hold shares carrying more than 50 per cent. of such voting rights, and such person (or any such person acting in concert with him) acquires an interest in any other shares which increases the percentage of shares carrying voting rights, that person (together with any persons acting in concert with him) is normally required by the Panel to make a general offer in cash to the shareholders of that company to acquire the balance of the shares not held by such person (or group of persons acting in concert) at not less than the highest price paid by him (or any persons acting in concert with him) for any such shares within the 12 months prior to the announcement of the offer.

For the purposes of the City Code, a concert party arises where persons acting in concert pursuant to an agreement or understanding (whether formal or informal) co-operate to obtain or consolidate control of a company or to frustrate the successful outcome of an offer for a company. Control means an interest, or interests, in shares carrying in aggregate 30 per cent. or more of the voting rights of the company, irrespective of whether such interest or interests give de facto control.

The interest of Lord Ashcroft KCMG in the voting rights of the Company following the Placing is expected to increase above his current percentage and increase above 30 per cent. or more. Under such circumstances, Lord Ashcroft KCMG would normally be obliged to make a general offer, pursuant to Rule 9 of the City Code, to all other Shareholders to acquire their Ordinary Shares. However, in this instance, the Panel has agreed to waive the obligation to make a general offer that would otherwise arise as a result of Lord Ashcroft KCMG subscribing for New Ordinary Shares in the Placing, but subject to the approval of the Independent Shareholders on a poll at the Extraordinary General Meeting, which will be sought pursuant to the Whitewash Resolution. To be passed, the Whitewash resolution will require the approval of a simple majority of votes cast on that poll. Only Independent Shareholders will be entitled to vote on this resolution.

Lord Ashcroft KCMG is currently interested in approximately 25.9 per cent. of the voting rights of the Company and has agreed to subscribe up to £6.2 million in aggregate for Placing Shares under the Placing, and together with his current shareholding, represents in aggregate, 42.9 per cent. of the Enlarged Share Capital, being 111,421,556 Ordinary Shares.

The Panel has agreed, subject to the Whitewash Resolution being passed (on a poll) by the Independent Shareholders at the Dods EGM, to waive the obligation on Lord Ashcroft KCMG, under Rule 9, to make a general offer for the entire issued share capital of the Company which would otherwise arise as a result of the Proposals. Accordingly, Independent Shareholders' approval (on a poll) for the Rule 9 Waiver of any obligations of Lord Ashcroft KCMG is sought in the Whitewash Resolution. To be passed, this Resolution will require the approval of a simple majority of votes cast on that poll. Only Independent Shareholders will be entitled to vote on this resolution.

For the avoidance of doubt, the Rule 9 Waiver applies only in respect of increases in the shareholdings of Lord Ashcroft KCMG resulting from the Placing and not in respect of other increases in his shareholdings. Lord Ashcroft KCMG has not taken part in any decision of the Board relating to the proposal to seek the Rule 9 Waiver.

Any further increases in Lord Ashcroft KCMG's interest will be subject to the provisions of Rule 9. The Acquisition is dependent on the approval of Independent Shareholders of the Rule 9 Waiver. There are no arrangements for the transfer of securities pursuant to the Rule 9 Waiver, nor are there any other arrangements having connection with or dependence upon the proposed transaction.

Information on Dods

The Group operates out of its head office in Westminster, London and has regional offices in Cambridgeshire, Brussels and Paris. The Group employs approximately 200 people across the business units.

The business, following recent disposals, is concentrated on Political Communications and training in the following main business units:

· Government. Working closely with the Cabinet Office and the central civil service, this unit was founded around the bi-weekly newspaper Civil Service World. The Civil Service Awards were launched off the back of this relationship - and is now an annual event. These awards were hosted by the Queen at Buckingham Palace in 2010. The large Civil Service Live exhibition was launched in 2008 and is now a key annual event in the Civil Service calendar, with Regional Events running alongside this event. The unit also produces a number of roundtable events, provides data and research for customers and operates a business networking website Civil Service Live Network.

· Parliament. The core brand within this unit is The House Magazine which is the ''in-house'' magazine of the Houses of Parliament. This magazine has been published since the 1970's and is produced in close association with an editorial board comprising of MPs and Peers from across the parties. This unit produces a number of round tables and other events - including being the largest supplier of Fringe Events to Party Conferences.

· Information. This unit was based originally on directory products. The original Dods Parliamentary Companion was produced in 1832 and is still the definitive ''Who's Who'' of the Houses of Parliament. Increasingly the products are moving digital - with the core product being Dods People which provides an interactive, work flow tool off the back of the Companion database. The largest growth area within this unit has been the UK Monitoring product which delivers bespoke information to customers to keep them informed about relevant activity within the political world.

· Europe. This unit is based in Brussels and provides media and information concerning the EU Parliament. The core brand is Parliament Magazine and its sister publications The Regional Review and The Research Review. Increasingly this unit also organises roundtables and other events alongside these publications. The fastest growing part of this unit is the EU Monitoring product which provides a similar service to clients re the EU parliament market as the UK Monitoring product does in the UK. The directory product EPAD is gradually being migrated to the online product Dods EU People.

· Political Knowledge. This unit is concerned with Civil Service training and conference events. Under the brand Westminster Explained the group provides training on Parliament procedures, the structure and function of government and policy skills. Westminster Briefings provides conference events to the wider public sector connecting stakeholders in the front line of public service delivery with policy makers in Westminster and Whitehall. This unit also partners with public sector organisations to run conferences which disseminate key messages to stakeholders.

· Trombiniscope. Based in Paris, this unit provides directories regarding the governmental bodies in France

· Fenman. This unit is split between Fenman which provides training manuals and DVDs to professional trainers, and Training Journal which is the leading magazine for professional trainers.

Information on the Business

The Business offers a wide range of political intelligence services centred on the UK and EU political agenda, including:

· Daily Alerts

· Monitoring parliamentary business in real-time

· Political research

· Full contact and biographical information on parliamentarians

· Events monitoring

· Alerts for name mentions

· Search

· Journalist and publication database

Through a variety of tailored services the Business keeps its customers informed of the latest developments in UK politics which have a direct impact on their objectives.

Strategy of the Enlarged Group

Following the Acquisition, the Enlarged Group will enhance its reputation as a leading provider of political information, both in the UK and Brussels, together with a smaller presence in the French market. This activity will be bolstered by the Group's move into the digital space, providing for more sustainable subscription based income. Additionally, these activities will continue to be complemented by related events and training activities for the Civil Service, which have grown significantly in recent years and provide further opportunities for growth through government outsourcing.

The Acquisition will provide the Enlarged Group with the ability to realise both cost synergies and cross-selling opportunities, in particular through the offering of EU Monitoring, Dods Legislation and Events to clients of the Business.

As stated above, the Directors remain aware that there are further opportunities for consolidation within the political information marketplace and following the Acquisition, the Directors believe that the Enlarged Group will be able to make further acquisitions, which in all cases the Directors will seek to ensure are earnings enhancing.

Current trading and prospects of Dods

The Board stated in the Interim Announcement on 26 September 2011 that it was conscious of the macro global economic uncertainties and the specific issues within the Company's markets over the remainder of 2011. It was further noted that there remained significant challenges, but that the Board did not believe that this will materially affect the results of the Group for the full year in 2011. The trading conditions have not changed materially since that announcement.

As announced on the 25th October 2011, Civil Service Learning, the new body controlling the outsourcing of civil service training, announced the beginning of its long awaited tender for newly outsourced civil service learning. Dods considers itself well placed to compete effectively for the appropriate parts of this tender. If successful this would have a significant effect on both 2012 and future years' results.

Banking arrangements

Following the disposal of the education businesses in 2010, the company had succeeded in repaying all of its bank debt. However, the Directors have decided to enter into new banking facilities with Bank of Scotland PLC in relation to the Acquisition and further potential acquisitions. At completion of the Acquisition, the Enlarged Group expects to have drawn down £3 million of this facility.

Capital Reorganisation

Prior to completion of the Acquisition and the Placing and irrespective of whether certain other elements of the proposals are completed, on the passing of Resolutions 1 to 3 (inclusive), each Existing Ordinary Share will be sub-divided into one New Ordinary Share and one Deferred Share, each having the rights and restrictions set out in the proposed new articles of association of the Company. This proposed change in nominal value of the Company's Ordinary Shares will have no effect on the net asset value or financial interest of existing Shareholders in the Company, nor on the number of shares held by them in the Company. The New Ordinary Shares will have the same rights (including voting and dividend rights and rights on a return of capital) as the Existing Ordinary Shares.

In order to effect the Capital Reorganisation, the Board proposes that the Company adopts new articles of association include the rights of the Deferred Shares. The Deferred Shares will have no economic value, will not be admitted to trading on AIM or any other recognised investment exchange, but will have the following rights and restrictions:

(a) they will confer no right to any dividend or any distribution (other than on a winding up);

(b) they will confer no right to receive notice of, or to attend or vote at, general meetings of the Company;

(c) on a winding up they will confer the rights to be paid out of the assets of the Company available for distribution an amount equal to 1 pence for all the Deferred Shares in issue prior to the surplus being distributed to the holders of New Ordinary Shares, but will not confer any right to participate in any surplus assets of the Company; and

(d) they can be purchased by the Company at any time for an aggregate consideration of 1 pence for all the Deferred Shares in issue and each Deferred Share so purchased shall thereafter be cancelled.

No share certificates will be issued in respect of the Deferred Shares.

Dods Extraordinary General Meeting

The Admission Document containing a notice convening the Dods EGM which will be held at the offices of Reynolds Porter Chamberlain LLP, Tower Bridge House, St. Katharine's Way, London E1W 1AA at 10.00 a.m. on 7 February 2012 will be sent to Shareholders later today and is available on the Company's website, www.dodsgroupplc.com.

The Resolutions to be proposed at the Dods EGM are as follows:

Resolution 1 - To approve the deletion from the Company's Articles of the maximum amount of shares that may be allotted by the Company.

Resolution 2 - To approve the sub-division of the Existing Ordinary Shares of 10 pence each, into one ordinary share of 1 pence and one Deferred Share of 9 pence

Resolution 3 - To adopt new articles of association of the Company reflecting the rights and restrictions of the Deferred Shares.

Resolution 4 - To approve the Acquisition.

Resolution 5 - To approve the Rule 9 Waiver (Whitewash Resolution)

Resolution 6 - To grant authority to the directors of the Company pursuant to section 551 of the 2006 Act to allot shares in the capital of the Company

Resolution 7 - To empower the directors of the Company pursuant to section 570(1) of the 2006 Act to allot or make agreements to equity securities for cash

Resolution 8 - to renew the authority granted by shareholders at this year's annual general meeting for the Company to make purchases of up to 17,599,922 New Ordinary Shares in the market (being approximately 5% of the Company's issued share capital after the Placing) for a period until the conclusion of its next Annual General Meeting.

Related Party Transaction

The placing of 111,421,556 New Ordinary Shares with Lord Ashcroft KCMG constitutes a related party transaction pursuant to Rule 13 of the AIM Rules for Companies. The Independent Directors, having consulted with the Company's nominated adviser Cenkos, consider the terms of the placing with Lord Ashcroft KCMG are fair and reasonable insofar as its shareholders are concerned.

Board Recommendations

The Independent Directors, who have been so advised by Cenkos, the Company's nominated adviser, consider that the Proposals are fair and reasonable, and in the best interests of the Company and its Independent Shareholders as a whole. In providing its advice to the Directors, Cenkos has taken into account the Directors' commercial assessments.

Accordingly, the Independent Directors unanimously recommend that Independent Shareholders vote in favour of the Whitewash Resolution relating to the Rule 9 Waiver as they intend to do in respect of their own beneficial holdings, where relevant, amounting to an aggregate of 614,094 Existing Ordinary Shares, representing approximately 0.4 per cent. of the Company's current issued share capital. Lord Ashcroft KCMG is considered to be interested in the outcome of the Rule 9 Waiver and accordingly has undertaken not to vote on the Whitewash Resolution.

The Directors consider that the Acquisition, the Placing, the Capital Reorganisation and Resolutions 1, 2, 3, 4, 5, 6, 7 and 8 are in the best interests of the Company and its Shareholders as a whole. Accordingly, all of the Directors unanimously recommend that Shareholders vote in favour of Resolutions 1, 2, 3, 4, 5, 6, 7 and 8 as they intend to do so in respect of their own beneficial holdings, where relevant, amounting to an aggregate of 1,882,167 Existing Ordinary Shares, representing approximately 1.2 per cent. of the Company's current share capital. Furthermore, Lord Ashcroft KCMG has irrevocably agreed to vote in favour of all the Resolutions in respect of all the Ordinary Shares he controls, except for the Whitewash Resolution.

Statistics of the Placing

Expected Timetable of Principal Events

Each of the times and dates above is subject to change. Any such change will be notified by an announcement on a Regulatory Information Service.

Definitions

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