RECOMMENDED CASH OFFER for SCAPA GROUP PLC by AMS HOLDCO 2 LIMITED

Alpharetta, Jan. 27, 2021 (GLOBE NEWSWIRE) -- NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

Summary

• The board of directors of AMS Holdco 2 Limited (“SWM Bidco”), an indirectly wholly-owned subsidiary of Schweitzer-Mauduit International, Inc. (“SWM”), and the Directors of Scapa Group plc (“Scapa”) are pleased to announce that they have reached agreement on the terms of a recommended cash offer by SWM Bidco for the acquisition of the entire issued and to be issued ordinary share capital of Scapa (the “Offer”). The Offer is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act (the “Scheme”).
• Under the terms of the Offer, each Scheme Shareholder will be entitled to receive:

                                                                                        for each Scheme Share            210 pence in cash

• The terms of the Offer value the entire issued and to be issued ordinary share capital of Scapa at approximately £402.9 million on a fully-diluted basis and represent premia of approximately:
  • 58.5 per cent. to the six-month volume weighted average price of 132.5 pence as at 26 January 2021 (being the last Business Day before the date of this Announcement); and
  • 18.6 per cent. to the Closing Price of 177 pence for each Scapa Share on 26 January 2021 (being the last Business Day before the date of this Announcement).
• The Offer also represents an Enterprise Value to EBITDA multiple of 11.3x on a reported basis, and 13.8x on a continuing basis for the financial year ended 31 March 2020.

Information on SWM and SWM Bidco

• SWM is a leading global performance materials company. SWM’s highly engineered films, nets, nonwovens and papers are designed and manufactured using resins, polymers, and natural fibres for a variety of industries and applications. SWM provides its customers with essential components that enhance the performance of their products. End markets served include filtration, transportation, infrastructure and construction, medical, industrial, tobacco, energy, food services and home décor. SWM and its subsidiaries manufacture on four continents, conduct business in over 80 countries and employ approximately 3,700 people worldwide.
• SWM Bidco is a company incorporated in England and Wales, and is indirectly wholly owned and controlled by SWM.

Information on Scapa

• Scapa is listed on AIM and is the parent company of a diversified Healthcare and Industrial group focused on bringing best-in-class innovation, design and manufacturing solutions to its customers, with manufacturing and sales operations across North America, Europe and Asia.
• For the financial year ended 31 March 2020, Scapa reported revenue of £320.6 million on a statutory basis and £313.3 million on a continuing basis, and a trading profit of £27.8 million on a statutory basis and £20.5 million on a continuing basis.
• Scapa Industrial adhesive based innovative bonding solutions are designed with specific technical requirements to differentiate technologies and positions in core markets, primarily: Construction, Consumer, Cable, Automotive and Specialty. In Construction and Consumer, which are primarily business to consumer, the business leverages its strong brand recognition as well as a broad product portfolio to meet the evolving need of the markets. Cable, Automotive and Specialty are primarily business to business, dealing with major global original equipment manufacturers. Customers receive significant technical and global support.
  • Scapa Healthcare is a trusted strategic partner to many of the world’s leading companies in Advanced Wound Care, Consumer Wellness and Medical Device Fixation. Scapa Healthcare has significant capabilities and scale in skin technology for healthcare companies. Its products are typically disposables and consumables which are stand-alone products or components of a medical device system. The demand for Scapa Healthcare’s products is driven by trends in demographics such as ageing populations and the increase in obesity-related illnesses. Growth opportunities are further enhanced by the trends that the medical device companies have been undergoing. Similar to other segments of healthcare, such as pharmaceuticals, there are increasing trends towards outsourcing by medical device companies. Outsourcing includes not only manufacturing but also development of the products.
  • Scapa was incorporated in England and Wales on 5 November 1964 with registration number 00826179 and the Scapa Shares were admitted to trading on AIM on 23 August 2006.

Background to and reasons for the Offer

• The SWM Board believes that Scapa presents an attractive opportunity to acquire a highly regarded, vertically integrated healthcare and industrial solutions provider with global presence and a blue-chip client base. SWM expects the combination to deliver a number of benefits to its shareholders given the compelling strategic and financial rationale for transaction. The combination of SWM and Scapa:
  • creates an entity with significant capabilities and scale in the advanced materials segment (“AMS”) with differentiated capabilities and scale, allowing SWM to leverage its expertise in performance materials and established medical business within Scapa’s integrated ecosystem to better serve customers’ evolving needs and cross-sell products. The combined company is expected to generate approximately $1.5 billion in annualised revenues conducting business in over 80 countries, with expanding markets in AMS, accounting for approximately 65 per cent. (approaching $1 billion) of annualised group revenues;
  • creates a ~$250 million healthcare portfolio (as measured by annualised revenues) with scale, global capabilities, and material development and integration skills required by an increasingly demanding and rapidly growing customer base;
  • provides an immediate boost to SWM’s industrial market specialisation and grows SWM’s manufacturing capabilities;
  • Continues SWM’s value creating strategy of organic growth supplemented by strategic acquisition; and
  • delivers compelling financial benefits for the combined company – growth, earnings diversification and meaningful potential synergies.

SWM believes that the combination of SWM and Scapa – two premier businesses within the broader AMS landscape – creates a well-positioned global business with the scale required to achieve and sustain sector leadership. The combination also better positions the combined company in the public market given the combination’s enhanced scale, capabilities and financial profile.

Background to and reasons for the Scapa Directors' recommendation

• The Scapa Directors believe that Scapa has demonstrated significant resilience in the face of the ongoing COVID-19 pandemic. In addition to the rapid action taken by management to remove costs in the face of continued uncertainty, in May 2020 Scapa completed an equity raise of £32.6 million, at 105 pence per Scapa Share, to further strengthen the balance sheet and improve covenant headroom. The Scapa Directors remain confident in the medium and long-term standalone prospects for Scapa as it continues its strategy of bringing best-in-class innovation, design and manufacturing solutions to a diverse customer base in the healthcare and industrials sectors.
   
• In healthcare, Scapa Healthcare is a trusted strategic partner to many of the world’s leading companies in Advanced Wound Care, Consumer Wellness and Medical Device Fixation with ‘state-of-the-art’ facilities including in Knoxville, U.S. and, through the Systagenix Acquisition, in Gargrave, UK. Scapa Healthcare has made progress against its strategic objective of transitioning to be a Global Contract Development and Manufacturing Organisation. However, the current scale and levels of capacity utilisation have impacted growth and the ability to fully compete in a global market. The Scapa Directors continue to assess opportunities to further scale the Scapa Healthcare business through M&A and technical transfers of differing size and scale, commensurate with its current financial resources, but there can be no certainty that either a transaction of significant size, or series of smaller transactions can be concluded in the short term, and on acceptable financial terms.
   
• Scapa Industrial is a global supplier of bonding solutions and manufacturer of adhesive-based products which offer meaningful value in industrial applications due to their lightweight, easy-to-apply properties. Scapa Industrial is recognised for its broad range of products, including adhesive tapes, films and foams, as well as its ability to engineer custom designs for even the most unique applications. Although a successful niche player in specific geographies and markets, globally the Industrial business unit lacks the scale currently to compete in higher volume markets without significant investment, where larger companies are able to better maintain a competitive advantage.
   
• The Scapa Directors have considered the current progress of the business and the medium-term value creation potential against the near-term risks specific to the business. These risks include the impact of the ongoing COVID-19 pandemic on the markets served, and, whilst these risks are expected to be temporary, they include, but are not limited to, a continued reduction in the number of elective surgeries performed that utilise Scapa Healthcare products which is an important end-market for the business; a delayed ability to improve plant utilisation following the loss of the ConvaTec contract in 2019 and a continuing uncertainty in the shape and longevity of the recovery in key industrial end markets that Scapa Industrial products address, including automotive and construction.

• The Scapa Directors note that SWM does not expect the Offer to result in material headcount reductions in the Scapa business overall or in any material changes to the balance of skills and functions of employees and management of the Scapa Group.
  

• The Scapa Directors also believe that for Scapa and its employees, there will be significant potential business benefits in the proposed combination with SWM. The Board recognises that the combination allows both companies to service markets not previously available on a standalone basis. These include, but are not limited to, benefits of scale, which may better insulate against the expected continuing end market volatility in product demand related to the impact of the pandemic; opportunities to cross-sell products across their respective client bases as well as significant other opportunities to enhance inorganic growth from within a larger group, versus the Board’s assessment of Scapa’s growth trajectory on a standalone basis.
   
• Set against this context the Offer represents an Enterprise Value to EBITDA multiple of 11.3x on a reported basis and 13.8x on a continuing basis for the financial year ended 31 March 2020 and a premium of 58.5 per cent. to the six-month volume weighted average price of 132.5 pence as at 26 January 2021 (being the last Business Day before the date of this Announcement).
   
• After careful consideration of the cash consideration and the deliverability of the Offer, the Scapa Directors believe that SWM's offer represents compelling value given the balance of future opportunities and risks facing the business, limited capital market liquidity resulting in share price volatility and provides an opportunity for Scapa Shareholders to crystallise, in cash, the value of their holdings.
   
• In considering the recommendation of the Offer, the Scapa Directors have given careful consideration to SWM’s statements for the management, employees and locations of the Scapa Group if the Offer becomes wholly unconditional. The Scapa Directors also note that SWM does not expect the Offer to result in material headcount reductions in the Scapa Group, other than in respect of certain corporate and support functions. The Scapa Directors also welcome SWM’s statement that any affected employees will be treated in a manner consistent with the high standards, culture and practices of both Scapa and SWM.

Irrevocable undertakings and letters of intent

• SWM Bidco has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, in the event that the Offer is implemented by way of a Takeover Offer, to accept or procure acceptance of the Offer) from each of the Scapa Directors who holds Scapa Shares in respect of 1,245,656 Scapa Shares, representing, in aggregate, approximately 0.66 per cent. of the issued ordinary share capital of Scapa as at the Latest Practicable Date.
• SWM Bidco has also received non-binding letters of intent from each of Paradice Investment Management, Sanford DeLand Asset Management Ltd., and Tellworth Investments LLP, to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, in the event that the Offer is implemented by way of a Takeover Offer, to accept or procure acceptance of the Offer) in respect of, in aggregate, 30,028,925 Scapa Shares, representing approximately 15.99 per cent. of the issued ordinary share capital of Scapa as at the Latest Practicable Date.
• SWM Bidco has therefore received irrevocable undertakings or letters of intent in respect of, in aggregate, 31,274,581 Scapa Shares, representing approximately 16.65 per cent. of the issued ordinary share capital of Scapa as at the Latest Practicable Date.
• Further details of these irrevocable undertakings and letters of intent are set out in Appendix 3 to this Announcement.

Recommendation

• The Scapa Directors, who have been so advised by Jefferies as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. In providing its financial advice, Jefferies has taken into account the commercial assessments of the Scapa Directors. Jefferies is providing independent financial advice to the Scapa Directors for the purposes of Rule 3 of the Code.
• Numis is acting as corporate broker and Nominated Adviser to Scapa in relation to the Offer. Berenberg is acting as Corporate Broker to Scapa in relation to the Offer.
• Accordingly, the Scapa Directors intend to recommend unanimously that Scheme Shareholders vote in favour of the Scheme at the Court Meeting and that Scapa Shareholders vote in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Offer is implemented by way of a Takeover Offer, that Scapa Shareholders accept such Offer) as the Scapa Directors who hold Scapa Shares have irrevocably undertaken to do in respect of their own entire beneficial holdings, amounting to 1,245,656 Scapa Shares, in aggregate, representing approximately 0.66 per cent of the issued share capital of Scapa as at the Latest Practicable Date.

General

• If any dividend, other distribution or return of capital is declared, made or paid in respect of the Scapa Shares on or after the date of this Announcement and with a record date prior to the Effective Date, SWM Bidco reserves the right to reduce the consideration payable in respect of each Scapa Share by the amount of all or part of any such dividend, other distribution or return of capital, except where Scapa Shares are or will be acquired pursuant to the Scheme on a basis which entitles SWM Bidco to receive any such dividend, other distribution or return of capital and retain it. If SWM Bidco exercises this right or makes such a reduction in respect of a dividend or other distribution, Scapa Shareholders will be entitled to receive and retain that dividend, other distribution or return of capital.
• It is intended that the Offer will be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act, further details of which are contained in the full text of this Announcement (and will be included in the Scheme Document). However, SWM Bidco reserves the right, with the consent of the Panel and subject to the terms of the Co-operation Agreement, to implement the Offer by way of a Takeover Offer.
• The Offer will be subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement including, among other things: (a) the approval of Scheme Shareholders at the Court Meeting and the passing of the Resolutions to be proposed at the General Meeting; (b) the sanction of the Scheme by the Court; (c) the Scheme becoming Effective no later than the Long Stop Date; and (d) SWM Bidco obtaining certain merger control and regulatory approvals. In order to become Effective, the Scheme must be approved by a majority in number of Scheme Shareholders present and voting (and entitled to vote), either in person or by proxy, at the Court Meeting representing at least 75 per cent. in value of the Scheme Shares voted by such holders.
• The Scheme Document will include full details of the Scheme, together with an explanatory statement providing details of the Offer, and the notices convening the Court Meeting and the General Meeting. The Scheme Document will also contain the expected timetable for the Offer and will specify the necessary actions to be taken by Scapa Shareholders. The Scheme Document will be sent to Scapa Shareholders as soon as reasonably practicable (subject to the availability of the Court to approve the posting of the Scheme Document).
• The Scheme is expected to become Effective during the second quarter of 2021, subject to satisfaction or (where applicable) waiver of the Conditions set out in Appendix 1 to this Announcement.
• Commenting on the Offer, Jeffrey Kramer, Chief Executive Officer of SWM, said:

“We are very excited to announce our proposed acquisition of Scapa, which significantly enhances our position as a leading provider of performance materials for attractive specialty applications. Scapa advances our successful valued-added solutions strategy and enhances our ability to solve our customers’ toughest innovation challenges by adding a fully integrated model with complementary capabilities. These offerings range from adhesive formulations and product design through converting finished products. This transaction also enhances our growth profile, with nearly 65% of our combined revenues generated from growing end-markets.

We are enthusiastic about adding Scapa’s best-in-class global healthcare solutions platform to our already substantial presence, giving SWM immediate critical mass in the growing medical materials space. Together with Scapa, we will offer a comprehensive suite of products focused on skin-friendly specialty applications like advanced woundcare, wellness, and medical device fixation, in addition to our existing portfolio of medical products. Scapa also brings a robust and profitable set of industrial tapes used in construction, transportation, consumer, and industrial end-markets, complementing our existing business. Like SWM, Scapa has significant capabilities and scale in key specialty applications and a well-recognised brand portfolio. With Scapa’s industrial business as part of SWM’s diversified AMS segment, we see potential to leverage our combined sales and distribution reach.

We are further enthusiastic about welcoming the Scapa people into SWM and are excited to add their deep industry, materials, and manufacturing experience to our organization. We will learn from each other and work together to support our expanded customer base through a deep commitment to our shared values of innovation, customer focus, and operational excellence.

We look forward to closing the transaction, capitalising on the growth opportunities ahead, and creating value for our customers, employees, and shareholders.”

·Commenting on the Offer, Heejae Chae, Chief Executive Officer of Scapa, said:

“The Scapa team has worked tirelessly to build our brand to be globally recognised as an innovative, solutions-driven partner for outsourced product development and manufacture. The expansion into healthcare markets, from our initial focus on the industrials space, has significantly broadened our reach and has brought new strategic partnerships, many of which are with blue-chip companies. As another multinational producer for outsourced performance materials, SWM has been on a similar journey to us, also extending into healthcare markets having initially been focused on customers in the industrials sector. We believe the combination of our complementary businesses will bring benefits to all stakeholders. We see these not only resulting from increased scale, but also from an increased ability to cross-sell products across our respective client bases, as well as an increased potential to enhance inorganic growth from within a larger group. We believe the enlarged business will also provide greater career development opportunities for employees”

·Commenting on the Offer, Chris Brinsmead, Chairman of Scapa, said:

            “Scapa has successfully executed a strategy of bringing best-in-class innovation, design and manufacturing solutions to a diverse customer base in the healthcare and industrials sectors. We therefore believe there will be significant potential business benefits in the proposed combination with SWM that will enhance both the further execution of this strategy and the growth trajectory of Scapa’s business, versus that on a standalone basis. Additionally, while Scapa has demonstrated considerable resilience, significant business uncertainties continue to persist in the near and medium term for a company of our relative size. Therefore, the Scapa Directors intend to unanimously recommend the Offer from SWM, which represents an Enterprise Value to EBITDA multiple of 11.3x on a reported basis and 13.8x on a continuing basis for the financial year ended 31 March 2020, or a premium of 58.5 per cent. to the six-month volume weighted average price of 132.5 pence as at 26 January 2021 (being the last Business Day before the date of this Announcement).”

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including its Appendices).

The Offer will be subject to the Conditions and further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix 2 to this Announcement contains the bases of calculations and sources of certain information contained in this Announcement. Appendix 3 to this Announcement contains a summary of the irrevocable undertakings received by SWM Bidco in relation to the Offer. Appendix 4 to this Announcement contains definitions of certain expressions used in this summary and in this Announcement.

Enquiries:

SWM
Schweitzer-Mauduit International, Inc.
Mark Chekanow – Investor Relations Director	Tel: +1 770 569 4229
J.P. Morgan (Financial adviser to SWM and SWM Bidco)
John Richert Justin Aylward	Tel: +1 212 270 6000
Celia Murray David Connern	Tel: +44 207 742 4000
Scapa
Scapa Group plc Heejae Chae – Group Chief Executive Oskar Zahn – Chief Financial Officer Brett Pollard – MD of Corporate Development	Tel: +44 161 301 7400
Jefferies International Limited (Sole Financial Adviser) Philip Noblet James Thomlinson Harry Le May	Tel: +44 20 7029 8000
Numis Securities Limited (Nominated Adviser and Joint Broker) Mark Lander Freddie Barnfield Duncan Monteith	Tel: +44 20 7260 1000
Berenberg (Joint Broker) Chris Bowman Toby Flaux	Tel: +44 20 3207 7800
FTI Consulting (Media Relations) Simon Conway Victoria Foster Mitchell	Tel: +44 20 3727 1000

King & Spalding International LLP are retained as legal advisers to SWM and SWM Bidco.

DLA Piper UK LLP are retained as legal adviser to Scapa.

Important notices relating to financial advisers

J.P. Morgan Securities LLC and its affiliate J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove, which is authorised by the Prudential Regulation Authority (the “PRA”) and regulated in the UK by the Financial Conduct Authority (the “FCA”) and the PRA (together, “J.P. Morgan”), are acting exclusively for SWM and SWM Bidco and no one else in connection with the Offer and shall not be responsible to anyone other than SWM and SWM Bidco for providing the protections afforded to clients of J.P. Morgan or its affiliates nor for providing advice in connection with the Offer or any other matter or arrangement referred to herein.

In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the U.S. Exchange Act, J.P. Morgan Securities plc and its affiliates will continue to act as exempt principal trader in Scapa securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

Jefferies International Limited (“Jefferies”), which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Scapa and no one else in connection with the Offer and will not be responsible to anyone other than Scapa for providing the protections afforded to clients of Jefferies nor for providing advice in relation to the Offer or any other matters referred to in this announcement. Neither Jefferies nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Jefferies in connection with this announcement, any statement contained herein or otherwise.

In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the U.S. Exchange Act, Jefferies and its affiliates will continue to act as exempt principal trader in Scapa securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for Scapa and no one else in connection with the matters set out in this Announcement and will not regard any other person as its client in relation to the matters in this Announcement and will not be responsible to anyone other than Scapa for providing the protections afforded to clients of Numis, nor for providing advice in relation to any matter referred to herein.

Joh. Berenberg, Gossler & Co. KG, London Branch (“Berenberg”), which is authorised by the German Federal Financial Supervisory Authority (“BaFin”) and subject to limited regulation by the FCA in the United Kingdom, is acting exclusively for Scapa and no one else in connection with the Offer and will not be responsible to anyone other than Scapa for providing the protections afforded to clients of Berenberg nor for providing advice in relation to the Offer or any other matters referred to in this announcement. Neither Berenberg nor any of its affiliates owes or accepts any duty, liability or responsibility to any person who is not a client of Berenberg in connection with this announcement, any statement contained herein or otherwise.

Further information

This Announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer or invitation to purchase, otherwise acquire or subscribe for or dispose of any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise. The Offer will be made solely through the Scheme Document (or, in the event that the Offer is to be implemented by means of a Takeover Offer, the Offer Document), which, together with the Forms of Proxy, will contain the full terms and conditions of the Offer, including details of how to vote in respect of the Scheme. Scapa Shareholders are advised to read the Scheme Document (including the related Forms of Proxy) (and/or, in the event that the Offer is to be implemented by way of a Takeover Offer, the Offer Document) once this becomes available because it will contain important information in relation to the Offer. Any vote in respect of resolutions to be proposed at the Court Meeting and/or the General Meeting, and any decision in respect of the Scheme or other response in relation to the Offer, by Scapa Shareholders should be made only on the basis of the information contained in the Scheme Document (and/or, in the event that the Offer is to be implemented by way of a Takeover Offer, the Offer Document).

This Announcement has been prepared for the purpose of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside England and Wales.

This Announcement does not constitute a prospectus or prospectus exempted document.

Overseas shareholders

The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are not resident in the United Kingdom or who are subject to the laws of any jurisdiction other than the United Kingdom (including Restricted Jurisdictions) should inform themselves about, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to participate in the Offer or to vote their Scheme Shares in respect of the Scheme at the Court Meeting or in respect of the Resolutions to be proposed at the General Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting and/or the General Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with applicable legal or regulatory requirements of any jurisdiction may constitute a violation of securities laws in that jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Offer disclaim any responsibility or liability for the violation of such restrictions by any person.

Unless otherwise determined by SWM Bidco or required by the Code, and permitted by applicable law and regulation, the Offer shall not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Offer by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction.

Copies of this Announcement and any formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction or any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Offer.

If the Offer is implemented by way of a Takeover Offer (unless otherwise permitted by applicable law and regulation), the Takeover Offer may not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction, and the Offer will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

The availability of the Offer to Scapa Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements. Further details in relation to Scapa Shareholders in overseas jurisdictions will be contained in the Scheme Document.

The Offer will be subject to English law and the applicable requirements of the Court, the Code, the Panel, the London Stock Exchange, the AIM Rules and the FCA.

Notice to U.S. investors

The Offer relates to shares of a UK company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the U.S. Exchange Act.

Accordingly, the Offer is subject to the disclosure and procedural requirements applicable in the United Kingdom to schemes of arrangement which differ from the disclosure requirements of United States tender offer and proxy solicitation rules. Furthermore, the payment and settlement procedure with respect to the Offer will comply with the relevant rules under the Code, which differ from U.S. payment and settlement procedures, particularly with regard to the date of payment of consideration.

However, if SWM Bidco were to elect to implement the Offer by means of a Takeover Offer, such Takeover Offer would be made in compliance with all applicable United States laws and regulations, including any applicable exemptions under the U.S. Exchange Act. Such a Takeover Offer would be made in the United States by SWM Bidco and no one else, in compliance with U.S. law and regulations, including Section 14(e) of the U.S. Exchange Act and Regulation 14E thereunder.

In accordance with normal United Kingdom practice, SWM, SWM Bidco or their nominees or their brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, shares or other securities of Scapa outside of the U.S., other than pursuant to the Offer, until the date on which the Offer and/or Scheme becomes Effective, lapses or is otherwise withdrawn, in compliance with applicable law, including the U.S. Exchange Act. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases or arrangements to purchase shall be disclosed as required in the United Kingdom, shall be reported to the Regulatory Information Service and shall be available on the London Stock Exchange website at www.londonstockexchange.com.

The receipt of consideration by a U.S. holder for the transfer of its Scapa Shares pursuant to the Offer will likely be a taxable transaction for United States federal income tax purposes. Each U.S. holder of Scapa Shares is urged to consult their independent professional adviser immediately regarding the tax consequences of the Offer applicable to such holder, including under applicable United States state and local tax laws, as well as overseas and other tax laws that may be applicable.

Some or all of Scapa’s officers and directors reside outside the U.S., and some or all of its assets are or may be located in jurisdictions outside the United States. Therefore, investors may have difficulty effecting service of process within the U.S. upon those persons or recovering against Scapa or its officers or directors on judgments of U.S. courts, including judgments based upon the civil liability provisions of the U.S. federal securities laws. Further, it may be difficult to compel a non-U.S. company and its affiliates to subject themselves to a U.S. court's judgment. It may not be possible to sue Scapa or its officers or directors in a non-U.S. court for violations of the U.S. securities laws.

Neither the SEC nor any U.S. state securities commission has approved or disproved or passed judgment upon the fairness or the merits of the Offer or determined if this Announcement is adequate, accurate or complete.

Financial information relating to Scapa included in this Announcement and the Scheme Document has been or will have been prepared in accordance with IFRS and may not therefore be comparable to the financial information of U.S. companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

Forward-looking statements

This Announcement (including information incorporated by reference in this Announcement), oral statements made regarding the Offer, and other information published by Scapa, any member of the Scapa Group, SWM, SWM Bidco or any other member of the SWM Group contain statements which are, or may be deemed to be, "forward looking statements". These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as, without limitation, "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "aim", "will", "may", "hope", "continue", "would", "could" or "should" or other words of similar meaning or the negative thereof. Forward-looking statements include, but are not limited to, statements relating to the following: (i) future capital expenditures, expenses, revenues, economic performance, financial conditions, dividend policy, losses and future prospects, (ii) business and management strategies and the expansion and growth of the operations of Scapa, any member of the Scapa Group, SWM, SWM Bidco or any other member of the SWM Group, (iii) the effects of government regulation on the business of Scapa, any member of the Scapa Group, SWM, SWM Bidco or any other member of the SWM Group, (iv) negative effects relating to this Announcement and/or status of the Offer, (v) the possibility that any of the conditions to the Offer will not be satisfied, and (vi) significant transaction costs (including litigation) or unknown liabilities. There are many factors which could cause actual results to differ materially from those expressed or implied in forward?looking statements. Among such factors are changes in global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or disposals. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

These forward looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and on numerous assumptions regarding the business strategies and the environment in which Scapa, any member of the Scapa Group, SWM, SWM Bidco or any member of the SWM Group shall operate in the future and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. By their nature, these forward-looking statements involve known and unknown risks, and uncertainties because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements in this Announcement may cause the actual results, performance or achievements of any such person, or industry results and developments, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. No assurance can be given that such expectations will prove to have been correct and persons reading this Announcement are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Announcement. None of Scapa, any member of the Scapa Group, SWM, SWM Bidco or any other member of the SWM Group, or their respective members, directors, officers, employees, advisers or any person acting on behalf of one or more of them, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur.

None of Scapa, any member of the Scapa Group, SWM, SWM Bidco or any other member of the SWM Group, or their respective members, directors, officers, employees, advisers or any person acting on behalf of one or more of them, has any intention or accepts any obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent legally required. All subsequent oral or written forward-looking statements attributable to Scapa, any member of the Scapa Group, SWM, SWM Bidco or any other member of the SWM Group or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above.

No profit forecasts or estimates

No statement in this Announcement is intended as a profit forecast or estimate for SWM, SWM Bidco or Scapa for any period and no statement in this Announcement should be interpreted to mean that cash flow from operations, earnings, or earnings per share or income of those persons (where relevant) for the current or future financial years would necessarily match or exceed the historical published cash flow from operations, earnings, earnings per share or income of those persons (as appropriate).

Publication on a website

A copy of this Announcement and the documents required to be published pursuant to Rule 26.1 and Rule 26.2 of the Code will be made available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions), free of charge, on SWM’s website at https://ir.swmintl.com/update-disclaimer and Scapa’s website at https://www.scapa.com/News/CashOfferForScapaGroupplc by no later than 12:00 noon on the Business Day following the date of this Announcement.

Neither the content of these websites nor the content of any other website accessible from hyperlinks on such websites is incorporated into, or forms part of, this Announcement.

Requesting hard copy documents

In accordance with Rule 30.3 of the Code, a person so entitled may request a copy of this Announcement (and any information incorporated into it by reference to another source) in hard copy form free of charge. A person may also request that all future documents, announcements and information sent to that person in relation to the Offer should be in hard copy form. For persons who have received a copy of this Announcement in electronic form or via a website notification, a hard copy of this Announcement will not be sent to you unless you have previously notified Scapa's registrar, Link Asset Services that you wished to receive all documents in hard copy form or unless requested in accordance with the procedure set out below.

If you would like to request a hard copy of this Announcement from Scapa please contact Scapa's registrar, Link Market Services Limited, on 0371 664 0321 (from within the UK) or on +44 371 664 0321 (from outside the UK), or by writing to Link Market Services Limited, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. Calls are charged at 12 pence per minute and will vary by provider. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Link Market Services Limited is open between 9:00 a.m. and 5:30 p.m., Monday to Friday, excluding public holidays in England and Wales. Please note that Link Market Services Limited cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

Information relating to Scapa Shareholders

Please be aware that addresses, electronic addresses and certain other information provided by Scapa Shareholders, persons with information rights and other relevant persons for the receipt of communications from Scapa may be provided to SWM Bidco during the Offer Period as required under section 4 of Appendix 4 to the Code.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.9 of the Code

For the purposes of Rule 2.9 of the Code, Scapa confirms that, as at the Latest Practicable Date, it had 187,811,037 ordinary shares of 5 pence each in issue and admitted to trading on AIM. The International Securities Identification Number for Scapa Shares is GB0007281198.

General

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under FSMA if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Time

All references to time in this Announcement are to the time in London, unless otherwise stated.

EBITDA and financial results

References to Scapa’s EBITDA and related financial results on a “continuing basis” indicate results before the impact of IFRS 15 provision release for the Systagenix Acquisition. For further explanation, see paragraph 5 of Appendix 2.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

27 JANUARY 2021

RECOMMENDED CASH OFFER

for

SCAPA GROUP PLC

by

AMS HOLDCO 2 LIMITED

an indirectly wholly-owned subsidiary of Schweitzer-Mauduit International, Inc.

to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006

1.             Introduction

The board of directors of AMS Holdco 2 Limited (“SWM Bidco”), an indirectly wholly-owned subsidiary of Schweitzer-Mauduit International, Inc. (“SWM”), and the Scapa Directors are pleased to announce that they have reached agreement on the terms of a recommended cash offer by SWM Bidco for the acquisition of the entire issued and to be issued ordinary share capital of Scapa.

The Offer is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.

2.             The Offer

Under the terms of the Offer, which shall be subject to the Conditions and further terms set out in Appendix 1 and to the full terms and conditions of the Offer which will be set out in the Scheme Document, each Scheme Shareholder will be entitled to receive:

for each Scheme Share            210 pence in cash

The terms of the Offer value the entire issued and to be issued ordinary share capital of Scapa at approximately £402.9 million on a fully-diluted basis and represent premia of approximately:

• 58.5 per cent. to the six-month volume weighted average price of 132.5 pence as at 26 January 2021 (being the last Business Day before the date of this Announcement); and
• 18.6 per cent. to the Closing Price of 177 pence for each Scapa Share on 26 January 2021 (being the last Business Day before the date of this Announcement).

The Offer also represents an Enterprise Value to EBITDA multiple of 11.3x on a reported basis and 13.8x on a continuing basis for the financial year ended 31 March 2020.

If any dividend, other distribution or return of capital is declared, made or paid in respect of the Scapa Shares on or after the date of this Announcement and prior to the Effective Date, SWM Bidco reserves the right to reduce the consideration payable in respect of each Scapa Share by the amount of all or part of any such dividend, other distribution or return of capital, except where Scapa Shares are or will be acquired pursuant to the Scheme on a basis which entitles SWM Bidco to receive such dividend, other distribution or return of capital and retain it. If SWM Bidco exercises this right or makes such a reduction in respect of a dividend or other distribution, Scapa Shareholders will be entitled to receive and retain that dividend, other distribution or return of capital. Any exercise by SWM Bidco of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Scheme.

The Scheme Shares will be acquired fully paid and free from all liens, charges, equitable interests, encumbrances, options, rights of pre-emption and any other third party rights or interests of any nature whatsoever and together with all rights now or hereafter attaching or accruing to them, including, without limitation, voting rights and the right to receive and retain in full all dividends and other distributions (if any) announced, declared, made or paid, or any other return of capital (whether by reduction of share capital or share premium account or otherwise) made, in each case, by reference to a record date falling on or after the Effective Date.

Full details of the Scheme will be included in the Scheme Document, together with notices of the Court Meeting and the General Meeting. The Scheme Document will be published as soon as reasonably practicable (subject to the availability of the Court to approve the posting of the Scheme Document and by no later than 28 days following the date of this Announcement (unless otherwise consented to by the Panel).

Subject to the satisfaction or waiver of the Conditions, it is expected that the Scheme will become Effective in the second quarter of 2021.

3.             Background to and reasons for the Offer

The SWM Board believes that Scapa presents an attractive opportunity to acquire a highly regarded, vertically integrated healthcare and industrial solutions provider with global presence and a blue-chip client base. SWM expects the combination to deliver a number of benefits to its shareholders given the compelling strategic and financial rationale for transaction.

The combination of SWM and Scapa creates an entity with significant capabilities and scale in AMS with differentiated capabilities and scale to better serve customers’ evolving needs

• The combined company is expected to generate annual revenues of approximately $1.5 billion with operations in over 80 countries, with expanding markets in AMS accounting for approximately 65 per cent. (approaching $1 billion) of annualised group revenues. The integration of in-house substrate production, adhesive formulation and application expertise and global con