MERGER BY TAKEOVER
OF VL FINANCE SAS
BY
SARTORIUS STEDIM BIOTECH SA
REPORT OF THE MERGER AUDITOR
ON THE VALUE OF THE CONTRIBUTIONS
REPORT OF THE MERGER AUDITOR ON THE VALUE OF THE CONTRIBUTIONS
AS PART OF THE MERGER BY TAKEOVER
OF VL FINANCE SAS BY SARTORIUS STEDIM BIOTECH SA
To the shareholders of
SARTORIUS STEDIM BIOTECH SA
Avenue de Jouques
Zone Industrielle des Paluds
13 400 Aubagne
In accordance with the mission entrusted to us by order of the President of the Commercial Court of
Marseille on 7 January 2016 as part of the proposed merger of the companies SARTORIUS STEDIM
BIOTECH and VL FINANCE by takeover of the second by the first, we have prepared this report
required by Article L.236-10 of the French commercial code on the assessment of the value of the
contributions.
The contributed net assets were settled upon in the draft merger treaty signed by the
representatives of the companies concerned dated 18 February 2016. It is our responsibility to
express a conclusion on the fact that the value of the contributions is not overstated. To that end, we
implemented the due diligence measures that we deemed necessary with regard to the professional
doctrine of the French national board of auditors relating to this mission. These due diligence
measures are intended to assess the value of the contributions, ensure that it is not overstated, and
verify that it corresponds to at least the nominal value of the shares to be issued by the acquiring
company plus any merger premium.
In addition, we have prepared a separate report on the terms of the merger assessing the relevance
of the relative values attributed to the shares of SARTORIUS STEDIM BIOTECH and VL FINANCE and
the fairness of the proposed exchange ratio.
Given that our mission ended with the filing of the report, we have no responsibility to update this
report in order to take account of facts and circumstances subsequent to the date of its signing.
At no time did we find ourselves in one of the cases of incompatibility, prohibition, and
disqualification provided for by law.
Our findings and conclusions are presented below as follows:
I.
Presentation of the transaction and description of the contributions
II. Due diligence measures performed and assessment of the value of the contributions
III. Assessment of special benefits
IV. Conclusion
CBP Audit & Associés – Accounting and Auditing Firm
A simplified joint stock company (SAS) with a capital of 83,500 euros, member of the board of accountants of the Region of Marseille and the
institute of Aix-en-Provence
Registered office: 2 boulevard de Gabès - 13008 Marseille
Secondary auditing office: 3 Quai Kléber 67 000 Strasbourg
Tel.: 04-91-80-10-53 / Fax: 04-91-80-85-45
www.cbpaudit.com
SIRET: 515 125 342 00029 / APE Code: 6920Z
I. Presentation of the transaction and description of the contributions
The proposed transaction consists in the merger by takeover of VL FINANCE by SARTORIUS STEDIM
BIOTECH.
The companies participating in the transaction described below belong to the SARTORIUS AG Group,
one of the leading suppliers of equipment and services for the process of development, quality
assurance, and production particularly in the biopharmaceutical, chemical, and agri-food industries
worldwide.
I.1. Companies involved
Acquiring company SARTORIUS STEDIM BIOTECH SA:
SARTORIUS STEDIM BIOTECH is a public limited company (SA) with a capital of 15,367,238 euros
composed of 15,367,238 shares with a nominal value of 1 euro each, all in the same category, fully
subscribed and paid up.
The registered office is located at Avenue de Jouques, Zone Industrielle Les Paluds, 13 400 Aubagne.
It is registered with the trade and companies register of Marseille under number 314 093 352.
The shares of SARTORIUS STEDIM BIOTECH are admitted to trading on the EURONEXT PARIS market –
Compartment A (ISIN code: FR0000053266).
SARTORIUS STEDIM BIOTECH’s corporate purpose, both in France and abroad, is:
-
The acquisition, optimisation, administration, and management of equity shares, securities,
voting rights, and other ownership rights in all companies regardless of its activity, by all
means, including by way of creation of new companies, contribution in kind of all ownership
rights, subscription rights, merger, purchases of securities and other ownership rights, or
formation of companies;
-
The direction, facilitation, and coordination of the activity of its subsidiaries and holdings;
where appropriate, the provision of all administrative, financial, accounting, or legal services
to these entities, the provision of all opinions and advice, or the commissioning of all studies
or research necessary for their development and growth;
-
And more generally, all operations involving real and other property, financial operations, or
civil operations relating directly or indirectly to this subject or to any other similar or related
subject or of a nature likely to directly or indirectly promote the goal pursued by the
company, its extension, or its development.
The company closes its annual accounts on 31 December.
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Acquired company VL FINANCE SAS:
VL FINANCE is a simplified joint stock company (SAS) with a capital of 4,614,710 euros, divided into
461,471 shares with a nominal value of ten euros each, all in the same category, fully subscribed and
paid up.
The registered office is located at Avenue de Jouques, Zone Industrielle Les Paluds, 13 400 Aubagne.
It is registered with the trade and companies register of Marseille under number 314 093 112.
VL FINANCE does not make public offerings.
VL FINANCE’s corporate purpose is:
-
The acquisition of equity interest or control of all companies, organisations, business
combinations, or undertakings by way of purchase, contribution, subscription, or any other
manner;
-
All information technology, management, and administration services for its subsidiaries or
for the benefit of companies in which it has interests;
-
And generally, carry out all commercial, industrial, or financial operations or operations
involving real or other property, relating in whole or in part to the company’s purpose, or to
all similar, related, or connected purposes, or that would be of a nature to facilitate or
develop its achievement;
-
More particularly, the company’s purpose, both in France and abroad, is to acquire any equity
interest, whether majority or not, in industrial or commercial companies having a direct or
indirect relationship with the sector involved in the manufacture or sale of medical or
paramedical equipment or equipment or products requiring draconian conditions of sterility
or microbial safety and, more generally, conditions of manufacture in controlled ambient
conditions, dispose of them and/or reap the benefits of these equity interests, and contribute
to their development by providing any advice or financial assistance that it deems
appropriate;
-
And more generally, all operations involving real or other property and financial operations
that may relate directly or indirectly to the activities below or that would be likely to facilitate
their accomplishment;
-
And, if needed, all industrial and commercial operations relating to:
-
The creation, acquisition, rental, or lease management of all businesses, factories,
and workshops relating to any of the activities specified above;
-
The takeover, acquisition, exploitation, or disposal of all processes, patents, and
intellectual property rights concerning such activities.
The company closes its annual accounts on 31 December.
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I.2. Relationships between the companies
Capital tie
VL FINANCE holds 1,642,095 shares of the 15,367,238 shares comprising the share capital of
SARTORIUS STEDIM BIOTECH, i.e., 10.69% of its capital and 12.16% of its voting rights.
SARTORIUS STEDIM BIOTECH holds no equity interest in the capital of VL FINANCE.
SARTORIUS STEDIM BIOTECH and VL FINANCE are both controlled by SARTORIUS AG, a German
company whose registered office is located at Weender Landstrasse 94-108, 37075 Göttingen,
Germany.
Executives and officers in common
The two companies have an executive in common: Mr Joachim Kreuzburg, Chairman of VL FINANCE
and also Chairman of the Board of Directors and Managing Director of SARTORIUS STEDIM BIOTECH.
I.3. Reasons for and goal of the merger
The transaction consists in a merger by takeover of VL FINANCE by SARTORIUS STEDIM BIOTECH. The
purpose of this transaction is to simplify and streamline the structure of the SARTORIUS AG Group.
Thus, SARTORIUS AG’s equity interests are currently as follows:
- SARTORIUS AG directly holds 100% of the share capital of VL FINANCE;
- SARTORIUS AG also holds 74.36% of the share capital of SARTORIUS STEDIM BIOTECH:
 63.67% of the share capital of SARTORIUS STEDIM BIOTECH directly;
 10.69% of the share capital indirectly through VL FINANCE.
In addition, VL FINANCE’s sole activity is a holding activity, and it now holds only a 10.69% interest
in the share capital of SARTORIUS STEDIM BIOTECH. Therefore, its existence is no longer
justified.
The proposed merger would thus make it possible to reorganise and simplify the holding structure of
SARTORIUS STEDIM BIOTECH by SARTORIUS AG and eliminate the financing costs specific to
VL FINANCE.
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I.4. Bases of the merger
Reference accounts
The merger shall be carried out with retroactive effect, from an accounting and tax point of view, to
1 January 2016. From a legal point of view, the merger shall take effect on the date when it is
definitively adopted by the extraordinary general meeting of SARTORIUS STEDIM BIOTECH and by the
sole shareholder of VL FINANCE, i.e., on 5 April 2016.
The terms and conditions of the merger by takeover of VL FINANCE by SARTORIUS STEDIM BIOTECH
are based on the annual financial statements of the two companies as at 31 December 2015, the
closing date of their most recent financial year.
The annual financial statements of SARTORIUS STEDIM BIOTECH were approved by the board of
directors on 18 February 2016. The general meeting to approve the financial statements will take
place on 5 April 2016.
The annual financial statements of VL FINANCE were approved by the Chairman on 18 February
2016. The date of approval of the financial statements by the sole shareholder is scheduled for 5
April 2016.
Method used for valuation of the contributions
Given that the proposed transaction consists in a reorganisation transaction internal to the
SARTORIUS AG Group, the assets and liabilities that make up VL FINANCE’s contributions shall be
transferred to SARTORIUS STEDIM BIOTECH and shall therefore be recorded in its accounts at the net
book value as indicated on VL FINANCE’s approved annual financial statements as at 31 December
2015.
This valuation of the contributions at the net book value results from the application of CRC
regulation 2004-01 of 4 May 2004 on the accounting treatment of mergers and similar transactions,
given the fact, in particular, that the participating companies are, both before and after the
completion of the transaction, under the common control of SARTORIUS AG.
I.5. Ownership, enjoyment, and conditions
The terms of the transaction detailed in the draft merger treaty can be summarised as follows:
-
the date of final completion of the transaction is defined as being the day when the merger has
become final as a result of the fulfilment of the conditions precedent stipulated in the draft
merger treaty and as a result of the decisions of the sole shareholder of VL FINANCE, the
acquired company, and the Extraordinary General Meeting of SARTORIUS STEDIM BIOTECH
(acquiring company), scheduled for 5 April 2016;
-
However, the parties have set the date of enjoyment of all the acquired company’s assets and
liabilities by the acquiring company retroactively to 1 January 2016. The results of transactions
performed by the acquired company VL FINANCE as from 1 January 2016 and until the date of
final completion of the merger shall therefore be exclusively for the benefit of the acquiring
company SARTORIUS STEDIM BIOTECH, which shall incorporate the said transactions into its
accounts;
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-
From a tax point of view, with respect to corporate taxes, the transaction is placed under the tax
regime provided for in Article 210 A of the French general tax code;
-
With respect to VAT, the transaction is placed under the regime provided for by Article 257 bis of
the French general tax code, which provides for exemption from VAT for deliveries of goods and
services between persons and entities liable for VAT and occurring as part of the transfer of a
totality of assets or part thereof. In addition, the acquiring company is deemed to continue the
person of the acquired company;
-
For tax purposes, the merger by takeover of VL FINANCE by SARTORIUS STEDIM BIOTECH shall be
retroactive to 1 January 2016, also for accounting purposes;
-
The merger shall entail the dissolution without liquidation of the acquired company and the
transfer of all its assets and liabilities to the acquiring company in their state as at the date of
final completion of the merger. As such, the transaction shall entail transfer of all rights, assets,
and obligations of VL FINANCE to SARTORIUS STEDIM BIOTECH.
The completion of the merger, the consequential capital increase of the acquiring company, and the
dissolution of the acquired company shall be conditional on:
-
The registration by the AMF (French financial markets authority) of the document referred to
in Article 212-34 of the AMF’s general regulation;
-
The approval by SARTORIUS AG, sole shareholder of the Acquired Company, of the merger
and early dissolution without liquidation of VL FINANCE; and
-
The approval by the combined general meeting of the acquiring company (i) of the merger as
well as the capital increase, a consequence of the merger, and (ii) the reduction of the capital
of the acquiring company in order to cancel the treasury shares, a consequence of the
takeover of the acquired company’s assets.
I.6. Description of the contributions
The assets and liabilities contributed by VL FINANCE retain their net book value as at 31 December
2015.
The table below summarises the components of the contributions as at this date:
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CONTRIBUTED ASSETS IN €
Other equity interests
Other long-term investments
Other receivables
Cash and cash equivalents
Contributed assets
4 485 395
676 167
88 186
9 806
5 259 554
LIABILITIES TAKEN ON IN €
Borrowings and financial debts
Trade payables
Taxes and social security contributions due
Liabilities taken on
CONTRIBUTED NET ASSETS IN €
747 875
61 829
0
809 704
4 449 850
I.7. Consideration for the contributions and capital increase
The consideration for the contributions, determined through the exchange ratio of 71 shares of
SARTORIUS STEDIM BIOTECH (acquiring company) for 20 shares of VL FINANCE (acquired company),
leads to the creation of 1,638,222 new shares in favour of Sartorius AG, sole shareholder of the
acquired company, VL FINANCE.
Given that the nominal value of the SARTORIUS STEDIM BIOTECH shares is €1, the capital increase
amounts to €1,638,222.
On the basis of the draft merger treaty, the difference between the value of the assets received in
respect of the merger, i.e., €4,449,850, and the amount of the capital increase of €1,638,222 is
€2,811,628. This amount constitutes the merger premium to be carried in the acquiring company’s
liabilities and to which the rights of the old and new shareholders shall relate.
We refer to our report on the consideration for the contributions detailing the methods for
determining the exchange parity leading to the capital increase described above.
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II.
Due diligence measures performed and assessment of the value of the contributions
II.1. Due diligence measures performed
We implemented the due diligence measures that we deemed necessary in accordance with the
professional doctrine of the national institute of auditors related to this type of mission for the
purpose of:
- Checking the reality of the contributions and the completeness of the assets and liabilities
transferred to SARTORIUS STEDIM BIOTECH,
- Assessing the value of the contributions taken individually and overall,
- Assessing the impact on the individual value of the contributions of events occurring
between the effective date of the transaction and the date of our report.
The purpose of our mission is to provide clarification to the shareholders of SARTORIUS STEDIM
BIOTECH on the non-overvaluation of the value of the consideration. It is therefore neither an audit
mission nor a limited review mission and cannot be considered a “due diligence” mission and does
not include all the work necessary for that type of intervention.
This mission ends with the filing of our report; it is not our responsibility to follow up on any
subsequent events possibly occurring between the date of our report and the date of the decisions
of the sole shareholder deciding on the transaction.
Our work primarily consisted in:
-
Familiarisation with SARTORIUS STEDIM BIOTECH and VL FINANCE and their environment;
-
Interviews with the persons in charge of the transaction, particularly the financial and legal
department of the SARTORIUS Group, in order to understand the context in which it
operates and to analyse the envisaged accounting, legal, and tax arrangements.
-
Familiarisation with the terms of the transaction and the draft merger treaty;
-
Familiarisation with the reports of the statutory auditors of SARTORIUS STEDIM BIOTECH and
VL FINANCE as at 31 December 2014, which indicate unreserved certification;
-
An interview with the financial department of SARTORIUS STEDIM BIOTECH and VL FINANCE
and their statutory auditors in order to validate with them the quality of the financial
statements and potential areas of risk and to orally review the conclusions of the audit work
on the financial statements as at 31 December 2015;
-
A review of the accounting principles and methods applied by VL FINANCE for the valuation
of the contributed assets and liabilities;
-
An analysis of the assets contributed by VL FINANCE presenting a risk of overvaluation as at
31 December 2015;
-
An analysis of the completeness and the valuation of the liabilities intended to be taken on as
at 31 December 2015;
-
An assessment of the overall value of the contributions on the basis of, in particular, our
work performed in our capacity as merger auditor;
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-
An analysis of the result of VL FINANCE’s activity over the period of retroactivity, between 1
January 2016 and the date of this report, in order to ensure the absence of losses over this
period;
-
Obtaining a representation letter signed by the Chairman of VL FINANCE.
II.2. Assessment of the value of the contributions
The assets contributed and liabilities taken on retain their net book value as at 31 December 2015.
This net book value applied for the transcription of the contributions in the accounts of the
beneficiary company is consistent with the provisions of CRC regulation 2004-01 of 4 May 2004 on
the accounting treatment of mergers and similar transactions.
Individual value of the contributions
Given that the contributions are based on the net book values as at 31 December 2015, we worked
with the financial department of VL FINANCE and its statutory auditor to ensure that:
- there were no elements calling into question the unreserved certification of the company’s
financial statements as at 31 December 2015;
-
there were no changes in the valuation methods applied to the assets and liabilities intended
to be contributed between 1 January 2016 and the date of our report;
-
no significant events between 1 January 2016 and the date of our report called into question
the valuation of the assets and liabilities, outside of transactions related to the ongoing
operation of the activity.
The annual financial statements closed as at 31 December 2015 were approved by the Chairman on
18 February 2016.
In order to ensure the reality and completeness of the contributions taken individually, we verified
the assets held, the rights retained, and the commitments to the third parties constituting the
liabilities, particularly by using the accounting documents and files made available to us.
On the basis of our work, we did not identify any elements likely to lead to an overvaluation of the
assets or an undervaluation of the liabilities intended to be contributed to SARTORIUS STEDIM
BIOTECH.
Our checks on the individual value of the contributions as at 31 December 2015 do not call for
other comments from us.
Overall value of the contributions
We are also responsible for assessing the overall value of the contributions and verifying that this
value is at least equal to the value of the contributions proposed in the draft merger treaty.
As such, we examined the valuation approaches implemented by VL FINANCE in determining the
overall value of the company for the purpose of the exchange ratio and mainly the adjusted net
SARTORIUS STEDIM BIOTECH / VL FINANCE Merger - Report of the merger auditor on the value of the contributions
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assets method, the method chosen by Management for determination of the value of the VL
FINANCE security.
This work is presented in our report on the contributions.
In particular, we made sure of:
- The relevance and consistency of the valuation method for the SARTORIUS STEDIM BIOTECH
securities with the actual value, given that this value is intended to replace the net book
value of the SARTORIUS STEDIM BIOTECH securities on the assets side of the balance sheet in
the adjusted net assets method;
-
The completeness of the market value revaluations of the assets and liabilities recorded on
VL FINANCE’s balance sheet.
The actual value of VL FINANCE thus determined is €542 M.
On the basis of this work, the actual value of the overall contributions according to the adjusted
net assets method of €542 M is greater than the value of the contributions of €4.4 M proposed in
the draft merger treaty.
II.3. Result over the period of retroactivity
According to the information obtained from VL FINANCE’s management, the result of the activity
over the interim period from 1 January 2016 to the date of actual completion of the merger will not
cause a decrease in the value of the overall contributions to a level lower than the contributed net
book assets, which therefore will not call into question the release of the contributions.
III. Assessment of special benefits
In reading the articles of association of VL FINANCE and the draft merger treaty, there are no special
benefits attached to the VL FINANCE shares.
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IV. Conclusion
On the basis of our work, and as at the date of this report, our opinion is that the adopted value of
the contributions of €4,449,850 is not overstated and, accordingly, that the contributed net assets
are at least equal to the amount of the acquiring company’s capital increase.
Marseille, 4 March 2016
The Merger Auditor
CBP Audit & Associés
Christine Blanc-Patin
Signed on French original report
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