FEDERAL COURT OF AUSTRALIA
Blackmores Limited, in the matter of Blackmores Limited [2023] FCA 624
File number(s): NSD 435 of 2023 Judgment of: JACKMAN J Date of judgment: 13 June 2023 Catchwords: CORPORATIONS – scheme of arrangement – first Court hearing – application for orders under s 411 of the Corporations Act 2001 (Cth) that company convene meeting of its members to consider scheme of arrangement – whether the arrangement proposed is of such a nature and is cast in such terms that, if approved at the meeting, the Court would be likely to approve the arrangement – no requirement to provide evidence as to due execution under foreign law of deed poll – sufficient disclosure of substantial benefit to director – appropriate to make orders sought Legislation: Corporations Act 2001 (Cth) ss 128, 129, 260A, 411
Federal Court (Corporations) Rules 2000 (Cth) r 3.2
Cases cited: Australian Capital Television Pty Ltd v Minister for Transport and Communications (1989) 86 ALR 119
Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492
First Pacific Advisers LLC v Boart Longyear Ltd [2017] NSWCA 116; (2017) 121 ACSR 136
Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331
Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146
Re 3P Learning Limited [2020] NSWSC 1573
Re Cashcard Australia Limited [2004] FCA 223; (2004) 48 ACSR 738
Re Citadel Group Limited [2020] FCA 1580; (2020) 148 ACSR 598
Re DWS Limited [2020] FCA 1590; (2020) 148 ACSR 616
Re Investa Listed Funds Management Limited [2018] NSWSC 1766
Re Kidman Resources Limited [2019] FCA 1226
Re Oz Minerals Limited [2023] FCA 197
Re RXP Services Limited [2021] FCA 38
Re Simavita Holdings Limited [2013] FCA 1274
Re Staging Connections Group Limited [2015] FCA 1012
Re Uniti Group Limited [2022] FCA 671; (2022) 160 ACSR 602
Re Veda Group Limited [2015] FCA 1506
Re Villa World Limited [2019] NSWSC 1207; (2019) 139 ACSR 550
Re Vita Group Ltd [2023] FCA 400
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 38 Date of hearing: 8 June 2023 Counsel for the Plaintiff: Mr J R Williams SC Solicitor for the Plaintiff: Herbert Smith Freehills Counsel for the Bidder: Mr S K Dharmananda SC Solicitor for the Bidder: Thomson Geer ORDERS
NSD 435 of 2023 IN THE MATTER OF BLACKMORES LIMITED
BLACKMORES LIMITED ABN 35 009 713 437
Plaintiff
ORDER MADE BY:
JACKMAN J
DATE OF ORDER:
8 JUNE 2023
THE COURT ORDERS THAT:
1Pursuant to subsection 411(1) and section 1319 of the Corporations Act 2001 (Cth) (Act):
(a)the Plaintiff convene and hold a meeting (Scheme Meeting) of its members holding fully paid ordinary shares (Blackmores Shareholders) other than Excluded Shareholders (as defined in the Scheme Implementation Deed dated 26 April 2023 (SID), a…
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- AGLC
- Re Blackmores Ltd [2023] FCA 624
- Case
- [2023] FCA 624
- Decision Date
CaseChat Overview and Summary
The court found that the scheme was of such a nature and cast in such terms that, if it achieved the statutory majorities at the scheme meeting, the Court would be likely to approve it. The court noted that there was no requirement to provide evidence as to the due execution under foreign law of the deed poll. Additionally, the court found that there was sufficient disclosure of a substantial benefit to a director. The court also considered the evidence in support of the application, which was modelled closely on the reasoning in Re Vita Group Ltd. The court concluded that it was appropriate to make the orders sought by Blackmores.
The court made orders convening a meeting of Blackmores' members to consider the scheme of arrangement, specifying the date, time, and venue of the meeting, and approving the documents to be distributed to members. The court also made orders regarding the conduct of the meeting, the eligibility of shareholders to vote, and the dispatch of documents to shareholders. The court dispensed with certain requirements of the Federal Court Rules 2000 (Cth) and required Blackmores to publish an announcement via the ASX Market Announcements Platform. The proceedings were adjourned to a later date for the hearing of any application to approve the scheme.
The final orders granted Blackmores the authority to convene and hold the scheme meeting, specified the documents to be distributed to shareholders, and outlined the procedures for the meeting and the dispatch of documents. The court granted liberty to Blackmores to apply for further orders as necessary.
Orders
Orders of the court
1 Pursuant to subsection 411(1) and section 1319 of the Corporations Act 2001 (Cth) (Act):
(a) the Plaintiff convene and hold a meeting (Scheme Meeting) of its members holding fully paid ordinary shares (Blackmores Shareholders) other than Excluded Shareholders (as defined in the Scheme Implementation Deed dated 26 April 2023 (SID), a copy of which is behind Tab 2 of Exhibit HM-1 to the Affidavit of Helen Mediati dated 6 June 2023 (Exhibit HM-1)), for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement proposed to be entered into between the Plaintiff and the Scheme Shareholders (as defined in the SID) (Scheme), the terms of which are contained in Annexure 2 to the Scheme Booklet (a copy of which is Exhibit 1);
(b) the Scheme Meeting be held on 18 July 2023 at 11.00am (Sydney time) at Blackmores’ Warriewood Campus, 20 Jubilee Avenue, Warriewood, New South Wales; and
(c) the following documents be approved for distribution to Blackmores Shareholders:
(i) the Scheme Booklet, substantially in the form of Exhibit 1 (which Scheme Booklet be and is hereby approved for the purposes only of subsection 411(1) of the Act); and
(ii) the proxy form in respect of the Scheme Meeting (for Electing Postal Shareholders and Non Electing Postal Shareholders only (each as defined in order 5 below), substantially in the form of Tab 9 to Exhibit HM-1 (Proxy Form)).
2 Subject to these orders, the Scheme Meeting be convened, held and conducted in accordance with:
(a) the provisions of Part 2G.2 of the Act that apply to a meeting of the members of the Plaintiff; and
(b) the provisions of the Plaintiff’s constitution that apply in relation to meetings of members and that are not inconsistent with Part 2G.2 of the Act.
3 The Blackmores Shareholders who are eligible to vote at the Scheme Meeting will be those whose names are recorded in the register of members of the Plaintiff at 7.00pm (Sydney time) on 16 July 2023 (Voting Record Date).
4 Pursuant to section 1319 of the Act:
(a) Wendy Stops, or failing her, Stephen Roche, be chairperson of the Scheme Meeting;
(b) the chairperson of the Scheme Meeting has the power to adjourn the Scheme Meeting in their absolute discretion to such time, date and place (including as to whether the adjourned meeting should be held electronically) as they consider appropriate;
(c) at the Scheme Meeting, each Blackmores Shareholder, present and entitled to vote, will be entitled to one vote for each fully paid ordinary share in the capital of the Plaintiff that the Blackmores Shareholder is registered as holding at the Voting Record Date;
(d) at the Scheme Meeting, a Blackmores Shareholder, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum;
(e) a poll must be taken to decide the resolution put to the vote at the Scheme Meeting and any provision in the constitution of the Plaintiff requiring voting to be by show of hands will be disregarded for this purpose.
5 On or around 14 June 2023 there be dispatched to each Blackmores Shareholder whose name is recorded in the Plaintiff’s register of members at 7.00pm (Sydney time) on 9 June 2023 (Register Time):
(a) in the case of Blackmores Shareholders who have elected to receive shareholder communications electronically (Email Shareholders), an email which includes access by an embedded link to an online portal or website where Email Shareholders may:
(i) access an electronic copy of the Scheme Booklet; and
(ii) lodge their proxy for the Scheme Meeting and voting instructions online; and
(b) in the case of Blackmores Shareholders who have elected to receive hard copy communications (Electing Postal Shareholders) and whose registered address is in Australia, the following documents by pre-paid post addressed to the relevant addresses recorded in the Plaintiff's register:
(i) a printed copy of the Scheme Booklet;
(ii) a personalised single Proxy Form; and
(iii) a reply paid envelope for the return of that Blackmores Shareholder’s Proxy Form; and
(c) in the case of Blackmores Shareholders who have not elected to receive electronic or hard copy communications (Non Electing Postal Shareholders) and whose registered address is in Australia, the following documents by pre-paid post addressed to the relevant addresses recorded in the Plaintiff's register:
(i) a letter in respect of the Scheme Meeting, which contains the address of a website which enables Non Electing Postal Shareholders to access a copy of the Scheme Booklet (Non Electing Postal Shareholder Letter);
(ii) a personalised single Proxy Form;
(iii) a reply paid envelope for the return of that Blackmores Shareholder’s Proxy Form; and
(d) in the case of Electing Postal Shareholders and Non Electing Postal Shareholders whose registered address is outside Australia, the following documents by pre-paid airmail post addressed to the relevant addresses recorded in the Plaintiff’s register:
(i) for Non Electing Postal Shareholders, a Non Electing Postal Shareholder Letter;
(ii) for Electing Postal Shareholders, a printed copy of the Scheme Booklet;
(iii) a personalised Proxy Form; and
(iv) a self-addressed envelope for the return of that Blackmores Shareholder’s Proxy Form.
6 The Plaintiff is not obliged to send documents in accordance with Order 5 to any person who becomes a Blackmores Shareholder after the Register Time.
7 The time by which proxy forms must be returned or lodged in accordance with the instructions given on the proxy form is at 11:00am (Sydney time) on 16 July 2023.
8 Pursuant to r 1.3 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules), compliance with the following requirements of the Rules is dispensed with:
(a) r 2.4(1), to the extent that rule requires the affidavit filed with the Originating Process to state the facts in support of the process;
(b) r 2.15;
(c) r 3.2(b)(ii); and
(d) r 3.4 and Form 6.
9 The Plaintiff is to publish an announcement via the ASX Market Announcements Platform in substantially the form set out at Tab 7 of Exhibit HM-1 by no later than 13 July 2023.
10 The proceedings be adjourned to 9.15am (Sydney time) on 20 July 2023 before Justice Jackman for the hearing of any application to approve the Scheme.
11 The Plaintiff be granted liberty to apply.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Under the proposed Scheme, Kirin Sub will acquire all of the outstanding shares in Blackmores for all-cash consideration of $95.00 per Blackmores share less the cash amount of any special dividend which may be paid by Blackmores prior to implementation of the Scheme (Scheme Consideration). The maximum aggregate amount payable by Kirin Sub as Scheme Consideration, having regard to Blackmores’ current issued share capital and assuming Blackmores does not pay a special dividend in connection with the Scheme, will be approximately $1,858 million. The effect of the Scheme will be to make Blackmores a wholly owned subsidiary of Kirin. It is proposed that Blackmores will be delisted from the ASX following implementation of the Scheme. Blackmores and Kirin entered into a Scheme Implementation Deed (SID) on 26 April 2023, under which they agreed to implement the Scheme subject to the satisfaction, or waiver, of various conditions precedent. If those conditions precedent are satisfied or waived (as applicable), the Scheme will be implemented in the following manner:(a)by no later than the business day before the Implementation Date (currently expected to be 10 August 2023), Kirin or Kirin Sub will deposit (or will procure the deposit) into an Australian dollar denominated trust account with an authorised deposit taking institution in Australia, operated by Blackmores or Computershare (Blackmores’ share registry) as trustee for the Blackmores Shareholders, an amount equal to the aggregate Scheme Consideration to be provided to Blackmores Shareholders (clause 5.1(a) of the Scheme); (b)Blackmores will, on the Implementation Date, pay the Scheme Consideration to each Scheme Shareholder (clause 5.1(b) of the Scheme); and(c)subject to and following the Scheme Consideration being provided to the Scheme Shareholders, all of the Blackmores shares held by Blackmores Shareholders will be transferred to Kirin Sub (clause 4.2(a) of the Scheme). The evidence in support of the application for the orders sought at the first Court hearing has been modelled closely on my reasoning in Re Vita Group Ltd [2023] FCA 400. That is unsurprising in light of the fact that a number of partners of Herbert Smith Freehills, the solicitors for Blackmores, have been leaders in the public debate as to improving the efficiency of scheme hearings, notably Mr Tony Damian and Mr Andrew Rich. The evidence may be summarised as follows: (a)the affidavit of Blackmores’ solicitor, Mr Hastings, affirmed 16 May 2023, exhibiting an ASIC company search for Blackmores obtained from ASIC on 16 May 2023, which provides formal evidence that Blackmores is a Part 5.1 body;(b)the affidavit of Blackmores’ Group General Counsel and Company Secretary, Ms Mediati, sworn 6 June 2023, giving evidence of:(i)the business and capital structure of Blackmores;(ii)verification of the factual information related to Blackmores in the Scheme Booklet;(iii)notification to ASIC of the hearing and provision to ASIC of a draft of the Scheme Booklet and the Scheme more than 14 days ago;(iv)the ability and willingness to act as the proposed chairperson and alternate chairperson of the proposed Scheme Meeting, for the purposes of r 3.2 of the Federal Court (Corporations) Rules 2000 (Cth), given on information and belief (and I note at this point that I dispense with the requirement under r 3.2(b)(ii), consistently with Re Vita Group Ltd at [22]);(v)the amount of the break fee contemplated by the SID as a percentage of the implied equity value of Blackmores based on the Scheme Consideration; and(vi)exhibiting the SID and the draft Scheme Booklet.(c)tender of the “usual letter” from ASIC, which provides evidence that it has had a reasonable opportunity to examine the terms of the Scheme and the draft explanatory statement, and that it does not propose to appear at the first Court hearing; and(d)the affidavit of Kirin’s Deputy General Manager, Corporate Strategy Department, Mr Yamazaki, giving evidence of verification of the factual information related to Kirin in the Scheme Booklet.