QUÉBEC CITY, Nov. 20 /CNW Telbec/ - Cossette Inc. reaffirmed today its support for the privatization transaction (the "Mill Road Transaction") with Mill Road Capital, L.P. ("Mill Road") and its recommendation that shareholders vote in favour thereof.
The management information circular in connection with the special general meeting of shareholders to be held on December 18, 2009 to consider the Mill Road Transaction has been filed with the Canadian provincial securities regulatory authorities and will be mailed to shareholders shortly. The circular contains a determination that the Mill Road Transaction is fair to Cossette's shareholders other than key senior management shareholders (the "Senior Executives") exchanging part of their Cossette shares for shares of a wholly-owned subsidiary of Mill Road (the "Public Shareholders") and is in the best interests of Cossette and the Public Shareholders. The circular also contains a recommendation to the shareholders of Cossette that they vote in favour of the Mill Road Transaction. The Board considered the following reasons for its recommendation:
- Significant Premium. The all-cash consideration of $7.87 per share to
be received pursuant to the Mill Road Transaction represents a premium
of approximately 40% to the volume-weighted average trading price of
the Shares for the 20 trading days ending on November 9, 2009 (the last
trading day prior to the announcement of the Mill Road Transaction on
November 10, 2009) and a premium of 142% over the unaffected share
price of $3.25 on July 17, 2009 (the last trading day prior to Cosmos
Capital Inc. ("Cosmos") announcing its unsolicited and non-binding
proposal on July 20, 2009).
- Extensive Strategic Review Process. Cossette conducted, with the
assistance of its financial and legal advisors, a thorough review
process to identify potential parties interested in acquiring all of
the shares of Cossette or in participating in any other form of
transaction with a view to maximizing value for all shareholders.
- Fairness Opinions of RBC Capital Markets and BMO Capital Markets. RBC
Capital Markets delivered to the Special Committee, and BMO Capital
Markets delivered to the Board, opinions to the effect that, as of
November 9, 2009, the consideration to be received pursuant to the Mill
Road Transaction is fair from a financial point of view to the Public
Shareholders (excluding Cosmos).
- Reasonableness of the Merger Agreement. The terms and conditions of the
Merger Agreement between Cossette and Mill Road, which were reviewed by
the members of the Special Committee in consultation with its legal
advisor, were determined to be fair and reasonable and were the result
of arm's length negotiations between Cossette and Mill Road.
- Superior Proposals. Under the Merger Agreement, the Board has retained
the ability to consider a competing acquisition proposal not solicited
by it which the Board believes, in the exercise of its fiduciary
duties, represents, or could reasonably be expected to lead to, a
superior proposal, and to terminate the Merger Agreement in the event
of such superior proposal, subject to Mill Road's right to match or be
paid a termination fee of $3.25 million. In addition, the support and
voting agreements between Mill Road and the Senior Executives terminate
automatically in the event of the termination of the Merger Agreement.
- All-Cash Consideration. The payment of cash under the Mill Road
Transaction will provide shareholders with immediate liquidity and
certainty of value that is not subject to market fluctuations.
- No Further Due Diligence. The Mill Road Transaction is not subject to
further due diligence.
- Support of the Mill Road Transaction by the Senior Executives. The
Senior Executives, who hold shares representing approximately 30% of
the outstanding shares, have each entered into a support and voting
agreement pursuant to which they have agreed to vote their shares in
favour of the Mill Road Transaction, subject to certain conditions.
- Interests of Other Stakeholders. The nature of a board supported,
negotiated transaction such as the Mill Road Transaction, together with
Mill Road's agreement to cause Cossette to comply with its obligations
under Cossette's retention program and to guarantee the performance of
such obligations as part of the completion of the Mill Road
Transaction, should address the concerns of Cossette's employees at a
time of uncertainty and maintain stability and a high level of service
at Cossette, which should in turn reassure Cossette's clients. In
Cossette's line of business, its most valuable assets are its employees
and its relationships with clients.
Cossette Inc. offers a full range of leading-edge communication services to clients of all sizes, including some of the most prestigious brands in the world. A customer-driven organization built around highly specialized business units, Cossette also offers Convergent Communications(TM), a unique working method that brings added value to the client by integrating various services offered by the Group, including strategic planning and research, advertising, media buying and channel planning, sales promotion, direct response, database and direct marketing, customer relationship management, interactive marketing and technology solutions, public relations, organizational communication and change management, sponsorship and alliance marketing, branding and design, ethnic marketing, business-to-business communications (B2B practices) and print and video production. Cossette has approximately 1,437 employees and offices in Quebec City, Montreal, Toronto, Vancouver, Halifax, New York, Irvine, Los Angeles, London and Shanghai.
SOURCE COSSETTE INC.
For further information: For further information: Financial Analysts only: Martin Faucher, Vice-President and Chief Financial Officer, (418) 521-3784; Investors: Francis Trudeau, Director, Acquisitions and Investor Relations, (514) 282-4633; Medias: Sylvie Isabelle, Optimum Public Relations, (418) 521-3184; Source: Cossette Inc.; www.cossette.com