TORONTO, May 1, 2012 /CNW/ - HSE Integrated Ltd. ("HSE" or the "Company") (TSX:HSL) is pleased to announce that they have entered into a binding agreement (the "Agreement") with DXP Enterprises, Inc. ("DXP") to complete a business combination (the "Transaction"). DXP is a leading products and service distributor in the United States and trades on the NASDAQ under the symbol DXPE.
The Transaction is anticipated to be completed by way of a statutory plan of arrangement pursuant to the Business Corporations Act (Alberta) whereby DXP would acquire all of the issued and outstanding common shares of HSE (the "HSE Shares"), including any shares issued upon the exercise of options to acquire HSE Shares and the conversion of outstanding convertible debentures prior to closing of the Transaction. Each HSE Share will be acquired by DXP, directly or indirectly, for cash consideration of CDN$1.80 per HSE Share, representing a premium of 59.3% percent to the closing price of the HSE Shares on the Toronto Stock Exchange ("TSX") as at April 30, 2012 and a 53.3% premium to the 30 day weighted-average trading price on the HSE Shares on the TSX. Any convertible debentures not converted prior to the closing of the Transaction will be redeemed in accordance with their terms. The total transaction value, including the assumption of approximately CDN $10.9 million of debt, is approximately CDN $84 million.
The Transaction is subject to the satisfaction of certain conditions including approval of at least 66 2/3% of the votes cast by holders of HSE Shares (the "HSE Shareholders") and potentially disinterested HSE Shareholder approval at a special meeting of HSE Shareholders expected to be held on or about June 29, 2012, and applicable court and regulatory approvals. The Agreement provides for, among other things, customary board support and non-solicitation in favour of DXP, as well as superior proposal provisions. The Agreement also provides for the payment of a termination fee to DXP of C$3,250,000 if the Transaction is not completed under certain circumstances and the payment of an equivalent fee to HSE if the Transaction is not completed in certain circumstances.
The Board of Directors of HSE (the "HSE Board"), as recommended by the Special Committee of the HSE Board and based upon the advice of HSE's financial advisor, has unanimously determined that the Transaction is in the best interest of HSE Shareholders and will recommend that HSE Shareholders vote in favour of the Transaction. The directors and senior officers of HSE, holding approximately 17% of the common shares of HSE, have entered into Voting Support Agreements by which, among other things, they have agreed to vote their HSE Shares in favour of the Transaction.
HSE's President and CEO, Tom Hickey said, "This is a great opportunity for HSE Shareholders. Shareholders will benefit from the fact that the price per share represents a strong premium to our current market price. DXP operates in many geographical markets and a range of energy industry sectors. HSE's expertise in the health, safety, and environmental monitoring industry, and our footprint across Canada will be great benefit to DXP's other subsidiaries, and to its efforts to expand into the Canadian marketplace."
HSE's Chairman of the Board, David Yager said, "The Transaction will be of great benefit to HSE's staff and customers. DXP intends to build upon HSE's staff and service locations across Canada to expand its products and services into the Canadian market. This will permit HSE to deliver more to our valued client base. Our staff will also benefit from opportunities with DXP in other locations from which it operates."
DXP's President and CEO, David Little said, "We are very pleased to announce our agreement to acquire HSE Integrated Ltd. HSE is a quality company with great people. HSE offers us an opportunity to expand and enhance our Safety Services division and Service Center operations while establishing a meaningful presence in Canada. By adding this experienced team and strategic offering to our suite of Safety Services, we can provide a more comprehensive offering to our customers. We are excited by our entrance into Canada and the markets HSE covers and we look forward to our future success together."
"We are excited about the opportunity to acquire a leading safety services business and establish our presence across Canada. The HSE team has done a great job of creating one of the best safety service businesses in the world. We look forward to growing HSE and adding more of our product divisions in Western and Eastern Canada," stated Kent Yee, Senior Vice President of Corporate Development.
Mac McConnell, DXP's CFO stated, "This transaction will be positive for HSE and DXP's customers and employees. We anticipate this acquisition to be accretive to earnings and will expand our suite of safety services."
The full terms and conditions of the Transaction will be described in detail in the Management Information Circular of HSE, which will be filed with the regulatory authorities under HSE's profile on SEDAR (www.sedar.com) and mailed to HSE securityholders in accordance with applicable corporate and securities laws. It is anticipated that the Transaction will be completed in the beginning of the third quarter on or about July 3, 2012.
Fraser Mackenzie Limited is acting as exclusive financial advisor to HSE. Fraser Mackenzie Limited provided an independent fairness opinion to HSE's Board of Directors that, as of the date thereof and subject to the assumptions, limitations and qualifications set out therein, the transaction is fair, from a financial point of view, to HSE shareholders.
HSE is a national supplier of onsite health, safety and environmental services. From its head office in Calgary, Alberta, it serves its customers from field service locations in Alberta, British Columbia, Saskatchewan, Ontario, Nova Scotia, New Brunswick, Newfoundland-Labrador, Michigan, and Texas.
DXP is a leading products and service distributor focused on adding value and total cost savings solutions to MRO and OEM customers in virtually every industry since 1908. DXP provides innovative pumping solutions, integrated supply and MROP (maintenance, repair, operating and production) services that emphasize and utilize DXP's vast product knowledge and technical expertise in pumps, bearings, power transmission, safety and industrial supplies. DXP's breadth of MROP products and service solutions allows DXP to be flexible and customer driven, creating competitive advantages for its customers.
This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "confident", "might" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this news release contains forward-looking information and statements pertaining to the following: (i) the successful completion of Transaction; (ii) HSE's ability to obtain all necessary HSE Shareholder, court and regulatory approvals; and (iii) other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release.
The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements.
HSE cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this news release speak only as of the date of this news release, and HSE assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.
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