- Premium offer represents the culmination of thorough value maximization process -
CONCORD, ON, Jan. 30, 2012 /CNW/ - RuggedCom Inc. ("RuggedCom") (TSX: RCM), a leading provider of rugged communications networking solutions designed for mission-critical applications in harsh environments, announced today that it has entered into an agreement (the "Support Agreement") with Siemens Canada Limited ("Siemens") pursuant to which Siemens has agreed, subject to the terms of the Support Agreement, to make an offer to purchase all outstanding common shares of RuggedCom by way of take-over bid at a price of C$33.00 per share in cash (the "Siemens Offer").
Each member of the Board of Directors as well as RuggedCom's Chief Executive Officer and Chief Financial Officer, who together hold an aggregate of 1,691,192 RuggedCom shares or approximately 13.6% of the issued and outstanding shares of RuggedCom have entered into Lock-Up Agreements in conjunction with the Support Agreement. The equity value of the proposed transaction, based on RuggedCom's 13,321,740 issued and outstanding common shares on a fully-diluted basis, is approximately C$440 million1.
The Siemens Offer represents a premium of 142% to the closing price of RuggedCom shares on the Toronto Stock Exchange on December 16, 2011, the last trading day prior to Belden Inc. ("Belden") announcing its intention to make an unsolicited take-over bid for RuggedCom. The Siemens Offer also represents a 50% premium relative to Belden's unsolicited take-over bid at an offer price of C$22.00 per share.
After receiving the recommendation of its Special Committee (the "Special Committee") and in consultation with its financial and legal advisors, the Board of Directors of RuggedCom has unanimously determined that the Siemens Offer is in the best interests of RuggedCom. Accordingly, the RuggedCom Board has agreed to recommend to RuggedCom shareholders that they accept the Siemens Offer and tender their shares to the offer.
TD Securities Inc. ("TD Securities"), the financial advisor to RuggedCom, has provided an opinion to the effect that, as of the date of such opinion and based on and subject to the scope of review, assumptions, limitations, and other matters described in such opinion, the consideration offered to RuggedCom shareholders pursuant to the Siemens Offer is fair, from a financial point of view, to RuggedCom shareholders.
Peter Crombie, Chairman of the RuggedCom Board of Directors, said, "The Siemens Offer is the culmination of a thorough and vigorous process run by the Special Committee to identify superior alternatives to the Belden Offer. Given the level of interest from qualified potential parties, the Special Committee facilitated a process to maximize the value on offer for RuggedCom. We believe the Siemens Offer, which has the unanimous support of the RuggedCom Board, provides fair value to our shareholders."
Marzio Pozzuoli, RuggedCom's Chief Executive Officer, said, "We have great respect for Siemens and believe RuggedCom will be well positioned for continued growth and industry leadership under their ownership. We are confident that, in addition to providing excellent value to our shareholders, this transaction will be beneficial to RuggedCom's valued customers and employees over the long term."
Siemens is one of the largest and most diversified companies in the world of electronics and electrical engineering, operating in the industrial, energy, healthcare and infrastructure and cities sectors. The company has approximately 4,400 employees in Canada, working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of solutions for individual requirements.
Additional Detail Regarding RuggedCom's Value Maximization Process
Following Belden's announcement on December 19, 2011 of its intention to offer C$22.00 per share for RuggedCom, the RuggedCom Special Committee solicited proposals from a number of parties as part of its value maximization process. As a result of this solicitation, RuggedCom received enquiries from a number of parties, including Siemens, expressing an interest in acquiring RuggedCom. The Special Committee and TD Securities engaged in a robust process with each of the parties who expressed an interest in acquiring RuggedCom. This process culminated in the proposed transaction with Siemens. In the view of the Special Committee and the full RuggedCom Board, the Siemens Offer is the most attractive offer made for the shares of RuggedCom and represents the best alternative available for the company and its shareholders.
Details of the Siemens Offer
The Siemens Offer will be made through a wholly-owned subsidiary and Siemens expects to mail its Take-Over Bid Circular in early February 2012. The Siemens Offer will be open for acceptance for a period of not less than 35 days. The Board of RuggedCom has agreed that its Directors' Circular recommending the Siemens Offer will be mailed to shareholders at the same time as or as soon as reasonably practicable after the mailing of Siemens Take-Over Bid Circular. The full details of the Siemens Offer will be contained in the Take-Over Bid Circular. Copies of the Take-Over Bid Circular and the Directors' Circular will be available online at www.ruggedcom.com and www.sedar.com. RuggedCom shareholders are encouraged to read both documents carefully and in their entirety.
Pursuant to the Support Agreement, RuggedCom may not solicit other offers, but is entitled to consider unsolicited acquisition proposals made by third parties. The Support Agreement also provides for, among other things, customary provisions relating to support of the Siemens Offer by RuggedCom's Board of Directors, right to match covenants in favour of Siemens in the event RuggedCom receives an acquisition proposal that is superior to the Siemens Offer and the payment to Siemens of a termination fee of $15 million if the acquisition is not completed in certain specified circumstances.
The obligation of Siemens to take up and pay for RuggedCom shares pursuant to the Siemens Offer is subject to certain conditions, including a sufficient number of shares being tendered to the Siemens Offer such that Siemens would own at least 66⅔% of RuggedCom's shares on a fully-diluted basis (the "minimum tender condition"), a customary condition relating to Siemens obtaining appropriate approvals or a "no-action" letter under the Competition Act (Canada) and the absence of a material adverse change with respect to RuggedCom and certain other conditions. The Siemens Offer is not conditional on financing. Siemens may waive or amend certain conditions of the Siemens Offer in certain circumstances without RuggedCom's approval, including amending the minimum tender condition to not less than 50.1% of the RuggedCom shares outstanding on a fully-diluted basis. In that event, Siemens must extend its offer to the extent required to ensure that the expiry date of the Siemens Offer will not be less than 10 days from the date of the amendment. If its offer is successful, Siemens has agreed to take steps available to it under relevant corporate and securities laws to acquire any remaining outstanding RuggedCom shares held by the public.
TD Securities Inc. is acting as financial advisor and McCarthy Tétrault LLP is acting as legal advisor to the Special Committee, and Bennett Jones LLP is acting as legal counsel to RuggedCom.
Copies of the Support Agreement and Lock-Up Agreements will be available at www.sedar.com.
How to Withdraw Your Shares From the Belden Offer
The RuggedCom Board maintains its recommendation that shareholder reject the Belden Offer and not tender their shares to this offer. Shareholders who may have already tendered their shares to the Belden Offer and wish to withdraw them are asked to contact RuggedCom's information agent, Georgeson Shareholder Communications Canada Inc., at 1-866-374-9877 or email@example.com.
About RuggedCom Inc.
RuggedCom is a leading provider of rugged communications networking solutions designed for mission-critical applications in harsh environments. RuggedCom's technology solutions include Ethernet switches, network routers, wireless devices, serial servers, media converters, software and professional services. RuggedCom's products are designed for use in harsh environments such as those found in electrical power substations and "Smart Grids", intelligent transportation systems, industrial process control and military applications.
(1) Equity value of transaction excludes cash proceeds from exercise of outstanding options of approximately $15 million.
Forward Looking Information
This news release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Forward-looking statements include all disclosure regarding possible events, conditions, results of operations, the Belden Offer or the Siemens Offer that is based on assumptions about future economic conditions and courses of action. RuggedCom cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements are based on RuggedCom's current plans, estimates, projections, beliefs and opinions, and RuggedCom does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change, except as required by law. When used in this news release, words such as "plans", "expects", "intends", "anticipates", "will", "believes" or variations of such words and phrases often, but not always, identify forward-looking statements. The forward-looking information in this news release includes, but is not limited to, the Siemens Offer and the Belden Offer. Although RuggedCom believes that the expectations reflected in such forward-looking statements are reasonable, all forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. The factors which could cause actual results or events to differ materially from current expectations include, but are not limited to: Siemens's ability to consummate the proposed transaction (including the satisfaction of the conditions to the Siemens Offer), continued growth in RuggedCom's key markets; RuggedCom's ability to manage its growth; RuggedCom's dependence on the electric power industry; the impact of the global financial crisis; foreign currency fluctuations; RuggedCom's ability to identify suitable acquisitions at reasonable prices and its ability to manage their integration; changes in environmental and other regulation; RuggedCom's reliance on key personnel; RuggedCom's reliance on third-party suppliers, contract manufacturers and channel partners; RuggedCom's ability to protect its intellectual property; rapid technological change; potential product liability claims; RuggedCom's dependence on certain licensed intellectual property; potential infringement by RuggedCom of third party intellectual property rights; and other factors identified under the headings "Risks and Uncertainties" in RuggedCom's management's discussion and analysis for the second quarter ended September 30, 2011, dated November 8, 2011, and "Risk Factors" in RuggedCom's annual information form dated June 15, 2011, each filed on SEDAR at www.sedar.com.
For further information:
RuggedCom Shareholder Contact:
Georgeson Shareholder Communications Canada Inc.
RuggedCom Media contact:
Longview Communications Inc.
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