Summary of the Offer
- STG offers SEK 1.75 in cash for each share in IBS, regardless of share class.1
- Irrevocable undertaking. Deccan Value Advisors Fund L.P., A/D Value Fund L.P., Y/D Value Fund L.P. and DVA Master Fund Ltd. (hereinafter jointly referred to as “Deccan”), holding 4,650,000 shares of class A and 89,194,205 shares of class B, representing approximately 75.5 percent of the capital and approximately 81.4 percent of the votes of the Company, have irrevocably undertaken to accept the Offer.2
- Recommendation from the IBS Board. The Board of Directors of IBS has unanimously decided to recommend IBS’ shareholders to accept the Offer.3 The IBS Board has obtained a fairness opinion from an independent expert.
- Acceptance period. The acceptance period is expected to commence on May 30, 2011 and end on June 28, 2011.
“Symphony Technology Group believes that the IBS group would strongly benefit from a change in ownership as well as a partner who can provide capital and competence to invest in strengthening the Company’s operations and value to customers. Symphony Technology Group has a long history in working with enterprise software companies such as IBS successfully, and we are optimistic that we can be good partners for the Company”, says J.T. Treadwell, Managing Director at Symphony Technology Group.
Background to and rationale for the Offer
IBS is a leader in the development of ERP business software solutions for logistics and distribution companies. IBS had revenue of MSEK 1,300 in 2010 and delivers solutions to over 1,300 customers globally.
Symphony Technology Group is a strategic private equity firm with the mission of investing in and building great software and services companies. In addition to capital, Symphony Technology Group provides transformation expertise to enable its companies to deliver maximum value to their customers, to drive growth through innovation, to retain and attract the best talent and to achieve best in class business performance. Symphony Technology Group has made multiple successful investments into the enterprise software solutions market, including Intentia AB, Industri-Matematik, Escalate Retail, and Aldata. Symphony Technology Group’s portfolio consists of 12 global companies.
The acquisition of IBS will enhance IBS’ ability to invest in its solutions for customers, and provide IBS access to capital as well as a long term strategic partner that has a deep understanding of delivering ERP software solutions on long term profitable basis. The combination is anticipated to provide IBS with enhanced reach to deliver solutions around the world.
STG recognizes the deep domain experience of the IBS team, and the rich functionality of the solutions that IBS deliver to their customers. STG respects these capabilities and intends to protect, invest in and grow IBS’ business and solutions.
STG places great value on the capabilities, skills, and knowledge of the IBS employees, and considers them fundamental to the success of STG’s investment in IBS going forward. STG does not expect any major near term changes for IBS employees or its global locations, however, given the profitability challenges of IBS, STG will evaluate options on an ongoing basis to ensure that IBS can be a sustainably profitable company in order to be the best partner for its global customers.
STG is offering SEK 1.75 in cash for each share in IBS, regardless of share class.4 No commission will be charged in connection with the Offer. The total value of the Offer amounts to approximately SEK 217.5 million, based on 124,270,574 outstanding shares, of which 4,725,000 are of class A and 119,545,574 are of class B.5
The Offer is formally made through Sweden Acquisition Corp., a Delaware corporation, which is wholly owned by Symphony Technology Group funds STG III, L.P. and STG III-A, L.P., both successfully, and we are optimistic that we can be good partners for the Company”, says J.T. Treadwell, Managing Director at Symphony Technology Group.
being Delaware limited partnerships.6 Sweden Acquisition Corp. may be substituted as acquisition vehicle by another entity wholly owned, directly or indirectly, by STG III, L.P. and STG III-A, L.P., in which case Sweden Acquisition Corp. and such other entity shall be jointly and severally liable in all respects in relation to the Offer.
The Offer price is below the closing price of IBS’ class B share of SEK 1.90 on May 16, 2011 (i.e. the last trading day before announcement of the Offer) as well as the average closing price of IBS’ class B share on First North for the last ten trading days before announcement of the Offer of SEK 2.54.
Dr. Pallab Chatterjee was chairman of the Board of Directors of IBS until October 2010. Dr. Pallab Chatterjee is currently Managing Director and Operating Partner at Symphony Technology Group, and participates in the Offer. Accordingly, STG intends to comply with the rules set forth in section IV of the Swedish Industry and Commerce Stock Exchange Committee’s (Sw. Näringslivets Börskommitté, NBK) rules concerning public offers for the acquisition of shares traded on certain MTFs. Dr. Pallab Chatterjee owns 50,000 shares of class B in IBS, none of which have been acquired during the last six months prior to the announcement of the Offer.
Financing of the Offer
The Offer is not contingent on receipt of any financing. Symphony Technology Group funds STG III, L.P. and STG III-A, L.P., both being Delaware limited partnerships, have committed to finance Sweden Acquisition Corp. with enough equity and/or shareholder loans to pursue the Offer. Part of such amount may be substituted by external debt financing.
STG’s holding in IBS
Neither STG nor any of its affiliates owns or controls any shares in IBS, nor have they acquired any shares in IBS during the last six months prior to the announcement of the Offer.
Recommendation from IBS’ Board of Directors
IBS’ Board of Directors has on May 17, 2011 unanimously decided to recommend IBS’ shareholders to accept the Offer.7 IBS’ Board of Directors has informed STG that it has obtained a fairness opinion regarding the Offer from an independent expert.
Irrevocable undertaking to accept the Offer
Deccan, holding 4,650,000 shares of class A and 89,194,205 shares of class B, representing approximately 75.5 percent of the capital and approximately 81.4 percent of the votes of the Company, has irrevocably undertaken to accept the Offer.8
STG has entered into a transaction agreement with the Company regarding the Offer, which will be disclosed in its entirety in the offer document.
Conditions to completion of the Offer
Completion of the Offer is conditional upon:
- the Offer being accepted to such an extent that STG becomes the owner of more than 90 percent of the total number of shares in the Company (calculated before as well as on a fully diluted basis)9;
- no other party announcing an offer to acquire IBS on terms that are more favorable to the shareholders in IBS than the Offer;
- with respect to the Offer and the acquisition of IBS, receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions, including from competition authorities, in each case on terms which, in STG’s reasonable opinion, are acceptable in all material respects;
- the Offer not being wholly or partly prevented or materially adversely affected by any legislation or other regulation, court decision, public authority decision or similar circumstance, which is actual or could reasonably be anticipated, outside the control of STG and which STG could not reasonably have foreseen at the time of the announcement of the Offer;
- no information made public by IBS or disclosed by IBS to STG being materially inaccurate, incomplete or misleading, and IBS not having failed to make public any material information that should have been made public by it;
- there being no circumstances which could reasonably not have been known, anticipated or foreseen by STG on the date hereof, having occurred after the date hereof that have a material adverse effect upon the business, results of operations or financial condition of IBS and its subsidiaries taken as a whole; provided, however, that none of (A) any economic, business, political, social or legal conditions generally or any conditions of any financial, banking or securities markets (including but not limited to any acts of war, terrorism or natural disasters), (B) any events or conditions that generally affect the industry in which the Company operates, (C) any change or development in law, regulation or generally accepted accounting principles or (D) the identity of STG, except, in the case of each of clauses (A), (B) and (C), to the extent having a disproportionate effect on the Company relative to the Company’s competitors, shall be considered in determining whether such a material adverse effect has occurred; and
- IBS not taking any measures that typically are intended to impair the prerequisites for the implementation of the Offer.
STG reserves the right to withdraw the Offer in the event that it is clear that any of the above conditions is not fulfilled or cannot be fulfilled. However, with regard to conditions (2) - (7), such withdrawal will only be made provided that the non-fulfillment of such condition is of material importance to STG’s acquisition of IBS.
STG reserves the right to waive, in whole or in part, any or all of the conditions above, including, with respect to condition (1) above, to complete the Offer at a lower level of acceptance.
Description of Symphony Technology Group
Symphony Technology Group is a strategic private equity firm with the mission of investing in and building great software and services companies. In addition to capital, Symphony Technology Group provides transformation expertise to enable its companies to deliver maximum value to their clients, to drive growth through innovation, to retain and attract the best talent and to achieve best in class business performance. Symphony Technology Group’s current portfolio consists of 12 global companies. Symphony Technology Group has over USD 1 billion of managed capital. For more information, visit: www.symphonytg.com. Sweden Acquisition Corp. is a Delaware corporation owned by Symphony Technology Group funds STG III, L.P. and STG III-A, L.P., both being Delaware limited partnerships.
- The offer document is expected to be made public on May 27, 2011.
- The acceptance period is expected to commence on May 30, 2011 and end on June 28, 2011.
- Settlement is expected to take place as soon as possible following the end of the acceptance period.
STG reserves the right to extend the acceptance period, as well as to postpone the settlement.
Compulsory acquisition and de-listing
As soon as possible following STG’s acquisition of shares representing more than 90 percent of the shares in IBS, STG intends to initiate compulsory acquisition of the outstanding minority shares in IBS. In connection herewith, STG intends to act in favor of a de-listing of the IBS class B shares from First North.
Applicable laws and rules
The Swedish Industry and Commerce Stock Exchange Committee’s (Sw. Näringslivets Börskommitté, NBK) rules concerning public offers for the acquisition of shares traded on certain MTFs, and the Swedish Securities Council’s (Sw. Aktiemarknadsnämnden) rulings regarding interpretation and implementation thereof, shall apply to the Offer.
The Offer shall be governed by and construed in accordance with substantive Swedish law. Disputes relating to the Offer shall be subject to the exclusive jurisdiction of the Swedish courts, of which the Stockholm City Court shall be the court of first instance.
For additional information about the Offer, please visit www.symphonytg.com or contact J.T. Treadwell, Managing Director at STG, on +1 650-935-9529.
The information was submitted for publication at 7.30 a.m. CET on May 17, 2011.
1 The offered price is subject to adjustment should IBS pay any dividend or make any other value distribution to shareholders prior to the settlement of the Offer, and will accordingly be reduced by the amount of any such dividend or value distribution per share.
2 2,303,800 treasury shares of class B have been excluded from the calculation.
3 Due to the undertaking by Deccan to accept the Offer, Vinit Bodas has not participated in the IBS Board of Directors’ evaluation of the Offer.
4 The offered price is subject to adjustment should IBS pay any dividend or make any other value distribution to shareholders prior to the settlement of the Offer, and will accordingly be reduced by the amount of any such dividend or value distribution per share.
5 Excluding 2,303,800 treasury shares of class B.
6 The company’s address is c/o Symphony Technology Group, 2475 Hanover Street, Palo Alto, CA 94304. The company has not carried out any business activities prior to the Offer.
7 Due to the undertaking by Deccan to accept the Offer, Vinit Bodas has not participated in the board of directors’ of IBS evaluation of the Offer.
8 2,303,800 treasury shares of class B have been excluded from the calculation.
9 Treasury shares and warrants held by IBS or its subsidiaries shall be excluded from the calculation.