1A SMART START, LLC ANNOUNCES A RECOMMENDED OFFER OF SEK 11.30 PER SHARE TO THE SHAREHOLDERS OF DIGNITA SYSTEMS AB
This announcement is not an offer, whether directly or indirectly, in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa or the United States or in any other jurisdictions where such offer pursuant to legislation and regulations in such relevant jurisdictions would be prohibited by applicable law. Shareholders not resident in Sweden who wish to accept the Offer (as defined below) must make inquiries concerning applicable legislation and possible tax consequences. Shareholders should refer to the offer restrictions included in the section titled “Important notice” at the end of this announcement and in the tender offer document which will be published shortly before the beginning of the acceptance period for the Offer.
1A Smart Start, LLC (“Smart Start”) hereby announces a recommended public offer to the shareholders of Dignita Systems AB (“Dignita”) to tender all shares in Dignita to Smart Start at a price of SEK 11.30 in cash per share (the “Offer”). The shares in Dignita are listed on AktieTorget.
- Smart Start offers SEK 11.30 in cash per Dignita share. The total offer value for all outstanding shares in Dignita amounts to approximately SEK 41.25 million.
- Dignita's Independent Bid Committee has unanimously recommended Dignita's shareholders to accept the Offer. The Independent Bid Committee has obtained a fairness opinion from the independent expert Skarpa AB stating that the Offer is fair from a financial point of view to the shareholders of Dignita.
- The two main shareholders, Björkbron AB and Jumeirah Limited, together representing in aggregate 76.16 per cent of the number of outstanding shares and votes in Dignita, have irrevocably and unconditionally undertaken to accept the Offer.
- The Offer is not subject to any financing condition. Smart Start has sufficient funds to complete the Offer.
- An offer document regarding the Offer is expected to be made public on or about 15 May 2017. The acceptance period for the Offer is expected to begin on or about 16 May 2017 and expire on or about 7 June 2017.
“Smart Start is excited to work with the experienced team at Dignita, partnering together to pursue strategic growth initiatives in the European market. Dignita has built a strong platform with significant momentum, and the combination of the two companies provides an opportunity to leverage the strengths of each company and to develop a truly global platform advancing the mission of keeping drunk drivers off the road”, said Matt Strausz, CEO of Smart Start.
“ABRY Partners is a strong owner with proven ability to successfully develop companies within a variety of industries where we have noticed that Smart Start, which we are familiar with, has had a very positive development since ABRY entered as owners. We are excited to work with Smart Start, combining our platforms and giving us access to more resources to grow our business in Europe. The offer confirms that Dignita is an attractive company with large potential. With a strong owner as ABRY and the combined know-how of Dignita and Smart Start, Dignita has the opportunity to accelerate our plans to grow and establish us as a leader within securing the non-use of alcohol at vehicles and workplaces”, said Anders Eriksson, CEO of Dignita
Background and reason for the Offer
Dignita is a Swedish technology and expertise company that develops products to promote road safety. Dignita's staff has extensive experience of the automotive industry and road safety issues.
Dignita's products are a form of quality assurance that makes a company competitive and reliable. The product range maintains high standards and features reliable fuel-cell technology which is used by both private and corporate customers at a groundbreaking low price. All products are quality-tested by the MHF test lab prior to launch. Smart Start has closely followed the development of Dignita and believes that a merger of the two companies will complement and strengthen Smart Start’s position on the European market. Smart Start is committed to growing Dignita’s business, and plans to retain and expand Dignita’s current customer base. Through the acquisition of Dignita, Smart Start will have a platform for expansion in Europe.
Smart Start does not currently foresee any material changes to Dignita's operations including operational sites, its management or employees or their terms of employment. However, Smart Start expects the business combination to offer synergies in the long-term perspective. Smart Start looks forward to building a focused team for interlocks with key employees in Sweden.
The shareholders of Dignita are offered SEK 11.30 in cash per share in Dignita.
The consideration under the Offer will be reduced accordingly should Dignita, prior to the settlement of the Offer, distribute a dividend or in any other way distribute or transfer value to its shareholders.
No commission will be charged in respect of the settlement of the Dignita shares tendered to Smart Start under the Offer.
The consideration under the Offer represents a premium of:
- 41.3 per cent for the Dignita share compared to the closing price on 9 May 2017, the last day of trading prior to the announcement of the Offer, of SEK 8.00; and
- 23.2 per cent for the Dignita share compared to the volume-weighted average trading prices over the 30 calendar days ending on 9 May 2017 of SEK 9.17.
Total value of the Offer
The total value of the Offer, based on all outstanding 3,650,000 shares in Dignita, amounts to approximately SEK 41.25 million.
Convertibles and warrants
Neither the convertibles held by Stiftelsen Norrlandsfonden nor the warrants held by Jumeirah Limited are included in the Offer. Smart Start has entered into an agreement with Stiftelsen Norrlandsfonden regarding the acquisition of all convertibles held by Stiftelsen Norrlandsfonden, conditional upon that Smart Start completes the Offer. The consideration for the convertibles shall be principal amount plus accrued, yet not paid, interest. The warrants held by Jumeirah Limited are excluded from the Offer as the value of such warrants is negligible.
Conditions for completion of the Offer
The completion of the Offer is conditional upon:
- the Offer being accepted to such extent that Smart Start becomes the owner of shares representing more than 90 per cent of the total number of outstanding shares in Dignita (calculated before as well as on a fully diluted basis);
- no other party announcing an offer to acquire shares in Dignita on terms that are more favorable to the shareholders of Dignita than the Offer;
- with respect to the Offer and completion of the acquisition of Dignita, all necessary clearances, approvals, decisions and other actions from authorities or similar, including approvals from competition authorities, being obtained, in each case on terms which, in Smart Start's opinion, are acceptable;
- neither the Offer nor the acquisition of Dignita being rendered wholly or partially impossible or significantly impeded as a result of legislation or other regulation, any decision of court or public authority, or any similar circumstance, which is actual or can reasonably be anticipated, and which Smart Start could not reasonably have foreseen at the time of announcement of the Offer;
- no circumstances having occurred which have or could reasonably be expected to have a material adverse effect on Dignita's financial position or operation, including Dignita's sales, results, liquidity, equity ratio, equity or assets, and Dignita being subject to bankruptcy, reorganization or similar proceedings;
- no information made public by Dignita or otherwise made available to Smart Start by Dignita being inaccurate, incomplete or misleading, and Dignita having made public all information which should have been made public; and
- Dignita not taking any measures that are likely to impair the prerequisites for making or implementing the Offer.
Smart Start reserves the right to withdraw the Offer in the event that it is clear that any of the above conditions is not satisfied or cannot be satisfied. However, with regard to conditions 2 – 7 above, the Offer may only be withdrawn provided that the non-satisfaction of such condition is of material importance to Smart Start's acquisition of Dignita or if otherwise approved by the Swedish Securities Council (Sw. Aktiemarknadsnämnden).
Smart Start reserves the right to waive, in whole or in part, one, several or all of the conditions set out above, including, with respect to condition 1, to complete the Offer at a lower level of acceptance.
Smart Start’s shareholding in Dignita
At the time of this announcement, Smart Start does not hold any shares in Dignita or any financial instrument that give financial exposure to Dignita shares. Smart Start has entered into an agreement with Stiftelsen Norrlandsfonden regarding the acquisition of all convertibles held by Stiftelsen Norrlandsfonden, conditional upon that Smart Start completes the Offer. Apart from that, Smart Start has not acquired or agreed to acquire any Dignita shares or any financial instrument that give financial exposure to Dignita shares during the six months preceding the announcement of the Offer.
Smart Start may acquire, or enter into arrangements to acquire, shares in Dignita outside the Offer. Any purchases made or arranged shall be in accordance with Swedish law and the Swedish Corporate Governance Board's (Sw. Kollegiet för svensk bolagsstyrning) takeover rules for certain trading platforms (the “Takeover Rules“) and will be disclosed in accordance with applicable rules.
The Offer is fully financed by cash available from Smart Start’s own funds. Smart Start is not dependent on external financing for the Offer. Accordingly, the completion of the Offer is not conditional upon any financing being obtained.
Recommendation from Dignita’s Independent Bid Committee
The board of directors of Dignita has appointed an independent bid committee of the board of directors (the “Independent Bid Committee”) to evaluate the Offer. The Independent Bid Committee consists of the board members Niclas Fröberg and Joakim Hermansson, who do not have any conflicts of interest in relation to Smart Start or the Offer. The Independent Bid Committee has unanimously recommended Dignita's shareholders to accept the Offer. The Independent Bid Committee has obtained a fairness opinion from the independent expert Skarpa AB stating that the Offer is fair from a financial point of view to the shareholders of Dignita. For further information regarding the recommendation and the fairness opinion, please refer to separate press release from Dignita.
Dignita's board members Ulf Gejhammar (chairman), Pontus Gustafsson and Anders Eriksson, are indirect shareholders of Björkbron AB, which is the major shareholder of Dignita, and Björkbron AB has undertaken towards Smart Start to accept the Offer. Accordingly, these board members in Dignita have conflicts of interest in relation to the Offer.
Undertakings to accept the Offer
Smart Start has received irrevocable undertakings to accept the Offer from Björkbron AB and Jumeirah Limited in respect of in aggregate 2,780,000 shares, representing 76.16 per cent of the total number of outstanding shares and votes in Dignita. These undertakings relate to their entire respective holdings of Dignita shares.
Description of Smart Start
Based in Grapevine, Texas, and a Delaware LLC, Smart Start is a leading provider of ignition interlock devices and alcohol monitoring devices primarily to the correctional services industry. Smart Start currently supports more than 120,000 devices in 46 states and 17 countries abroad, servicing customers through a broad network of more than 1,800 locations.
In 2016, Smart Start generated revenue of $117 million. Smart Start is majority owned by ABRY Partners, a Boston-based private equity investment firm.
For more information on Smart Start, please refer to Smart Start’s website (www.smartstartinc.com)
Smart Start, LLC
500 E Dallas Rd., Suite 100
Grapevine, TX 76051
Description of Dignita
Dignita is a Swedish technology and expertise company whose mission is to help companies, organisations and individuals to make visible and prevent drug related matters and to comply with applicable legislation by providing cost efficient products for measuring and testing including thereto related services. In 2016, Dignita generated revenue of approximately SEK 16.5 million and had 8 employees. The shares in Dignita are listed on AktieTorget. Dignita has offices in Umeå and Örebro, Sweden and has currently 10 employees.
For more information on Dignita, please refer to Dingita's website (www.dignita.se).
The acceptance period for the Offer is expected to commence on or about 16 May 2017 and end on or about 7 June 2017. An offer document regarding the Offer is expected to be made on or about 15 May 2017. Assuming that the Offer is declared unconditional no later than on or about 12 June 2017, settlement is expected to begin on or about 16 June 2017.
Smart Start reserves the right to extend the acceptance period for the Offer, as well as to postpone the settlement date.
Approvals from the authorities
The completion of the Offer is conditional upon, inter alia, all necessary clearances, approvals, decisions and other actions from authorities or similar, including approvals from competition authorities, being obtained, in each case on terms which, in Smart Start's opinion, are acceptable. According to Smart Start's current assessment, the completion of the Offer will not require any approvals from competition or other authorities.
Smart Start has, in connection with the preparation of the Offer, conducted a confirmatory due diligence review of Dignita including a documentary review and meetings with the management of Dignita. Dignita has informed Smart Start that no inside information (as defined in Article 7 of the EU Market Abuse Regulation) has been disclosed to Smart Start during the due diligence review, with the exception of unaudited financial information regarding Dignita’s report for the first quarter 2017 (which was announced by Dignita prior to the launch of the Offer).
Agreements with certain members of the senior management
Smart Start has entered into agreements with five members of the senior management of Dignita, Anders Eriksson, Kenneth Eriksson, Pontus Gustafsson, Stefan Nordin and Joakim Berglin, regarding their participation in the management incentive equity program of Smart Start (together with other key members of the management team of Smart Start), conditional upon that the Offer is completed by Smart Start. Smart Start has also entered into agreements with Anders Eriksson, Kenneth Eriksson and Pontus Gustafsson regarding investments by them in Smart Start, conditional upon that the Offer is completed by Smart Start. The purpose of the agreements is to incentivise the members of the senior management to remain employed by Dignita following the Offer and to continue to develop Dignita’s business. The agreements have been approved by the Independent Bid Committee of Dignita.
Compulsory redemption proceedings and delisting
As soon as possible after Smart Start has acquired shares representing more than 90 per cent of the total number of shares in Dignita, Smart Start intends to commence compulsory redemption proceedings under the Swedish Companies Act (Sw. aktiebolagslagen) to acquire all remaining shares in Dignita. In connection therewith, Smart Start intends to promote delisting of Dignita’s shares from AktieTorget.
Applicable law and disputes
The Offer, as well as the agreements entered into between Smart Start and the shareholders in Dignita as a result of the Offer, shall be governed and constructed in accordance with substantive Swedish law. Any dispute regarding the Offer, or which arises in connection therewith, shall be exclusively settled by Swedish courts, and the Stockholm District Court (Sw. Stockholms tingsrätt) shall be the court of first instance.
The Swedish Corporate Governance Board's takeover rules for certain trading platforms (the ”Takeover Rules”) and the Swedish Securities Council's rulings regarding interpretation and application of the Takeover Rules, including, where applicable, the Swedish Securities Council's interpretation and application of the formerly applicable Rules on Public Offers for the Acquisition of Shares issued by the Swedish Industry and Commerce Stock Exchange Committee (Sw. Näringslivets Börskommitté), are applicable to the Offer.
Kirkland & Ellis (as to U.S. law) and Hamilton Advokatbyrå (as to Swedish law) are legal advisors and Danske Bank is transaction advisor to Smart Start in connection with the Offer.
1A Smart Start, LLC
For additional information, please contact:
Ian R Marples, Vice President, International Operations, 1A Smart Start, LLC, tel. +1 972 621 0252 / +1 780 291 0359
For information and documentation regarding the Offer, please visit: www.danskebank.se/prospekt.
This press release was submitted for publication on 10 May 2017 at 08.00 CET.
The Offer is not being made, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, New Zealand, South Africa or the United States by use of mail or any other means or instrumentality (including, without limitation, facsimile transmission, electronic mail, telex, telephone and the Internet) of interstate or foreign commerce, or of any facility of national security exchange, of Australia, Canada, Hong Kong, Japan, New Zealand, South Africa or the United States, and the Offer cannot be accepted by any such use, means, instrumentality or facility of, or from within, Australia, Canada, Hong Kong, Japan, New Zealand, South Africa or the United States. Accordingly, this press release and any documentation relating to the Offer are not being and should not be sent, mailed or otherwise distributed or forwarded in or into Australia, Canada, Hong Kong, Japan, New Zealand, South Africa or the United States.
This press release is not being, and must not be, sent to shareholders with registered addresses in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. Banks, brokers, dealers and other nominees holding shares for persons in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, or the United States must not forward this press release or any other document received in connection with the Offer to such persons.
Statements in this press release relating to future status or circumstances, including statements regarding future performance, growth and other trend projections and the other benefits of the Offer, are forward-looking statements. These statements may generally, but not always, be identified by the use of words such as “anticipates”, “intends”, “expects”, “believes”, or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of 1A Smart Start, LLC. Any such forward-looking statements speak only as of the date on which they are made and 1A Smart Start, LLC has no obligation (and undertakes no such obligation) to update or revise any of them, whether as a result of new information, future events or otherwise, except for in accordance with applicable laws and regulations.
 Source for Dignita share price: S&P Capital IQ.