SYSOPEN PLC AND NOVO GROUP PLC HAVE SIGN
Sysopen Plc STOCK EXCHANGE RELEASE 25 September 2003 at 08:20
SYSOPEN PLC AND NOVO GROUP PLC HAVE SIGNED A COMBINATION AGREEMENT Sysopen Plc (öSysOpenö) and Novo Group plc (öNovo Groupö), which are both listed on the Helsinki Exchanges, have today signed a combination agreement (öCombination Agreementö). The combination is effected through an offer by SysOpen to purchase all the shares of Novo Group in a public tender offer (Tender Offerö). A Novo Group shareholder shall receive for each one (1) Novo Group share tendered in the Tender Offer a cash payment of 1.90 euros as well as 0.545 new SysOpen shares (the Tender Offer Considerationö). In addition, the Board of Directors of Novo Group proposes to the extraordinary meeting of shareholders to be invited at a later time, that a dividend per share of 0.50 euro will be paid. If Novo Group decides to pay a dividend, the cash consideration per share shall be deducted by such dividend per share. The combined company will continue its operations under the name Sysopen Plc. The Boards of Directors of SysOpen and Novo Group have concluded that the business operations of the combining companies complement each other well, and that by combining the business operations a stronger and more competitive company will be created. The Boards of Directors of both companies conclude that it is beneficial to both companies and their shareholders to combine the business operations of SysOpen and Novo Group. Combined company The combination will create one of Finlands largest companies providing information technology services, as measured both in terms of net sales and number of employees. In 2002, the combined companys pro forma net sales were EUR 337.5 million and it reported operating profit before goodwill amortisation of EUR 18.5 million. During the six-month period ended 30 June 2003, the combined companys pro forma net sales were EUR 165.7 million and it reported operating profit before goodwill amortisation of EUR 5.8 million. The combined company had 2,661 employees on 30 June 2003. The combined company will be the largest company in the information technology industry held mainly by Finnish investors. The combined company will be a significant supplier of complete information technology services and it will have an extensive customer base consisting of customers in nationally significant segments of the private sector and public administration. The present customer bases of the combining companies complement each other well and the market share in the largest domestic industries will be significantly strengthened. The combined company has a nationwide service network in Finland and foreign subsidiaries in the United Kingdom, the Netherlands, Germany, Estonia, China and the United States. The combined companys clear home market is Finland, which accounted for 95 per cent of its net sales in 2002. Most significant benefits of the combination - The implementation of high value-added customised information systems will strengthen its position among the combined companys core businesses, as the combination will significantly increase resources in this field. - The combination is expected to bring annual cost savings of about EUR 1.6 million. - The combined company is expected to be able to respond better to the intense development in the information technology field, to meet the constantly changing and ever-developing service needs of customers and customer sectors and to adapt to general market conditions. By way of combining functions, the best practices and the know-how of both companies the combined company is expected to be able to further strengthen its competitiveness in the converging and increasingly international domestic market. Comments Veikko Kasurinen, Chairman of the Board of Directors of Novo Group: Novo and SysOpen have already in the past investigated possible means of combining their operations. Now we have found a way that we believe will be beneficial for shareholder value in the best possible manner. Board of Directors of Novo will propose to the extraordinary meeting of shareholders that an extra dividend will be paid. The objective is to improve capital structure and to increase the return on equity. The current shareholders of Novo will, as a result of the transaction, own a majority of the new combined company. Kari Karvinen, Chairman of the Board of Directors of SysOpen: I am very pleased that we have reached a Combination Agreement between the Boards of Directors of SysOpen and Novo Group and that we have also received support of the largest shareholders of both companies for the combination. We believe that this combination will be a positive opportunity for the customers and personnel of the combined company. We are able to offer more complex services, more challenging work opportunities and better abilities for know-how development. I also firmly believe that the combination is beneficial for the shareholders of both companies. Considerations of the Boards of Directors of SysOpen and Novo Group The Board of Directors of SysOpen recommends that the shareholders of SysOpen would accept the proposals necessary for the completion of the combination in the extraordinary meeting of shareholders to be invited specifically for this purpose at a later date. The following matters, among other things will be proposed to the extraordinary meeting of shareholders of SysOpen: increase of the share capital and issuance of new shares to Novo Group shareholders, amendments to the Articles of Association with regard to the minimum and maximum share capital, as well as election of the Board of Directors in accordance with the Combination Agreement. The Board of Directors of Novo Group recommends that the shareholders of Novo Group would accept the Tender Offer and the proposals necessary for completion of the combination in the extraordinary meeting of shareholders to be invited specifically for this purpose at a later date. The following matters, among other things will be proposed to the extraordinary meeting of shareholders of Novo Group: removal of the redemption clause provided in Article 16 of the Articles of Association, distribution of an extra dividend, as well as election of the Board of Directors in accordance with the Combination Agreement The Board of Directors of Novo Group decided to sign the Combination Agreement by vote. Support of major shareholders Major shareholders of SysOpen, Kari Karvinen, Jorma Kylätie and Matti Savolainen, who together hold 50.5 per cent of the shares and votes in SysOpen, excluding the treasury shares, have beforehand announced that they will support the proposed combination. Furthermore the said shareholders have undertaken certain lock-up restrictions relating to their shareholding as well as prohibition of competition. Major shareholders of Novo Group, including Etra-Invest Ltd, Tapiola Mutual Pension Insurance Company and certain of its affiliated companies, Sampo Life Insurance Company and certain of its affiliated companies, Mutual Fund Alfred Berg Finland and certain of its affiliated companies as well as Etera Mutual Pension Insurance Company, who together hold 28.9 per cent of the shares and votes in Novo Group, excluding the treasury shares, have beforehand announced that they will support the proposed combination. Summary of the Tender Offer A Novo Group shareholder shall receive for each one (1) Novo Group share tendered in the Tender Offer a cash payment of 1.90 euros as well as 0.545 new SysOpen shares. Novo Group shares held by Novo Group or its subsidiaries, as defined by the Finnish Companies Act, are excluded from the Tender Offer. The Board of Directors of Novo Group will propose to the extraordinary meeting of shareholders to be convened at a later date that a dividend per share of 0.50 euro will be paid to the shareholders. If Novo Group decides to pay a dividend to its shareholders as provided in the Combination Agreement, the Cash Consideration per share (1.90 euros) shall be deducted by such dividend per share. The Tender Offer will commence on or about 6 October 2003 at 10.00 a.m. (Finnish time) and will expire on or about 7 November 2003 at 4.00 p.m. (Finnish time) unless the offer period is extended. The terms and conditions of the Tender Offer will be published on a stock exchange release on or about 30 September 2003 and the Finnish language Tender Offer Document/Listing Particulars relating to the Tender Offer will be available on or about 30 September 2003 on the Internet on the following addresses: www.sysopen.fi and www.novogroup.com. The English language Tender Offer Document will be available on or about 6 October 2003, free of charge, upon request from the offices of Nordea Securities Corporate Finance Oy (at the address Pohjoisesplanadi 33 A, Helsinki, as well as from HEX Gate at the address Fabianinkatu 14, Helsinki. The official closing price of the SysOpen share on the Helsinki Exchanges on 24 September 2003 was EUR 3.47. The implied value of the Tender Offer Consideration offered by SysOpen for each Novo Group share was EUR 3.79, or about 7 per cent above the official closing price of the Novo Group share on the Helsinki Exchanges on the same day as well as about 53 per cent above the volume-weighted average trading price of the Novo Group share (EUR 2.48) for the 12-month period from 25 September 2002 to 24 September 2003. If the Tender Offer is completed, SysOpen will make a mandatory redemption offer prescribed in the Finnish Securities Market Act for all the remaining Novo Group shares and stock options as well as present a redemption claim in accordance with the Finnish Companies Act. The Tender Offer is, as agreed in the Combination Agreement, subject to the satisfaction of the following conditions: (a) that SysOpen will, after the completion of the Tender Offer, own more than 90 per cent of the shares and votes in Novo Group as a result of the Novo Group shares validly tendered in the Tender offer, and not withdrawn; (b) that proposals of the Board of Directors of SysOpen provided in the first paragraph of Section 2.3 of the Combination Agreement have been approved by the vote of SysOpen shareholders at the extraordinary general meeting of shareholders; (c) that the loan facility agreed by SysOpen is still available to SysOpen, and there has not been a material adverse change in the terms of the loan facility; (d) that the Combination Agreement between SysOpen and Novo Group shall not have been terminated; (e) that SysOpen shall have obtained all necessary approvals from applicable competition authorities and other applicable governmental entities and the possible material conditions set forth in such approvals can be accepted by SysOpen and Novo Group; and (f) that, as calculated based on the principles set forth in the statement of the Finnish Financial Supervision Authority (no. 2/263/2002), SysOpen is not required to pay, in connection with the mandatory redemption offer pursuant to Finnish Securities Market Act, a top-up payment provided in Chapter 6, Section 6, Paragraph 5 of the Finnish Securities Market Act to the Novo Group shareholders that have tendered their shares in the Tender offer. Ownership structure If the Tender Offer is accepted in its entirety, SysOpen shareholders will hold a total of 30.0 per cent and Novo Group shareholders a total of 70.0 per cent of the combined company, excluding the treasury shares in the possession of SysOpen and Novo Group and the stock options issued by them. The ten largest shareholders of the combined company, according to the shareholder registers of the combining companies on 23 September 2003, will be: 1. Etra Invest Ltd 7.4 % 2. Karvinen Kari Juhani 5.1 % 3. Savolainen Matti Ilmari 5.1 % 4. Kylätie Jorma Matti Olavi 4.9 % 5. Tapiola Mutual Pension Insurance Company 2.9 % 6. Etera Mutual Pension Insurance Company 1.9 % 7. Sampo Life Insurance Company 1.6 % 8. Sampo Finance Ltd 1.6 % 9. Aktia Secura Mutual Fund 1.4 % 10.Mutual Life Insurance Company Tapiola 1.3 % Ten largest shareholders 33.2 % Other shareholders 66.8 % Total 100.0 % Financing the Tender Offer In order to finance the Tender Offer approximately EUR 75.8 million of debt financing is raised. SysOpen will finance the Tender Offer by issuing new shares of SysOpen as well as by means of cash funds and external loan arrangements. The Offeror does not intend to draw down the external loan financing until the Tender Offer has become unconditional. SysOpen has received a commitment for external loan financing, according to which it is possible to draw down the debt financing when the terms and conditions of the Tender Offer have been fulfilled. Due to strong cash flow of the combined company, the financing arrangements related to the Tender Offer are not expected to have a material impact on the ability of the combined company or Novo Group to engage in business operations or to meet their obligations. Structure of the combined company The combined company will continue its operations under the name Sysopen Plc. The operations will be continued for some time on the basis of the current organisations. In order to improve profitability and efficiency, the combined companys business models will be carefully analysed after the combination. Reshaping the organisation will be started within six months from the combination. Accroding to the Combination Agreement, the combined companys operations will be headed by SysOpens current Managing Director Arto Sahla. Jorma Kielenniva will continue in the combined company as a director. His task is to participate in the implementation of the combination process. After a transitional period, he will retire. The Board of Directors of Novo Group will nominate three members to the Board of Directors of the combined company, of which one will act as the Chairman of the Board of Directors. The Board of Directors of SysOpen will nominate three members to the Board of Directors of the combined company, of which one will act as the Vice Chairman of the Board of Directors. The names of the Board members will be announced before the publication of the Tender Offer Document. Certain unaudited pro forma consolidated financial statement information of the combined company Income statement information, MEUR 1.1.-31.12.2002 Net sales 337,5 Operating profit before goodwill amortisation 18,5 Operating profit after goodwill amortisation 7,9 Balance sheet information, MEUR 30.6.2003 Shareholders equity 89,3 Total assets 243,4 Key figures 30.6.2003 Net Gearing 54 % Equity ratio 37 % Interest-bearing net debt, MEUR 48,6 Further information A press and analyst briefing on the combination will be held today on Thursday 25 September 2003 at 10 a.m. at Ravintola Pörssi, Fabianinkatu 14, 00100 Helsinki. Welcome. Helsinki 25 September 2003 SYSOPEN PLC Board of Directors Additional information: Kari Karvinen, Chairman of the Board of Directors, Sysopen Plc, tel. 04242020304 Veikko Kasurinen, Chairman of the Board of Directors, Novo Group Plc, tel. 0400602251 Arto Sahla, Managing Director, Sysopen Plc, tel. 0400 442986 Jorma Kielenniva, President and CEO, Novo Group Oyj, tel. 0205662300, 0400 204676 This press release may not be published or distributed in Australia, Canada, Hong Kong, Japan, South Africa or the United States. The information contained in this press release is not to be published or distributed in or to the United States. This press release is not an offer to sell securities in the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from the registration requirements of the Securities Act of 1933. The tender offer or the new shares of Sysopen Plc will not be registered or offered to public in the United States. This press release is neither an offer to purchase nor a solicitation for an offer to sell, and the shares of Sysopen Plc may not be subscribed for in any country in which such offer, solicitation or subscription would be unlawful prior to registration, an exemption from registration obligation or other acceptance in accordance with the securities laws of such country.