Hyland Software UK announces a cash offer to the shareholders of ReadSoft

This press release may not be published or distributed, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, New Zealand or South Africa. The Offer is not being made to, nor will any tender of shares be accepted from or on behalf of, holders in such jurisdictions or elsewhere where their participation requires further documentation, filings or other measures in addition to those required by Swedish law. Shareholders in the United States should refer to the section titled “Special notice to shareholders in the United States” at the end of this announcement.

Hyland Software UK Ltd (“Hyland UK”), controlled by Hyland Software, Inc. (“Hyland”), hereby announces a cash offer (the “Offer”) to the shareholders of ReadSoft AB (publ) (“ReadSoft” or the “Company”). The class B shares in ReadSoft are admitted to trading on NASDAQ OMX Stockholm.

• Hyland UK offers SEK 42.86 in cash per share in ReadSoft, irrespective of share class.[1] The total offer value for all shares in ReadSoft amounts to approximately SEK 1,312 million.[2]
   
  
• The Offer represents a premium of:
   
  *  7.4 per cent compared to the closing price of SEK 39.90 of the Company’s class B share on NASDAQ OMX Stockholm on 17 June 2014, the last trading day before the announcement of the Offer, and 132.9 per cent compared to the closing price of SEK 18.40 on 5 May 2014, the day before Lexmark International Technology S.A. announced a cash offer to the shareholders of ReadSoft;
  
  *  31.2 per cent compared to the volume-weighted average share price of SEK 32.68 of the Company’s class B share on NASDAQ OMX Stockholm during the last three months prior to 18 June 2014, and 140.5 per cent compared to the volume-weighted average share price of SEK 17.82 of the Company’s class B share on NASDAQ OMX Stockholm during the three months prior to 6 May 2014, the day Lexmark International Technology S.A. announced a cash offer to the shareholders of ReadSoft;
   
  *  52.4 per cent compared to the volume-weighted average share price of SEK 28.12 of the Company’s class B share on NASDAQ OMX Stockholm during the last twelve months prior to 18 June 2014, and 113.1 per cent compared to the volume-weighted average share price of SEK 20.11 of the Company’s class B share on NASDAQ OMX Stockholm during the twelve months prior to 6 May 2014, the day Lexmark International Technology S.A announced a cash offer to the shareholders of ReadSoft; and
   
  *  7.0 per cent compared to the cash offer announced by Lexmark International Technology S.A. on 6 May 2014.
    
  
• The acceptance period is expected to commence around 11 July 2014 and end around 5 September 2014. Settlement is expected to begin around 10 September 2014.

Background and reasons for the Offer
Since 1991, Hyland has helped thousands of organizations by providing enterprise content management, capture and business process automation solutions to address business challenges. Hyland’s focus on positive customer experiences has produced customer retention and satisfaction rates that are among the best in the industry. Hyland has experienced significant organic growth by focusing on its enterprise content management platform, OnBase®. Hyland has also acquired ten companies that have expanded the options available to its customers as they seek to digitally transform their organizations.

Hyland believes that ReadSoft’s business enhances Hyland’s solution offerings and its market presence in key geographies. The addition of ReadSoft’s document processing and automation capabilities and enterprise resource planning integrations to Hyland’s product platform would forge an industry leader uniquely capable of serving an ever-increasing set of customers for which document and process automation is a strategic imperative. The combination of the organizations would also strengthen Hyland’s geographic presence and reach in Europe.

Hyland expects ReadSoft’s leadership team to play an integral role in executing on their current operational plans and in pursuing the considerable additional opportunities that exist among the combined customer base and channel partners. Hyland is excited about the prospect of collaborating with ReadSoft’s professional and knowledgeable staff and supporting the advancement of its outstanding technology. Hyland intends to integrate ReadSoft with Hyland’s business. Until Hyland completes its integration plans, Hyland does not intend to make material changes to the terms or places of employment of ReadSoft’s employees.

The Offer
Hyland UK offers SEK 42.86 in cash per share in ReadSoft, irrespective of share class.[3]

The Offer represents a premium of:

• 7.4 per cent compared to the closing price of SEK 39.90 of the Company’s class B share on NASDAQ OMX Stockholm on 17 June 2014, the last trading day before the announcement of the Offer, and 132.9 per cent compared to the closing price of SEK 18.40 on 5 May 2014, the day before Lexmark International Technology S.A. announced a cash offer to the shareholders of ReadSoft;
   
  
• 31.2 per cent compared to the volume-weighted average share price of SEK 32.68 of the Company’s class B share on NASDAQ OMX Stockholm during the last three months prior to 18 June 2014, and 140.5 per cent compared to the volume-weighted average share price of SEK 17.82 of the Company’s class B share on NASDAQ OMX Stockholm during the three months prior to 6 May 2014, the day Lexmark International Technology S.A. announced a cash offer to the shareholders of ReadSoft;
   
  
• 52.4 per cent compared to the volume-weighted average share price of SEK 28.12 of the Company’s class B share on NASDAQ OMX Stockholm during the last twelve months prior to 18 June 2014, and 113.1 per cent compared to the volume-weighted average share price of SEK 20.11 of the Company’s class B share on NASDAQ OMX Stockholm during the twelve months prior to 6 May 2014, the day Lexmark International Technology S.A announced a cash offer to the shareholders of ReadSoft; and
   
  
• 7.0 per cent compared to the cash offer announced by Lexmark International Technology S.A. on 6 May 2014.

The Offer does not include the convertible bonds issued in May 2011, October 2011, April 2012 and April 2013 as part of ReadSoft’s incentive programs for employees. Outside of the Offer, Hyland UK will offer the participants in the programs a reasonable treatment with respect to their holdings.

The total offer value for all shares in ReadSoft amounts to approximately SEK 1,312 million.[4]

No commission will be charged in connection with the Offer.

Hyland UK’s and Hyland’s shareholding in ReadSoft
Neither Hyland UK, nor Hyland currently holds or controls any shares in ReadSoft. Neither Hyland UK, nor Hyland has acquired any shares in ReadSoft during the last six months prior to the announcement of the Offer.

Undertaking by shareholders
Miguel Zubizarreta (Chief Technical Officer at Hyland) and Alfonso Zubizarreta (Vice President at Hyland), together holding 934,254 class B shares, corresponding to about 3.1 per cent of all outstanding shares in ReadSoft[5], have each, pursuant to agreements dated 17 June 2014 between Miguel Zubizarreta and Hyland UK, and Alfonso Zubizarreta and Hyland UK, respectively, unconditionally and irrevocably undertaken to accept the Offer.

Conditions for the Offer
Completion of the Offer is conditional upon:

1. the Offer being accepted to such an extent that Hyland UK becomes the owner of shares representing more than 90 per cent of the outstanding shares in ReadSoft on a fully diluted basis and provided that either all class A shares have been tendered in the Offer or that all holders of the remaining class A shares (i.e. those class A shares not tendered in the Offer) have waived their pre-emption rights set out in section 10 of ReadSoft’s articles of association;
    
   
2. no other party announcing an offer to acquire shares in ReadSoft on terms that are more favorable to the shareholders of ReadSoft than those of the Offer;
    
   
3. all regulatory, governmental or similar clearances, approvals and decisions necessary to complete the Offer, including approvals and clearances from competition authorities, being obtained, in each case on terms which, in Hyland UK’s opinion, are acceptable;
    
   
4. neither the Offer nor the acquisition of ReadSoft being rendered partially or wholly 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 Hyland UK could not reasonably have foreseen at the time of announcement of the Offer;
    
   
5. save as publicly announced by ReadSoft or as otherwise disclosed by ReadSoft to Hyland UK prior to the date the Offer was announced, Hyland UK does not discover that any information publicly disclosed by ReadSoft or otherwise made available by ReadSoft to Hyland UK is materially inaccurate or misleading or that any material information which should have been publicly disclosed by ReadSoft has not been so disclosed;
    
   
6. no circumstances, which Hyland UK did not have knowledge of at the time of announcement of the Offer, having occurred that have or can be expected to have a material adverse effect upon ReadSoft’s sales, results, liquidity, equity or assets; and
    
   
7. ReadSoft not taking any measures that are liable to impair the prerequisites for making or implementing the Offer.

The Offer is not conditional on financing. Hyland UK 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, the Offer may only be withdrawn where the non-satisfaction of such condition is of material importance to Hyland UK’s acquisition of ReadSoft.

Hyland UK 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.

Financing
Hyland has entered into loan agreements regarding financing of the Offer on terms customary for financing of public takeovers on the Swedish market with a bank syndicate represented by Credit Suisse AG, Cayman Island Branch. Furthermore, Hyland has undertaken to on-lend funds made available under the loan agreements to Hyland UK, and, if such funds are not sufficient to finance the Offer in full, provide additional financing in the form of shareholder contributions, loans or other. Accordingly, completion of the Offer is not subject to any financing condition.

Due diligence
Hyland UK has, in connection with the preparations for the Offer, conducted a limited confirmatory due diligence review of ReadSoft. Hyland UK does not possess any information which can reasonably be expected to affect the price of the Company’s securities.

Hyland UK and Hyland in brief
Hyland UK is a private company limited by shares incorporated in the United Kingdom, registered under number 08172897, with registered seat in England and Wales and with the principal office at Northumberland House, 155-157 Great Portland Street, London, UK. Hyland UK is a wholly-owned subsidiary of Hyland. Hyland UK operates Hyland’s business in the United Kingdom and much of Europe.

Hyland is an Ohio corporation formed in 1991. Named one of Fortune’s Best Companies to Work For® in the United States for 2014, Hyland continues to thrive and develop OnBase, one of the most flexible and comprehensive enterprise content management (ECM) solutions available. Hyland does business in over 60 countries, both directly and through a network of more than 300 solution providers around the world.

Indicative timetable
The acceptance period for the Offer is expected to commence around 11 July 2014 and end around 5 September 2014. An offer document regarding the Offer is expected to be made public shortly before the commencement of the acceptance period. Assuming that the Offer is declared unconditional no later than around 5 September 2014, settlement is expected to begin around 10 September 2014.

Hyland UK reserves the right to extend the acceptance period for the Offer, as well as the right to postpone settlement.

The acquisition of ReadSoft might require clearance from the relevant competition authorities. Such necessary approvals, if applicable, are expected to be received prior to the end of the acceptance period set forth above, but there can be no assurance regarding the timing or receipt of the approvals.

Redemption and de-listing
In the event that Hyland UK, whether in connection with the Offer or otherwise, becomes the owner of shares representing more than 90 per cent of the outstanding shares in ReadSoft, Hyland UK intends to commence a compulsory acquisition procedure under the Swedish Companies Act to acquire all remaining shares in ReadSoft. In connection therewith, Hyland UK intends to promote a de-listing of the Company’s shares from NASDAQ OMX Stockholm.

Applicable law and disputes
The Offer shall be governed by and construed in accordance with the laws of Sweden. The Takeover Rules issued by NASDAQ OMX Stockholm, and the Swedish Securities Council rulings regarding the interpretation and application of the Takeover Rules, apply in relation to the Offer. In accordance with the Swedish Takeover Act, Hyland UK has undertaken towards NASDAQ OMX Stockholm to comply with the Takeover Rules and to submit to any sanctions imposed by NASDAQ OMX Stockholm upon breach of the Takeover Rules. The courts of Sweden shall have exclusive jurisdiction over any dispute arising out of or in connection with the Offer and the City Court of Stockholm shall be the court of first instance.

Advisers
Hyland UK has retained Arma Partners as financial adviser and Advokatfirman Vinge KB and Kirkland & Ellis International LLP as legal advisers.

Further information
For media questions, please contact:
Alexa Marinos, Public Relations and Communications, Hyland Software
Phone: +1 216-389-8508
E-mail: alexa.marinos@onbase.com

For further information, see www.hylandinfo.se.

This press release was submitted for publication on 18 June 2014 at 08.00 (CET).

  
Important notice
This is a translation of the original Swedish language press release. In the event of discrepancies, the original Swedish wording shall prevail.

Offer restrictions
The Offer is not being made to persons whose participation in the Offer requires that any additional offer document is prepared or registration effected or that any other measures are taken in addition to those required under Swedish law. This press release and any documentation relating to the Offer are not being published in or distributed to or into and must not be mailed or otherwise distributed or sent in or into any country in which the distribution or offering would require any such additional measures to be taken or would be in conflict with any law or regulation in such country. Any such action will not be permitted or sanctioned by Hyland UK. Any purported acceptance of the Offer resulting directly or indirectly from a violation of these restrictions may be disregarded.

The Offer is not being made, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, New Zealand or South Africa 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 or South Africa, 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 or South Africa. 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 or South Africa.

Hyland UK will not deliver any consideration under the Offer into Australia, Canada, Hong Kong, Japan, New Zealand or South Africa.

This press release is not being, and must not be, sent to shareholders with registered addresses in Australia, Canada, Hong Kong, Japan, New Zealand or South Africa. Banks, brokers, dealers and other nominees holding shares for persons in Australia, Canada, Hong Kong, Japan, New Zealand or South Africa 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 Hyland, Hyland UK and ReadSoft. Any such forward-looking statements speak only as of the date on which they are made and Hyland UK 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.

Special notice to shareholders in the United States
The Offer described in this announcement is subject to the laws of Sweden. It is important for US holders of shares in ReadSoft to be aware that this document is subject to disclosure and takeover laws and regulations in Sweden that are different from those in the United States. The Offer is made in the United States in compliance with Section 14(e) of, and Regulation 14E under, the US Securities Exchange Act of 1934, as amended (“Exchange Act”), subject to the exemptions provided by Rule 14d-1(d) under the Exchange Act and otherwise in accordance with the requirements of Swedish law. Accordingly, the Offer is subject to disclosure and other procedural requirements, including with respect to withdrawal rights, the Offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and laws.

Pursuant to an exemption from Rule 14e-5 under the Exchange Act, Hyland UK and certain of its Representatives may, from time to time, purchase or make arrangements to purchase shares outside the Offer from the time the Offer was announced until the expiration of the acceptance period of the Offer, including purchases in the open market at prevailing prices or in private transactions at negotiated prices, in each case, outside of the United States and to the extent permitted under the applicable Swedish laws and regulations. Any such purchases will not be made at prices higher than the price of the Offer provided in this announcement unless the price of the Offer is increased accordingly. Any future purchases will be made in accordance with applicable laws, rules and regulations. Any such purchases of shares will be disclosed to the extent required by Swedish law or rules or regulations and, if so disclosed, will also be disclosed in the US.

NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY U.S. STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THIS OFFER, PASSED UPON THE FAIRNESS OR MERITS OF THIS ANNOUNCEMENT OR DETERMINED WHETHER THIS ANNOUNCEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES.

[1] Based on 30,603,744 outstanding shares, whereof 1,194,480 class A shares and 29,409,264 class B shares, excluding the 2,540,696 class B shares held by the Company. In the event that ReadSoft should pay any dividend or make any other value transfer prior to the settlement of the Offer, the price per share in the Offer will be reduced correspondingly.
[2] Based on 30,603,744 outstanding shares, excluding the 2,540,696 class B shares held by the Company.
[3] Based on 30,603,744 outstanding shares, whereof 1,194,480 class A shares and 29,409,264 class B shares, excluding the 2,540,696 class B shares held by the Company. In the event that ReadSoft should pay any dividend or make any other value transfer prior to the settlement of the Offer, the price per share in the Offer will be reduced correspondingly.
[4] Based on 30,603,744 outstanding shares, excluding the 2,540,696 class B shares held by the Company.
[5] Based on 30,603,744 outstanding shares, excluding the 2,540,696 class B shares held by the Company.