Kamic Electronics launches a public cash offer of SEK 38 per share to the shareholders of ElektronikGruppen
This press release may not, directly or indirectly, be disclosed, published or distributed to or within Australia, Japan, Canada, New Zeeland, South Africa, USA or any other country where such action would require registration or any other actions in addition to those required under Swedish law. The offer is not being made to (and acceptances will not be accepted from) persons in those countries or elsewhere where their participation requires further documentation, filings or other measures in addition to those required by Swedish law.
This press release has been published in Swedish and English. In the event of any discrepancy in content between the language versions, the Swedish version shall prevail.
Kamic Electronics AB[1] (the “Bidder” or “Kamic Electronics”), a company jointly controlled by Kenneth Lindqvist (through wholly owned companies) and Thomas Wernhoff, hereby launches an offer in cash to the shareholders of ElektronikGruppen BK Aktiebolag (publ) (“ElektronikGruppen”) to transfer all shares in ElektronikGruppen to the Bidder (the “Offer”). The class B shares in ElektronikGruppen are listed on NASDAQ OMX Stockholm, Small Cap. The class A shares are not listed.
The Bidder currently does not own any shares in ElektronikGruppen. Kenneth Lindqvist, who is chairman of the board and the largest shareholder in ElektronikGruppen, owns or otherwise controls together with related parties (directly or indirectly) a total of 49,500 A-shares and 1,584,159 B-shares in ElektronikGruppen, corresponding to approximately 29.2 percent of the share capital and approximately 29,9 percent of the votes. Thomas Wernhoff, who is deputy chairman of the board and the second largest shareholder in ElektronikGruppen, owns indirectly 100,500 A-shares and 340,000 B-shares in ElektronikGruppen, corresponding to approximately 7.9 percent of the share capital and approximately 19.4 percent of the votes. Each share of class A and B owned or otherwise controlled by Kenneth Lindqvist together with related parties and Thomas Wernhoff, respectively, – a total of 150,000 A- shares and 1,924,159 B-shares, corresponding to approximately 37.1 percent of the share capital and approximately 49.3 percent of the votes in ElektronikGruppen – will be transferred to the Bidder in connection with the completion of the Offer. In addition, pursuant to option agreements, the Bidder has the right to acquire 83,047 B-shares, corresponding to approximately 1.5 percent of the share capital and approximately 1.2 percent of the votes, in connection with, and subject to, completion of the Offer.
Summary of the Offer
> For each share in ElektronikGruppen, irrespective of the class of share, SEK 38 is offered in cash, resulting in a total Offer value of approximately SEK 213 million.
> The Offer represents a premium of
- 31.0 percent compared to the closing price of ElektronikGruppen’s B-share on NASDAQ OMX Stockholm of SEK 29 on 21 June 2011, being the last trading day prior to announcement of the Offer,
- 32.3 percent compared to the volume-weighted average price during the last ten trading days prior to announcement of the Offer, and
- 30.6 percent compared to the volume-weighted average price during the last 30 days prior to announcement of the Offer.
> The acceptance period of the Offer is expected to run during the period 8 July – 12 August 2011. Settlement is expected to begin about six days after the end of the acceptance period, i.e. on or around 18 August 2011.
”I am pleased to form a new group together with Thomas Wernhoff. The two companies are highly complementary with similar technologies and few product overlaps. The new group will enhance its competitive position by utilizing each company’s competitive advantages. We have a solid understanding of both businesses and we have reached the conclusion that the anticipated merger is attractive for both companies as a larger constellation is created with limited risk.” Kenneth Lindqvist, Chairman of the Board of KAMIC AB.
”I have known and worked together with Kenneth Lindqvist for a long time in different situations and found that we have reached a level of mutual trust. We have now agreed to evaluate potential synergies between ElektronikGruppen and the companies owned by Kenneth Lindqvist. Our common view is that ElektronikGruppen would see a more positive development as a privately held company and that ElektronikGruppen lack sufficient size to motivate its costs associated with being a public company. ElektronikGruppen would gain flexibility and be in a position to capture potential synergies with Kenneth Lindqvist’s companies, as a privately held company. This has previously not been an option due to the potential conflict of interest with other shareholders. I look forward to actively participate in facilitating a more expansive ElektronikGruppen and have therefore decided to support this effort within the KAMIC framework.” Thomas Wernhoff, Member of the Board of Kamic Electronics.
Background and rationale for the Offer
Kamic Electronics is a member of the KAMIC group in which KAMIC AB is the ultimate parent company ("KAMIC" or "KAMIC Group"). KAMIC continuously monitor growth opportunities, both organic as well as growth through acquisitions. KAMIC’s acquisition strategy is based on the company's business philosophy that a group can achieve more than a single unit Strong, well-established specialised entities can grow through interacting with each other. This facilitates an offering with a broad knowledge base as well as a wide range of components and total solutions. Hence, KAMIC actively seeks potential acquisitions and alliances which strengthens existing technologies and adds new as well as complementary products and distribution channels. Since 1998, KAMIC has undertaken approximately 10 acquisitions.
KAMIC has monitored ElektronikGruppen for some time and acknowledges its leading position with regards to components for telecommunications equipment, commercial vehicles, information systems and automation products and has concluded that ElektronikGruppen complements the KAMIC Group’s own product portfolio. As a consequence, a merger would strengthen the company's position as a trading and agency business in the electricity and electronics segment.
KAMIC notes that ElektronikGruppen’s business has seen limited historical profitability due to structural market changes for its products, price erosion as well as unfavourable currency developments, despite extensive recent rationalisations. A merger with KAMIC would strengthen ElektronikGruppen’s position on the international market and, through joint efforts with KAMIC, increase ElektronikGruppen’s ability to achieve cost advantages.
ElektronikGruppen is a leading supplier of high technology components, systems and production equipment for the electronics industry in the Nordic region. KAMIC is a market leader in emergency lighting and ancillary products and also operates within general lighting, electronics and electromechanical components, insulation materials and wiring as well as anti fire and theft systems. KAMIC believes that a merger would create a strong business formation, resulting in reduced business risk, enhanced profitability and several direct rationalisation opportunities.
After the merger, the combined group is expected to generate revenues of approximately SEK 1.4 billion (based on KAMIC’s and ElektronikGruppen’s revenues for the fiscal years 2010/11 and 2010, respectively), with a more diversified trading and agency business as well as critical mass for further international expansion. Operationally, the two companies complement each other and is expected to see limited product overlap. KAMIC has identified cost saving potential in the areas of real estate, purchasing, logistics and administration in addition to the expected cost savings derived from operating as a private company rather than as a listed company.
KAMIC greatly appreciates the work undertaken by ElektronikGruppen’s management as well as employees and intends to continue to safeguard ElektronikGruppen’s corporate culture and strong employer/employee relationship. A detailed structure analysis will be undertaken post completion of the Offer with the aim to secure ElektronikGruppen’s identity within the new group. KAMIC expects no major short-term changes for either management or other employees (including employment conditions) or for the degree of employment in the ElektronikGruppen subsidiaries.
The Offer
The Bidder offers SEK 38 in cash for each share in ElektronikGruppen, irrespective of class. The offer price is subject to adjustment corresponding to the value of any dividends or other distributions made by ElektronikGruppen prior to settlement of the Offer.
The Offer represents a premium of
> 31.0 percent compared to the closing price of ElektronikGruppen’s B-share on NASDAQ OMX Stockholm of SEK 29 on 21 June 2011, being the last trading day prior to announcement of the Offer,
> 32.3 percent compared to the volume-weighted average price during the last ten trading days prior to announcement of the Offer, and
> 30.6 percent compared to the volume-weighted average price during the last 30 days prior to announcement of the Offer.
Commission is not paid in the Offer.
The total value of the Offer amounts to approximately SEK 213 million.
The Bidder does not currently own any shares in ElektronikGruppen. Each share of class A and B directly or indirectly owned or otherwise controlled by Kenneth Lindqvist together with related parties and Thomas Wernhoff, respectively, – a total of 150,000 A- shares and 1,924,159 B-shares, corresponding to approximately 37.1 percent of the share capital and approximately 49.3 percent of the votes in ElektronikGruppen – will be transferred to the Bidder in connection with the completion of the Offer. In addition, pursuant to option agreements, the Bidder has the right to acquire 83,047 B-shares, corresponding to approximately 1.5 percent of the share capital and approximately 1.2 percent of the votes, in connection with, and subject to, completion of the Offer.
For information regarding the financing of the Offer, please see “Description of the Bidder and the financing of the Offer” below.
Terms and conditions of the Offer
Completion of the Offer is conditional upon:
(i) that the Offer is accepted to such extent that the Bidder becomes the owner of more than 90 percent of the total number of shares in ElektronikGruppen,
(ii) that no other party announces an offer to acquire shares in ElektronikGruppen on terms that are more favorable to the shareholders of ElektronikGruppen than the Offer,
(iii) that ElektronikGruppen does not take any measures that are likely to impair the prerequisites for making or implementing the Offer,
(iv) with respect to the Offer and completion of the acquisition of ElektronikGruppen, receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions, inter alia from competition authorities, in each case on terms which, in the Bidder’s opinion, are acceptable,
(v) that neither the Offer nor the acquisition of ElektronikGruppen, is 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 the Bidder and which the Bidder could not reasonably have foreseen at the time of the announcement of the Offer,
(vi) there being no material adverse change in ElektronikGruppen’s financial position or business subsequent to the announcement of the Offer, whereby material adverse change shall mean an event, which significantly affects or can be reasonably expected to affect ElektronikGruppen’s liquidity, sales, results, equity or assets negatively and which the Bidder could not have foreseen at the time of the announcement of the Offer, and
(vii) that payment is made in accordance with the Bidder’s agreements with Danske Bank A/S, Danmark, Sverige Filial (“Danske Bank”) (please see further below under “Description of the Bidder and the financing of the Offer”).
The Bidder reserves the right to withdraw the Offer in the event that it is clear that any of the above conditions are not fulfilled or can not be fulfilled. However, with regard to conditions (ii)-(vii), such withdrawal will only be made provided that the defective fulfillment of such condition is of material importance to Kamic Electronic’s acquisition of ElektronikGruppen.
The Bidder reserves the right to waive, in whole or in part, one or more of the conditions above, including, with respect to condition (i) above, to complete the Offer at a lower level of acceptance.
Description of the Bidder and the financing of the Offer
Kamic Electronics AB, corporate registration number 556852-7393, is a Swedish limited liability company currently having its registered office in Stockholm, Sweden.[2] The Bidder has not pursued any business and has not had any employees. The Bidder is owned by 92 percent by KAMIC Components AB, which is wholly-owned by KAMIC AB, which in turn is wholly-owned by Kenneth Lindqvist. The remaining eight percent of the Bidder is owned by Thomas Wernhoff. Kenneth Lindqvist and Thomas Wernhoff are the only ordinary members of the board of directors of Kamic Electronics. Please see “The KAMIC group in short” below for a description of the KAMIC group’s business.
The Bidder has obtained binding financing undertakings regarding both capital contributions in the form of subordinated shareholder loans from companies controlled by Kenneth Lindqvist and from a company wholly owned by Thomas Wernhoff and bank financing from Danske Bank, which shall be provided in accordance with a detailed term sheet executed by Danske Bank.
Disbursement in accordance with the undertaking from Danske Bank is conditional upon that the conditions for completion of the Offer are satisfied or waived (where under certain circumstances such waiver requires the lender’s approval). In addition to this, the loan agreement will not contain any conditions for disbursement that the Bidder and its owners does not in practice control (besides a condition that disbursement will not take place if it is illegal for the borrower to utilize the loan or for the lender to provide the loan, which is a common condition for disbursement of a loan of this type).
The further conditions for disbursement of the loan which the Bidder and its owners control, are in all material respects the following:
> that the Bidder and certain other companies in the KAMIC group fulfills the agreed pledges over certain assets, including a pledge over the shares in ElektronikGruppen that are acquired through the Offer,
> that the companies in the KAMIC group have not breached any of the limited key terms in the loan documentation, such as the raising of debt, granting of security or disposal of assets other than as agreed with Danske Bank, or that the Bidder or other companies in the KAMIC group becomes insolvent or withdraws from their agreements,
> that the Bidder acts in accordance with the Offer and complies the laws and regulations applicable to the Offer and that the Bidder is capitalized with the agreed subordinated shareholder loans, and
> that Kenneth Lindqvist, directly or indirectly, continues to own 100 percent of KAMIC AB and KAMIC Components AB and continues to control the Bidder.
Certain related parties
Kenneth Lindqvist and Thomas Wernhoff, chairman of the board and deputy chairman of the board respectively in ElektronikGruppen, control the Bidder and, consequently, participate in the Offer (se section “Description of the Bidder and the financing of the Offer” above). Neither Kenneth Lindqvist nor Thomas Wernhoff is therefore part of the group of independent board members of ElektronikGruppen as regards the Offer, and none of them have participated, or will participate, in the ElektronikGruppen board’s evaluation or resolutions in connection with the Offer.
Pursuant to the rules of NASDAQ OMX Stockholm regarding public tenders on the stock market, it is the duty of ElektronikGruppen to obtain a fairness opinion from an independent financial institution which will be disclosed not later than two weeks prior to the lapse of the acceptance period.
Preliminary time plan
The acceptance period of the Offer is expected to run during the period 8 July – 12 August 2011. An offer document regarding the Offer will be published prior to the commencement of the acceptance period and subsequently distributed to the shareholders in ElektronikGruppen.
Settlement is expected to begin about six days after the end of the acceptance period, i.e. on or around 18 August 2011.
The Bidder reserves the right to extend the acceptance period, as well as, as a consequence thereof, to postpone the settlement date.
Compulsory acquisition and de-listing
Compulsory acquisition of the then outstanding minority shares is intended to be called for provided that the Offer is excepted to such extent the Bidder obtains more than 90 percent of the total number of shares in ElektronikGruppen. In connection therewith, the Bidder intends to promote a de-listing of ElektronikGruppen’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 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, the Bidder has undertaken to 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.
Advisors
The Bidder has retained ABG Sundal Collier as financial advisor and Advokatfirman Vinge as legal advisor in connection with the Offer.
Stockholm, 22 June 2011
Kamic Electronics AB
The board of directors
Any questions may be referred to:
Kenneth Lindqvist, representative of Kamic Electronics, phone: + 46 70 310 18 23
The KAMIC group in short
The KAMIC group consists of 14 European trade and agent companies within the following fields of technology:
- Electricity and electronic components
- Emergency lighting and lighting
- Safety products
- Back-up power, UPS, power supply, testing and measuring
- Equipment for the broadband market
The group is focusing on sale and marketing of quality products from world leading producers. With its strong technical competence, sensitivity for support and good delivery capacity, the companies within the group develop its business operations in a close cooperation with the customers. The KAMIC group’s parent company, KAMIC AB, is wholly-owned by Kenneth Lindqvist.
Kenneth Lindqvist has been the chairman of the board of ElektronikGruppen since 2007. Kenneth Lindqvist is also chairman of the board in Amplex AB, KAMIC AB and in several of his own companies. Kenneth Lindqvist’s professional experience includes being the CEO of SAAB Sverige from the middle of 1980 to 1992 and has thereafter been self-employed.
[1] StartVision 2363 AB under change of name to Kamic Electronics AB.
[2] The address to Kamic Electronics is P.O Box 278, 651 07 Karlstad, Sweden.