Teklogix International Inc. (TKX.TO) invites you to participate in a conference call on
Wednesday, July 12th, 2000
MISSISSAUGA, ON, July 12 /CNW/ - Teklogix is making a major corporate
announcement and we would like to invite you to participate in a Canadian
Financial Analysts briefing conference call with Ian McElroy, President and
CEO, and Gord Wilde, Vice President of Finance and CFO. The call will take
place July 12th at 9 a.m. (EDT)
The dial-in number to participate in the teleconference is:
1-877-871-4105 and the Confirmation No. : 15786714.
We will be using Smart Polling for the question-and-answer period.
Participants simply press "1" followed by "4" on a touch-tone phone to
register their request to ask a question. The conference call coordinator is
immediately notified of all requests in the order in which they are made.
He/she will then introduce each questioner to the chair speaker. If you would
like to cancel a request, press "1" followed by "3" on your phone. If you
accidentally hang up your phone during the conference call, you can re-dial
the bridge at `-877-871-4105. For any other problems that may occur, dial "0"
or call the Global Crossings Help Line at 1-800-267-5196.
At this time we would also like to invite you to attend a presentation by
Ian McElroy and Gord Wilde, which will discuss the announcement in greater
detail, on July 13 at 11:30 a.m. (EDT). Please confirm your attendance at this
session with Sylvia Smellie at 905-812-6200 ext. 3570.
Royal York Hotel
100 Front Street West
Salon 1, 19th Floor
TEKLOGIX ENTERS INTO MERGER AGREEMENT WITH PSION PLC
The Board of Psion PLC and the Board of Directors of Teklogix
International Inc. are pleased to announce that they have entered into a
definitive Merger Agreement by which Psion proposes to acquire the entire
issued and to be issued share capital of Teklogix through a combination of up
to C$225 million (approximately pnds stlg 100 million) in cash and the balance
in Psion Exchangeable or Ordinary Shares.
SUMMARY
- Teklogix is a global provider of real-time data collection and
communication solutions to industrial users, for use especially in the
logistics area. Teklogix's products are based on Local Area Networks
and Wide Area Networks.
- In the year ended March 31, 2000, Teklogix generated revenues of $209
million (pnds stlg 93 million), earnings before interest, tax,
depreciation and amortization of $39 million (pnds stlg 17 million)
and profits before tax of $33 million (pnds stlg 14 million).
- Psion is a group of four world-leading technology companies focused on
providing mobile internet and corporate network solutions. Psion is
also the largest shareholder in Symbian, whose objective is to develop
and market its platform technology as the industry standard for the
next generation of mobile communication and computing devices.
- In the year ended December 31, 1999, Psion generated revenues of pnds
stlg 150 million, earnings before interest, tax, depreciation,
amortization, joint ventures and exceptional items of pnds stlg 16
million, profits before tax of pnds stlg 5 million and earnings of pnds
stlg 3 million. As at December 31, 1999, Psion had net assets of pnds
stlg 105 million.
- Psion is offering a total of C$35.00 per Teklogix share, which values
the whole of the issued and to be issued share capital of Teklogix at
$544 million (pnds stlg 242 million) (based on an assumed Psion Share
price of 650 pence), subject to the collar arrangements described in
this announcement.
- The price represents a premium of 41 per cent over the closing price of
Teklogix Shares of $24.90 on July 11, 2000, the last business day
before announcement of the Acquisition and a premium of 17 per cent
over Teklogix's highest closing share price over the last twelve months
of $30.00 per share.
- The acquisition of Teklogix will provide Psion with leading edge
wireless integration capabilities. These technologies will facilitate
the exploitation of the mobile internet in many environments over the
coming years. The company will seek to develop a presence in these
sectors including education and enterprise as well as the industrial
and logistics arenas.
- Teklogix brings critical local wireless integration skills, a strong
North American brand, and a global blue chip customer base. High
profile customers include Delphi Automotive Systems Inc., Cadbury
Schweppes Plc, Dell Computer Corporation, Compaq Computer Corporation,
Nippon Express, The Hertz Corporation, Volkswagen and Honda Europe.
- The Board of Psion believes that the business combination with Teklogix
will give Psion an enhanced geographic and customer reach.
- In addition, the combination of businesses provides a complementary fit
of wireless technologies including Wireless IEEE Standard 802.11,
Bluetooth and access to Symbian's EPOC technology.
- Ian McElroy, currently President and Chief Executive Officer of
Teklogix, will join the Board of Psion and be responsible for managing
the combined business of Teklogix and the Enterprise Computing division
of Psion.
- Rod Coutts, chairman of Teklogix, his related family trusts, and Ian
McElroy have undertaken to vote their entire 27.0 per cent holding in
Teklogix on a fully diluted basis in favor of the transaction.
- Each of Rod Coutts, his related family trusts and Ian McElroy have
agreed to retain a significant proportion of the shares they will
receive as consideration at least until the publication of the Psion
preliminary statement of annual results for the year ending December
31, 2000.
- The Acquisition, which will be recommended by the Boards of Teklogix
and Psion (subject to their fiduciary duties), is subject to approval
by Psion Shareholders and Teklogix Securityholders, Canadian court
approval and certain regulatory approvals.
Dr David Potter, Chairman of Psion, said:
'In the emerging age of the mobile internet, more and more people will
depend upon personal, wireless access to the internet, wherever they are.
Mobile internet will empower them in their work and personal lives with
information, communications, services and entertainment.'
'Psion views the industrial wireless communications market as
tremendously important in the development of Psion's strategy. This strategy
is focused on the potential to harness the mobile internet in all workplaces,
the home and within other environments such as education or health. In
addition to the acquisition of an outstanding company, most importantly
Teklogix provides Psion with core technology in wireless local area networking
for Psion to address the new mobile internet world.'
Ian McElroy, President and Chief Executive Officer of Teklogix, said:
'I am delighted that Teklogix is joining the Psion group of companies and
will help drive its growth as mobile telecommunications and computing
technologies converge. This deal will allow Teklogix to broaden its operations
around the world. The two companies are a great fit, in terms of geography,
technology, customer base and culture. As a result, it represents the
beginning of an exciting new chapter in Teklogix's history.'.
INTRODUCTION
The Board of Psion PLC and the Board of Directors Teklogix International
Inc. are pleased to announce that they have entered into a definitive Merger
Agreement on July 11, 2000 by which Psion proposes to acquire the entire
issued and to be issued share capital of Teklogix. The Acquisition will be
effected by means of a plan of arrangement under Canadian law. Psion is
offering a total of C$35.00 per Teklogix share, which values the whole of the
fully diluted share capital of Teklogix at $544 million (pnds stlg 242
million) based on an assumed Psion share price of 650 pence. The price
represents a premium of 41 per cent over the closing price of a Teklogix share
on July 11, 2000, the last business day before announcement and a 17 per cent
premium over Teklogix's highest share price in the last 12 months of $30.00
per share. It also represents a multiple of 13.5 times historic profits before
interest, tax, depreciation and amortization and 27.5 times historic earnings
on a fully diluted basis. The consideration is to be satisfied by up to $225
million (approximately pnds stlg 100 million) in cash and the balance in Psion
Exchangeable or Ordinary Shares.
INFORMATION ON TEKLOGIX
Teklogix is a provider of industrial wireless data communications
systems, integration services, and product support and maintenance for
customers throughout the world, in particular in Europe (42 per cent of
revenues) and North America (51 per cent of revenues). Teklogix is
incorporated under the laws of Ontario, Canada and is headquartered in
Mississauga, Ontario. Teklogix Shares are listed on the Toronto Stock
Exchange.
Teklogix develops, designs, markets and supports real-time logistics
systems in the industrial space. Teklogix's products focus on providing real-
time data collection and communication solutions to major companies worldwide.
They are based on providing wireless Local Area Networks, Wide Area Networks,
enabling software and related services. High profile customers include Delphi
Automotive Systems Inc., Cadbury Schweppes Plc, Dell Computer Corporation,
Compaq Computer Corporation, Nippon Express, The Hertz Corporation, Volkswagen
and Honda Europe. There are currently more than 6,000 Teklogix systems
installed in 50 countries worldwide.
Teklogix also provides integration services for customers, typically
consisting of software interface customizations, project management,
implementation and training services, and the integration of third party
software and hardware.
Support services to end-user customers and distributors are provided from
service and technical support offices situated in more than 52 locations
throughout the world. These services include customer-site surveys, training,
installation support and product maintenance.
Teklogix's products are agnostic as to both client core systems and
applications software. However, Teklogix has identified Symbian's EPOC
operating system as an important part of the future development of its product
line.
Teklogix is a certified software partner of SAP AG and the only wireless
systems integration partner present at the SAP(TM) Partner Port in Waldorf,
Germany. In April 2000, Teklogix purchased an 11 per cent interest in SyVox
Corporation. SyVox voice recognition technology, based on the Lernout &
Hauspie speech engine, is used to control computer-based data systems by
voice. This shareholding gives Teklogix access to SyVox's technology which
will position Teklogix at the forefront of the use of voice control in
industrial and logistics applications.
In the financial year ended March 31, 2000, Teklogix generated revenues
of $209 million (pnds stlg 93 million), earnings before interest, tax,
depreciation and amortization of $39 million (pnds stlg 17 million) and
profits before tax of $33 million (pnds stlg 14 million). On March 31, 2000,
Teklogix had net assets of $90 million (pnds stlg 40 million) and employed 661
people.
The above figures are extracted from the audited financial statements of
Teklogix for the year ended March 31, 2000 (prepared according to Canadian
GAAP).
INFORMATION ON PSION
The Psion group is now a group of four world-leading technology companies
focused on providing mobile internet and corporate network solutions. Psion
has a well-earned reputation for technology innovation and leadership. Psion
was founded in 1980 by its chairman David Potter and is now one of Europe's
leading technology companies with a history of pioneering new markets for
digital products. Psion has a worldwide distribution network comprising sales
companies in the USA, Germany and Holland, as well as more than 50 independent
overseas distributors. Psion is also the largest shareholder in Symbian, a
joint venture company owned by Psion, Ericsson, Motorola, Matsushista and
Nokia. Symbian's objective is to develop and market its platform technology as
the industry standard for the next generation of mobile communication and
computing devices.
The Psion Group comprises:
Psion Computers - the market-leader in consumer and corporate palmtop
computing with products such as the Revo, Series 5 and Series 7 ranges and a
wide range of peripheral devices;
Psion Connect (formerly Psion Dacom) - European leader and world number
three PC Card modem manufacturer with a reputation for premium, cutting-edge
connectivity products such as the Gold Card Global range of multi-function PC
Cards. As supply partner to Compaq and Dell, the company is also a leading
player in Bluetooth markets;
Psion Enterprise Computing (formerly Psion Industrial) - formed in 1966
to focus on the growing worldwide demand for commercial and industrial
handheld devices such as the netBook, netPad, Workabout, HC and the Organiser
ranges;
Psion InfoMedia - formed in 1999 to develop new products which exploit
the convergence of computing and communications technologies. The division
will produce innovative products for the home or mobile environments that will
distribute text, audio and video in new ways using wireless technologies. The
company's first product is the Psion Wavefinder Digital Audio product, which
will be available in autumn 2000.
In the year ended December 31, 1999, Psion generated revenues of pnds
stlg 150 million, earnings before interest, tax, depreciation, amortization,
joint ventures and exceptional items of pnds stlg 9 million, profits before
tax of pnds stlg 5 million and earnings of pnds stlg 3 million. As at December
31, 1999, Psion had net assets of pnds stlg 105 million.
BACKGROUND TO AND REASONS FOR THE ACQUISITION
The Board of Psion is of the opinion that the rapid convergence and
integration of wireless communication and computing technologies means that
people and organizations will increasingly demand information, communications
and services whilst on the move. Psion recognizes that the rapid convergence
and integration of these technologies will create a range of business
opportunities in the mobile space.
Psion is building its position at the heart of the emerging mobile
internet industry. It is doing this through acquisitions and strategic
investments, technology agreements, OEM relationships and other means. The
acquisition of Teklogix marks a major step forward in implementing this
strategy.
Teklogix is a growing company in an expanding market and is highly
complementary to Psion's existing Enterprise business. Further, and most
importantly, Teklogix provides Psion with core technology in wireless local
area networking which will enable Psion to address the new mobile internet
world. Teklogix's history shows compound sales of more than 20 per cent over
the five years to March 31, 2000. Teklogix also shares Psion's commitment to
R&D spending (around 8 per cent of revenues) in order to develop new
technologies.
Following completion of the Acquisition, the combined Teklogix/Psion
Enterprise division will be managed from Canada by Ian McElroy. Andrew Clegg,
the current Managing Director of Psion Enterprise, will report to him. There
are no plans for rationalization of the business in the short term.
The transaction is expected to be earnings enhancing before the impact of
goodwill amortization. It will result in an annual amortization charge for up
to 10 years.
PRINCIPAL TERMS OF THE ACQUISITION
The Merger Agreement
The Merger Agreement provides that the consideration for the Acquisition
will be on the following basis:
for every Teklogix Share C$35.00 in cash, or
2.393 Psion Exchangeable Shares, or
2.393 Psion Ordinary Shares, or
a combination thereof at the election of
each Teklogix Shareholder (assuming a
Psion Ordinary Share price of 650 pence
and subject to the limitations described
below).
The expected number of Psion Exchangeable Shares or Ordinary Shares to be
issued by Psion, based on an exchange ratio of 2.393 and assuming full take-up
of the cash available, is 21.8 million (representing 5.5 per cent of the
current issued share capital of Psion). Assuming full take-up of the cash
available, the maximum number of shares that can be issued is 27.0 million
(due to a collar arrangement), representing 6.8 per cent of Psion's issued
share capital.
The maximum amount of cash available to Teklogix Shareholders is C$225
million (the 'Aggregate Cash Amount'). If the cash required to satisfy the
consideration for the aggregate number of Teklogix Shares in respect of which
cash elections are made exceeds the Aggregate Cash Amount, shareholders who
elected cash will be entitled to their pro rata portion of the Aggregate Cash
Amount and will be deemed to have elected to receive either Psion Exchangeable
Shares or Psion Ordinary Shares (at each shareholder's option) to the extent
of the balance of the consideration payable for their Teklogix Shares". If
fewer than 2,000,000 Psion Exchangeable Shares (in aggregate) are elected (or
deemed to be elected), Psion Exchangeable Shares will not be issued and
holders who elected to receive Psion Exchangeable Shares will receive Psion
Ordinary Shares.
The Acquisition is to be effected by means of a plan of arrangement under
the OBCA. Psion intends to satisfy the cash element of the consideration from
its existing cash resources. Each Teklogix Option which is not exercised on
the Effective Date will be exchanged for an option to purchase a number of
Psion Ordinary Shares calculated using the exchange ratio applicable to the
Teklogix Shares. The exchange ratio of Teklogix Shares to Psion Exchangeable
and Psion Ordinary Shares is subject to a collar arrangement. The exchange
ratio will be equal to C$ 35.00 divided by the weighted average price of the
Psion Ordinary Shares during the ten day trading period ending on the trading
day immediately prior to the date of the Teklogix Shareholder meeting to
approve the Acquisition. However, if the price of Psion Ordinary Shares is
between 488 pence and 569 pence only one half of the adjustment below 569
pence will be made and if the price of Psion Ordinary Shares is between 731
pence and 813 pence only half the adjustment above 731 pence will be made. No
further adjustment will be made to take account of a move in the price of
Psion Ordinary Shares below 488 pence or above 813 pence. Therefore, the
maximum exchange ratio will be 2.961 and the minimum exchange ratio will be
2.021. The exchange rate to be used in the calculations is fixed at pnds stlg
1 equals C$2.25.
The result of this is set out below:
Psion share price Exchange ratio
(pence)
----------------- --------------
below 488 2.961
488 2.961
569 2.734
650 2.393
731 2.128
813 2.021
above 813 2.021
Application will be made for the new Psion Ordinary Shares to be admitted
to the Official List. The new Psion Ordinary Shares will rank pari passu with
the existing issued Psion Ordinary Shares on the day that they are issued.
PSION EXCHANGEABLE SHARES
Teklogix Shareholders who elect Psion Exchangeable Shares will receive
exchangeable shares issued by Exchangeco, a Canadian incorporated indirect
subsidiary of Psion. An application will be made to list the Psion
Exchangeable Shares on The Toronto Stock Exchange.
The disposition of Teklogix Shares in exchange for Psion Exchangeable
Shares by Canadian residents holding Teklogix shares as capital property will
not result in a taxable Canadian transaction, provided that they make certain
tax elections.
The Psion Exchangeable Shares may be converted into Psion Ordinary Shares
on a one-for-one basis at any time at the request of the holder of a Psion
Exchangeable Share except when the holder is a person within the United
States. Psion Exchangeable Shares can be compulsorily converted in certain
circumstances, and may be converted, in any event, after January 31, 2010.
The Psion Exchangeable Shares will have similar rights and benefits to
existing Psion Ordinary Shares. They will have a right to dividends equivalent
to those paid on Psion Ordinary Shares and, through a Special Voting Share, a
vote at general meetings of Psion. In addition, where Psion, inter alia, seeks
to issue additional shares, is subject to a takeover offer, or reorganizes its
share capital, Psion will seek to put holders of Psion Exchangeable Shares in
a similar position to Psion Ordinary Shareholders.
Further information on the Exchangeable Shares will be included in the
circulars to Psion and Teklogix Shareholders in connection with the
shareholders meetings required to approve the Acquisition. The circulars will
be distributed by mail as soon as practicable after this announcement.
In cases where fractional entitlements to Psion Exchangeable Shares arise
as a result of a Teklogix Shareholder's election, the fractional element will
be paid in cash.
The Acquisition will be recommended by the boards of Psion and Teklogix
(subject to their fiduciary duties).
OTHER TERMS AND CONDITIONS OF THE ACQUISITION
Pending the implementation of the Acquisition, Teklogix is under an
obligation, amongst other things, to continue to conduct its business in the
ordinary course.
The Merger Agreement is subject to certain conditions precedent. These
include, amongst other things, the shareholder approvals required by both
Psion and Teklogix to implement the Acquisition, required regulatory approval
and Canadian court approval and that the Psion Exchangeable Shares shall have
been conditionally approved for listing on The Toronto Stock Exchange.
Teklogix has agreed not to solicit competing offers or proposals although
it may respond to an unsolicited proposal. Teklogix may not enter into any
agreement with respect to an unsolicited proposal unless it constitutes a
superior proposal to the terms of the Acquisition, the terms of the superior
proposal have been communicated to Psion and Psion has been given seven days
to match the terms of such superior proposal.
In certain circumstances, if the Merger Agreement is terminated, Teklogix
will be required to pay a termination fee to Psion of up to C$20 million.
If the Teklogix Securityholders fail to approve the Acquisition, then,
subject to certain exceptions, Teklogix will be required to pay Psion an
expense reimbursement fee. If the Psion Directors cease to recommend the
Acquisition or if the Psion Shareholders fail to approve the Acquisition,
then, subject to certain exceptions, Psion will be required to pay to Teklogix
an expense reimbursement fee.
As a condition of Psion entering into the Merger Agreement, Teklogix has
agreed to grant Psion an irrevocable option to purchase newly issued Teklogix
Shares, representing approximately 19.9 per cent of the issued and outstanding
Teklogix Shares (the 'Option'). This option may be exercised in circumstances
in which the Board of Teklogix recommends a superior proposal and the shares
issued may be voted with respect to such superior proposal. Such shares may
not be voted in connection with the approval of the Acquisition. The Option
may also be exercised in other circumstances in which Teklogix would be
required to pay a termination fee to Psion.
MANAGEMENT AND INTEGRATION PROCESS
Following the Acquisition, the Enterprise Division of Psion will be
combined with Teklogix. The combined division will be run from Canada by Ian
McElroy, currently President and Chief Executive Officer of Teklogix, with
Andrew Clegg, the current Psion Enterprise Managing Director, reporting to
him.
Ian McElroy and other key members of his team are also giving
undertakings of support for this transaction by entering into new employment
agreements.
It is anticipated that the integration efforts of Psion and Teklogix will
focus on opportunities to exploit the market position of the two companies.
MAJOR SHAREHOLDERS
Psion has entered into certain arrangements with Rod Coutts, the trusts
for Rod Coutts' family members and Ian McElroy pursuant to which they are
prohibited from disposing of their Teklogix Shares or entering into
negotiations with any other party regarding an alternative transaction. In
addition, these shareholders have agreed to vote their entire 27.0 per cent
shareholding in Teklogix (on a fully diluted basis) in favour of the
Acquisition and against any action which would impede the Acquisition.
The above shareholders have also given undertakings in relation to the
Psion shares they will receive. Rod Coutts and his related family trusts have
agreed to elect to receive at least their pro rata entitlement to Psion
Exchangeable Shares or Psion Ordinary Shares. Rod Coutts has also agreed to
restrict the sale of approximately half of the Psion Exchangeable Shares or
Psion Ordinary Shares received as consideration, following the donation of a
limited amount of shares to charity, until at least the publication of the
Psion preliminary statement of annual results for the year ending December 31,
2000. The family trusts have agreed to restrict the sale of approximately 20
per cent of Psion Exchangeable Shares or Psion Ordinary Shares received as
consideration until at least the same date as above.
Ian McElroy intends to replace one quarter of his Teklogix options with
new Psion options and to restrict the sale of the Psion Exchangeable Shares or
Psion Ordinary Shares received as consideration on at least a further one
quarter of his Teklogix options until at least the same date as above.
Rod Coutts, his family trusts and Ian McElroy have agreed to orderly
marketing arrangements in respect of the balance of any shares received as
consideration. Any such marketing is likely to commence shortly after
completion of the Acquisition.
SHAREHOLDER MEETINGS
The Acquisition requires the approval of Psion Shareholders at a general
meeting. Further details of the Acquisition and the Extraordinary General
Meeting are expected to be provided in a circular to Psion Shareholders which
will be sent as soon as practicable.
The plan requires the approval of the Teklogix Securityholders at a
special meeting. Further details of the plan and the Teklogix Special Meeting
will be contained in a management information circular which will be sent to
Teklogix Securityholders as soon as practicable.
Further information can be found at www.teklogix.com or www.psion.com.
The Acquisition is expected to be completed by the end of the third
quarter of this year.
RECOMMENDATIONS
The Board of Psion, which has been advised by Lazard, considers that the
Acquisition is in the best interests of the Company and the Psion Ordinary
Shareholders as a whole. In giving its advice, Lazard has placed reliance upon
the Directors' commercial assessment of the Acquisition.
Accordingly, the Board of Psion intends to recommend unanimously that all
Psion Shareholders vote in favour of the resolutions to be proposed at the
Extraordinary General Meeting as they intend to do in respect of their own
beneficial holdings, amounting to 67,993,960 Psion Ordinary Shares
representing 17.1 per cent. of the Psion Ordinary Shares in issue.
Teklogix has considered the proposed Acquisition and is of the view that
the terms of the Acquisition are fair to Teklogix Securityholders and in the
best interests of Teklogix. The Board of Teklogix has unanimously approved the
Acquisition and intends to recommend unanimously that Teklogix Securityholders
vote in favour of the resolutions to be proposed at the Teklogix Special
Meeting of Shareholders. Broadview has provided a fairness opinion to the
Board of Teklogix. Each of the directors of Teklogix has advised that he or
she intends to vote the Teklogix shares or Teklogix options held by him or
her, directly or indirectly, in favour of the resolution approving the
Arrangement.
This announcement assumes an exchange rate of pnds stlg 1 equals C$2.25.
Further information can be found at and www.teklogix.com and
www.psion.com.
INQUIRIES
Teklogix Tel: +1 905 813 9900
--------
Ian McElroy
Gordon Wilde
Psion Tel: +44(0)20 7404 5959
-----
Dr David Potter
David |
