LEITCH TECHNOLOGY TO ACQUIRE DIGITAL PROCESSING SYSTEMS
Strengthens core video business, enhances editing and effects capabilities,
supports IP strategy
Offer provides 26% premium to DPS shareholders
TORONTO, September 5, 2000 -- Leitch Technology Corporation ("Leitch")
(TSE:LTV;
NASDAQ:LVID) and Digital Processing Systems ("DPS") (TSE:DPS) jointly
announced today that Leitch has agreed to acquire all of the issued and
outstanding common shares of DPS. Leitch will offer total compensation
equivalent to $6.50 per DPS common share comprised of cash and Leitch common
stock. The offer price represents an approximate 26% premium to the closing
price of DPS' shares on the Toronto Stock Exchange on Friday, September 1,
2000 and a 50% premium based on the three-month average price of DPS'
shares.
The transaction has received the unanimous approval of the Boards of
Directors of both companies. DPS shareholders holding approximately 40% of
the outstanding DPS shares have irrevocably agreed with Leitch to tender
their shares to the offer. The transaction has an aggregate transaction
value of approximately $86.5 million.
John A. MacDonald, Leitch President and Chief Executive Officer, said, "This
is a logical step in the evolution of our company. It strengthens our core
video business and enhances our video storage and editing portfolio. It also
expands our research and development capacity by uniting two exceptional
video engineering teams. This acquisition reflects Leitch's stated growth
strategy of leveraging our core video processing competencies into new and
expanded markets and it provides an excellent platform for future growth.
"We are delighted to welcome DPS and its personnel as our new strategic
partners. The combination of our creative, technical, and financial
strengths will reinforce our leadership position in the professional
television equipment market. We are excited by the business opportunities
generated by this transaction.
"We believe that next-generation video systems will be physically
distributed, and that processes such as production and post production will
be increasingly fragmented. Our strategy includes building the networked
infrastructure itself, as well as providing a wide range of creative tools
that can be used collaboratively in this environment. The DPS acquisition
moves us closer to both of these goals."
Mark E. Burton, President and Chief Executive Officer of DPS, stated: "This
merger is a very positive step for DPS and will be good for our
shareholders, employees and customers. We believe that Leitch is offering
fair value to our shareholders for their shares, and we support the offer
and recommend its acceptance."
Burton continued, "We are very pleased to be aligning ourselves with Leitch,
a recognized leader in the video industry. Leitch has significant financial
resources, a long history of technological innovation, a broad product line
and an extensive customer base. Together, the companies will have a strong
core of advanced video hardware and software expertise, plus the critical
mass necessary to maintain a leadership position in our industry.
"In addition, we share the same vision concerning the future of video
technology. Companies such as Leitch and DPS, which possess leading-edge
skills relating to the processing of high quality video, will take the lead
as video applications expand and incorporate new technologies. Working
together, Leitch and DPS will be able to achieve more than would have been
possible working apart."
The transaction is expected to be immediately accretive to Leitch's earnings
per share. Based on most recently reported results for the last twelve
months, the combined company will enjoy revenues of $212, 907,000, EBITDA
of $38,812,000, and a workforce of approximately 850. Leitch generated
EBITDA of $35,142,000 on revenue of $163,046,000 in its fiscal year ended
April 30, 2000.
Leitch and DPS are the world's leading manufacturers of video synchronizers
and timing products. These devices are used to align signals from different
locations, and therefore represent a key building block in distributed video
systems. With an arsenal that includes Leitch-developed Absolute Time Code
(ATC) technology, the company will be the undisputed world leader in this
market.
With the addition of products and development expertise from DPS, Leitch
continues its move toward a comprehensive offering of video storage and
editing solutions. The company's server product line currently includes
focused editing applications such as NEWSFlash, a digital newsroom solution
for acquisition, editing, browsing and instantaneous play-to-air. DPS offers
a complementary range of general-purpose, stand-alone editing and animation
products, and together the companies will posses all of the skills necessary
to develop a broad array of editing options.
In addition to synergies with Leitch's server business, the DPS acquisition
provides access to a broader market for post production tools. The
successful dpsVelocity and dpsReality non-linear editors, which are used in
the creation of feature films and video programming, represent an
incremental market for Leitch. The companies are also aligned in their
recognition of the growing importance of video-over-IP technology. DPS
recently extended its offering of creative tools into the web-streaming
domain with the "eBroadcast" versions of dpsVelocity and dpsReality, which
feature ultra-fast output of the most popular web video formats.
While full integration of the Leitch and DPS product lines is ultimately
expected, it is anticipated that this will be accomplished primarily through
next-generation product development. The product offerings of both Leitch
and DPS remain intact, and the companies are mutually committed to ensuring
a seamless transition for their customers. All products continue to be
available and fully supported, and all distribution channels remain active.
The companies plan to integrate their workforces quickly.
Transaction Details
Each DPS share will be exchanged at the option of DPS shareholders for $6.50
cash or the fraction of a Leitch common share equal to $6.50 divided by the
"effective Leitch share price" (subject to an aggregate minimum cash
consideration of $20 million and an aggregate maximum cash consideration of
$40 million). The "effective Leitch share price" is the volume-weighted
average trading price of Leitch shares on the TSE for the ten trading days
ending on the third trading day immediately prior to the expiry date of the
offer, subject to a minimum effective Leitch share price of $23.43 and a
maximum effective Leitch share price of $28.64. DPS has approximately 13.3
million shares outstanding (on a fully diluted basis).
Leitch's take-over bid circular will be mailed on or about September 20,
2000. The offer is subject to certain conditions that are required to be
satisfied prior to take-up and payment by Leitch, including, but not limited
to, a requirement that at least 66 2/3% of the total number of DPS shares,
calculated on a fully diluted basis, be tendered to the offer, and
compliance with necessary regulatory requirements. DPS shareholders holding
approximately 40% of the outstanding DPS shares have irrevocably agreed with
Leitch to tender their shares to the offer.
The board of directors of DPS has unanimously agreed to support the offer
and recommend to its shareholders that they accept it. DPS has received an
opinion from RBC Dominion Securities Inc., which has acted as financial
advisor to DPS, that the offer is fair from a financial point of view to the
shareholders of DPS.
DPS has entered into a Support Agreement with Leitch which contains terms
and conditions typical for transactions of this nature and which prohibits
DPS from soliciting any competing offers. If an unsolicited offer having a
higher value is received by DPS, Leitch has the right to increase its offer
to match that competing offer and if Leitch matches the competing offer, DPS
must continue to support Leitch's offer. In certain circumstances,
including one in which Leitch does not match a competing offer, DPS may
terminate the Support Agreement and withdraw its recommendation to
shareholders to accept Leitch's offer. In such an event and in certain
other circumstances where the offer is not completed, DPS would be required
to pay a break fee to Leitch of $2.5 million. In certain other
circumstances where the offer is not completed, DPS would be required to pay
certain expenses of Leitch, up to $800,000.
National Bank Financial Inc. is providing financial advice to Leitch for
purposes of this transaction, while DPS is being advised by RBC Dominion
Securities Inc.
A media availability session will be held in the Toronto Room of the Royal
York Hotel at approximately 12:00 noon today, immediately following Leitch's
annual general meeting which is scheduled to begin at 11:00 a.m. in the
Ballroom of the same hotel.
Leitch Technology Corporation provides leading-edge solutions to store,
switch, distribute, convert, and otherwise process high-quality audio and
video signals. Applications for Leitch products span the broadcast, telco,
cable, post-production, Internet, and business-to-business markets. Leitch
is headquartered in Toronto, ON Canada with other key offices in Virginia,
California, the United Kingdom, Brazil, Japan, Hong Kong and Australia.
Digital Processing Systems Inc., based in Markham, Ontario, designs,
manufactures and sells innovative hardware and software products that
facilitate the creation, manipulation and dissemination of broadcast-quality
video and audio content. In both of the company's two business segments,
Broadcast and Post Production, DPS provides powerful, flexible solutions
that lead the world in terms of price/performance. DPS's Broadcast products
are used by major television networks, television stations, cable companies
and telecommunications companies throughout the world. DPS's editing
products are used by professionals worldwide for film and video post
production, corporate, educational and industrial videos, multimedia
presentations, video game development, animation, compositing, special
effects, Web video streaming and DVD authoring.
Contact:
Leitch Technology Corporation Digital Processing Systems
Inc.
Media: Don Thompson David Fenton
Director of Marketing Director of
Communications
Tel: +1 (757) 548-2300 x 101 Tel: +1
(905) 944-4000
(800) 231-9673 x 101
mailto:don.thompson@leitch.com
mailto:david.fenton@dps.com
Investors: Reg Tiessen Mark E.
Burton
VP Finance and CFO President &
CEO
Tel: +1 (416) 445-9640 Tel: +1 (905)
944-4290
mailto:reg.tiessen@leitch.com
mailto:mark.burton@dps.com
or
Ken J.
MacKenzie
CFO
Tel: +1
(905) 944-4005
mailto:ken.mackenzie@dps.com
Web site: leitch.com
dps.com |
