Ian --
There was a conference call early this morning that I missed, but the replay is still available: 888-266-2086, access # 1432281.
Acquisition will be accretive in 2000.
>>>>
sdli
March 31, 1999 08:24
SDL, Inc. Announces Recommended Offer to Acquire IOC International PLC
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Acquisition Intended to Expand SDL's Offerings to Dense Wavelength Division Multiplexing Customers and Enhance European Presence
SAN JOSE, Calif., March 31 /PRNewswire/ -- SDL, Inc. (Nasdaq: SDLI) announced today that an agreement has been reached with the board of IOC International plc (IOC) on the terms of a recommended offer for IOC. The IOC Group is a UK-based manufacturer of lithium niobate components for long haul fiber optic transmission systems. IOC shares are traded on the United Kingdom Alternative Investment Market (AIM) under the symbol, IOC. The acquisition is intended to expand SDL's range of optical products to its large base of dense wavelength division multiplexing (DWDM) customers and enhance its presence in Europe in manufacturing, development and sales and marketing.
Terms of the Offer
SDL will offer to acquire the whole of the share capital of IOC in exchange for new SDL Common Stock on the basis of 1.815 shares of new SDL Common Stock for every 100 IOC shares (before taking account of SDL's recently announced intention to declare a 2-for-1 stock split by way of a stock dividend). Full acceptance of the Offer will involve the issue of SDL Common Stock representing approximately four percent of SDL's current outstanding Common Stock, and values IOC's current issued share capital at approximately $46 million (approximately $50 million on a fully diluted basis after adjusting for the exercise of all outstanding IOC options and deducting the aggregate exercise price of such options). The Offer is intended to qualify as a pooling of interests transaction and is conditional upon, among other factors, the SEC declaring a Registration Statement effective and the receipt of acceptances in respect of 90 percent of IOC shares. The Offer will be a taxable transaction to U.S. holders of IOC shares or U.K. holders of IOC shares resident in the U.S.
The directors of IOC intend unanimously to recommend IOC shareholders to accept the Offer. The U.K. directors of IOC and certain other IOC shareholders have given irrevocable undertakings to accept the Offer in respect of holdings amounting in total to 19,766,175 IOC shares, representing approximately 63.49 percent of IOC's issued share capital as of March 30, 1999. Of these undertakings, those relating to 5,084,830 IOC shares (approximately 16 percent) will be binding even if a higher competing offer is made for IOC and those relating to 14,681,345 IOC shares (approximately 47 percent) will cease to be binding under certain circumstances. SDL will issue an Offer document to IOC shareholders following the declaration by the SEC that the Registration Statement is effective. SDL expects the acquisition to be completed in the second quarter of 1999. Rea Brothers Limited is acting for SDL in connection with the Offer and Henry Cooke Corporate Finance Ltd is acting for IOC.
Following the acquisition, the IOC executive management team is expected to remain, including Mike Powell, who will continue as managing director of IOC. The IOC operating unit will report to Gregory P. Dougherty, the chief operating officer of SDL. SDL expects to integrate the sales organizations into a common structure.
Acquisition expands SDL's offerings to fiber optic system customers
Commenting on the Offer, Donald R. Scifres, chairman and chief executive officer of SDL, said, "The acquisition of IOC is designed to expand our ability to service the growing DWDM market by broadening our existing product portfolio. With the addition of IOC's lithium niobate based components and modules, we are able to provide our existing customer base with more elements of their DWDM solutions, while leveraging the increasing market for 10 Gbit/s products." Donald R. Scifres continued, "From this acquisition, SDL also gains additional manufacturing, development and sales and marketing capabilities. The combination of SDL and IOC is expected to enable SDL to further penetrate the European market, while allowing IOC a faster entry to the substantial U.S. market."
Mike Powell, managing director of IOC, commented, "The combination of the two companies adds to IOC's strengths as we benefit from the strong leadership position SDL has established in the telecommunications industry. SDL is considered a key supplier to most of the major telecommunication equipment suppliers. We believe SDL's strong customer relationships will allow IOC to expand rapidly the demand for our products."
IOC and SDL product offerings
The IOC Group's products include 2.5 Gbit/s and 10 Gbit/s modulators and other lithium niobate products which are designed for use in long haul fiber optic transmission systems. The IOC Group manufactures hermetically sealed lithium niobate modulators, developed for high reliability applications for both 2.5 Gbit/s and 10 Gbit/s transmission. The worldwide lithium niobate modulator market is expected to grow significantly as transmission systems continue to move to 10 Gbit/s data rates per wavelength division multiplexing (WDM) channel.
Since the admission of its shares to AIM, IOC has invested heavily in manufacturing capacity and technologies. As a result, the IOC Group now provides high yield manufacturing of high performance products. IOC tests and qualifies all its products to industry quality standards.
The acquisition of IOC is intended to expand SDL's range of optical products to its DWDM customers and is a key part of SDL's strategy to offer a full line of critical components to fiber optic system manufacturers. SDL already has a leading position for the supply of 980 nm pump modules used in fiber amplifiers for both terrestrial and undersea communications business. SDL also offers a line of other products for use in the telecommunications business including fiber Bragg gratings WDM combined 980 nm pump lasers and modules, high power 1480 nm laser pump modules, fiber amplifiers and tunable 1550 nm sources for telecommunications diagnostic equipment.
SDL designs, manufactures and markets fiber optic-related products, lasers and optoelectronic based systems. Its products are used in a diversity of markets such as telecommunications, cable television, dense wavelength division multiplexing, satellite communications, printing, medical and materials processing.
Statements in this press announcement which are not historical, including statements regarding SDL's or IOC's or their respective management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (a U.S. statute). Such statements include statements regarding SDL's intention to expand its product range, its customer base, its markets and presence in Europe with manufacturing, development and sales and marketing, its belief that the worldwide lithium niobate modulator market will grow significantly, its expectations to retain the IOC management team, the terms of the Offer and its expectations to complete the acquisition during the second quarter of 1999. It is important to note that SDL's and IOC's actual results could differ materially from those in any such forward-looking statements. Factors that could cause actual results to differ materially include risks related to uncertainties in or failure to meet customer and market requirements, failure to achieve or participate in market growth, failure to achieve a profitable operation, inability to penetrate the European markets, delay or failure to complete the transaction in the second quarter of 1999, delay or failure to successfully incorporate the acquired business, an inability to retain the present IOC management team and the risk factors listed form time to time in SDL's SEC reports including, but not limited to, the annual report on Form 10-K/A for the year ended January 1, 1999.
The directors of SDL accept responsibility for the information contained in this press announcement, except for the information in this press announcement concerning IOC, its subsidiary and their respective businesses, the directors of IOC and their connected persons and persons acting in concert with, and associates of, IOC. Subject as aforesaid, to the best of the knowledge and belief of the directors of SDL (who have taken all reasonable care to ensure that such is the case), the information contained in this press announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
The directors of IOC accept responsibility for the information contained in this press announcement concerning IOC, its subsidiary and their respect businesses, themselves and their connected persons and persons acting in concert with, and associates of, IOC. To the best of the knowledge and belief of the directors of IOC (who have taken all reasonable care to ensure that such is the case), the information contained in this press announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
The statements set out in the two immediately preceding paragraphs are included solely to comply with the requirements of Rule 19.2 of the City Code and shall not be deemed to establish or expand any liability under the Securities Act or any state securities legislation in the United States.
The Offer will not be made to IOC shareholders in the United States, Canada, Australia and Japan.
Rea Brothers Limited, which is regulated by The Securities and Futures Authority Limited, is acting exclusively for SDL and no one else in connection with the Offer, and will not be responsible to anyone other than SDL for providing the protections afforded to customers of Rea Brothers Limited nor for providing advice in relation to the Offer.
Henry Cooke Corporate Finance Ltd., which is regulated by The Securities and Futures Authority Limited, is acting exclusively for IOC and no one else in connection with the Offer, and will not be responsible to anyone other than IOC for providing the protections afforded to customers of Henry Cooke Corporate Finance Ltd nor for providing advice in relation to the Offer.
Rea Brothers Limited has approved the contents of this announcement solely for the purposes of section 57 of the Financial Services Act of 1986.
SOURCE SDL, Incorporated
/CONTACT: Donald R. Scifres, Chairman and CEO, or Michael L. Foster, VP
Finance and CFO, of SDL, Inc. 408-943-9411, or general info, Lisa Horn Chainey
or Jose Mallabo, investor contact, Kristi Larson, or media, Scott Marx,
415-986-1591, of the Financial Relations Board, or Jennifer Pantling, Director
of Rea Brothers Limited, U.K., +0171-623-1155/
(SDLI)
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