TIDMEDA
RNS Number : 8639S
Endace Limited
06 December 2012
Endace Limited receives cash takeover offer from Emulex
Corporation
The Board of Directors of Endace (the "Endace Board") advises
that it has received a takeover notice (the "Takeover Notice") from
El Dorado Research Ventures Limited ("Emulex Bidco"), a wholly
owned subsidiary of Emulex Corporation, stating Emulex Bidco's
intention to make an offer under the New Zealand Takeovers Code to
purchase the entire issued and to be issued share capital of
Endace.
The Offer is for GBP5.00 in cash for each share in Endace and
represents a 65 percent premium to the mid-market closing price per
Endace share on 5 December 2012 of 302.50 pence, and values the
entire issued and to be issued ordinary share capital of Endace at
approximately GBP80.7 million (assuming the exercise of all
outstanding options which carry an exercise price of less than
GBP5.00 per share, net of proceeds) (All share price information is
quoted in London time).
The Offer is subject to a number of conditions, including Emulex
Bidco receiving acceptances for shares which confer 90 percent or
more of the voting rights in Endace, all consents required from the
New Zealand Overseas Investment Office and consent from the
Ministry of Business Innovation and Employment in respect of the
status of various grants received by Endace. The full conditions of
the Offer are set out in the Takeover Notice, which has been lodged
with the New Zealand Takeovers Panel and is available on the
Company's website at www.endace.com.
Approach by Emulex and commitment to accept by major
shareholders
Following an approach by Emulex in relation to a potential
acquisition of all the shares in Endace, the Endace Board agreed to
provide Emulex with the opportunity to perform due diligence on
Endace's business.
Upon completion of that due diligence, Emulex has entered into
lock-upagreements with certain Directors of Endace, including the
Chairman and co-founder Dr. Ian Graham in respect of his holding of
an aggregate of 1,133,705 shares (7.45 percent of Endace's issued
share capital) and Mike Riley, CEO, in respect of 593,953 shares
held under option. Emulex has also received commitment letters from
the two other Directors who are shareholders in respect of an
aggregate of 454,568 shares (2.99 percent of Endace's issued share
capital), as well as receiving expressions of support from another
founder of the business, Selwyn Pellett in respect of 896,982
shares (5.89 percent of Endace's issued share capital).
The Offer Document is expected to be despatched to shareholders
on 21 December 2012.
"The Endace team is excited to be joining forces with Emulex.
Our companies share a common vision and have a strong cultural
affinity. Together, we will create a new generation of network
visibility solutions and take them to a global market," said Mike
Riley, CEO, Endace. "The combined strengths of Emulex and Endace
will provide our customers with industry-leading solutions to
connect, monitor and manage high-performance networks in the
world's most demanding data centre environments."
Emulex's intentions for Endace
Emulex views the acquisition as an opportunity to enhance its
network product offering through Endace's market-leading network
visibility and intelligent network recording solutions.
Emulex intends to retain and respect the organisational culture,
history and achievements of Endace. Accordingly Emulex's intention
is to retain and enhance the existing Endace brand, and businesses
in New Zealand, and to support and enhance the direction of
Endace's existing business strategy. Emulex values the technical
expertise and capabilities of Endace, its management and its
employees. To that end, Emulex intends to support the employment
policies of Endace, and exert its best efforts to retain key
personnel consistent with business needs as well as retaining in
New Zealand the existing Endace research and development
activities. This will include the promotion of Endace in New
Zealand as an International Centre of Excellence for ongoing
research and development into Intelligent Network Monitoring and
Recording. It is Emulex's intention to maintain Endace's offices in
New Zealand.
If Emulex Bidco becomes entitled to invoke the compulsory
acquisition provisions of the New Zealand Takeovers Code, it
intends to compulsorily acquire any outstanding Shares. If Emulex
Bidco becomes entitled it will procure that Endace applies for
de-listing of its shares from AIM.
If Emulex Bidco does not receive sufficient acceptances under
this Offer to enable it to invoke the compulsory acquisition
provisions of the New Zealand Takeovers Code, but nevertheless
declares this Offer unconditional, Emulex Bidco will seek
appropriate board representation on the Endace board and will
participate in decisions relating to Endace and its future.
"This acquisition provides Emulex with a strategic entry point
into the network performance management space at a disruptive point
in time, as speeds move to 10Gb, making network visibility from
end-to-end a critical requirement in a converged network
environment," said Jim McCluney, chief executive officer (CEO),
Emulex. "Acquiring Endace aligns with our software-defined
convergence strategy, doubles our total addressable market and
places Emulex in another high-margin, high-growth market. Excluding
transaction related expenses, we expect the acquisition to be
neutral to our non-GAAP earnings per share for fiscal 2013 and
accretive at the beginning of fiscal 2014."
Endace's Independent Directors' recommendation
Emulex Bidco's offer price of GBP5.00 per Endace share
represents a 65 percent premium to the mid-market closing price on
5 December 2012 and a 65 percent premium to the one month volume
weighted average price of Endace shares on AIM.
The Independent Directors unanimously support the Offer and
recommend that Endace shareholders accept the Offer; each of the
Independent Directors who holds Endace shares has committed to
accept the Offer. As required by the New Zealand Takeovers Code,
the Independent Directors have commissioned the firm of Grant
Samuel in Auckland to provide an independent adviser's report. This
recommendation and the Directors' commitments are subject to the
normal provisos of (i) the Offer price being within or above the
Grant Samuel valuation range, and (ii) the absence of a superior
offer.
Endace's Deputy Chairman and convenor of the Company's
sub-committee of Independent Directors, John Scott, said "I believe
this is a compelling offer for Endace and its shareholders. Endace
has been quoted on AIM since June 2005, during which time it has
recorded some remarkable successes; since the 04/05 financial year
we have increased sales tenfold, sold to a loyal, top tier global
client list, and built a world-class technology. As a relatively
small independent technology company competing in a large and
growing market, joining forces with Emulex makes excellent sense,
and is a very satisfactory outcome to the process of evaluating our
strategic options.
We have known Emulex for some time. Through an extensive due
diligence process, Emulex have satisfied themselves as to the
validity of our technology and our ability to fit within their
growth plans, while maintaining Endace's research base in New
Zealand and excellent relationship with the New Zealand government.
At the same time, the management of Endace have established a
working relationship with Emulex which gives us great confidence as
to their credentials as the future owner of our business.
The offer price of GBP5.00 per share represents a premium of
209% to our share price at flotation. In the unanimous opinion of
the full Board of Endace, who have been advised in this by the
Independent Directors, this offer is financially and strategically
attractive and should be accepted by shareholders. We believe the
Offer promises an excellent future for the other stakeholders in
Endace, in particular our customers, and our employees in New
Zealand and elsewhere."
In addition to John Scott, the Independent Directors of Endace
are Mark Rowan, Mark Giles, Clayton Wakefield and Simon Wilson; Ian
Graham (Chairman) and Mike Riley (CEO) are deemed non-independent.
John Scott noted that no action in respect of the Offer is required
from shareholders at this stage. He suggested that any shareholders
considering selling their shares should seek independent
professional advice.
Update on Endace's trading
Trading since 30 September 2012 has been in line with management
expectations.
New Zealand Takeover offer documents
The Independent Directors and Emulex have agreed to coordinate
the preparation of the documents they are each required to send
pursuant to the New Zealand Takeovers Code with a view to Emulex
Bidco sending its offer document together with Endace's target
company statement, including Endace's independent adviser's report
and the Independent Directors' recommendation, to Endace's
shareholders on 21 December 2012. The Takeover Notice can be viewed
on Endace's website www.endace.com. A copy of the Takeover Notice
is available from each of Endace and Emulex free of charge on
request.
Announcement authorised by:
John Scott
Deputy Chairman
Endace Limited
For further information on Endace, please contact:
John Scott +44 77 86 54 34 62
Panmure Gordon, UK
Hugh Morgan / Giles Stewart / Hannah Woodley +44 20 78 86 25 00
Porter Novelli, NZ
Strahan Wallis + 64 21 410 294
For further information on Emulex, please contact:
Katherine Lane +1 714 885-3828
Director, Corporate Communications, Emulex
About Endace:
Endace is a New-Zealand based network monitoring company that
specialises in network visibility and intelligent network
recording, and its shares are quoted on London's AIM market. It
provides services to global clients including government security
agencies, international telecommunication companies, investment
banks, some of the world's largest ISPs, and a number of major
corporations. Endace trades on AIM under the symbol EDA.
About Emulex:
Emulex is a US-based global provider of a broad range of
enterprise-class connectivity solutions for servers, networks and
storage devices within the data centre. Emulex's product portfolio
of Fibre Channel (FC) Host Bus Adapters (HBAs), 10Gb Ethernet
(10GbE) Network Interface Cards (NICs), Ethernet-based Converged
Network Adapters (CNAs), controllers, embedded bridges and
switches, and connectivity management solutions are proven, tested
and trusted by the world's largest and most demanding Information
Technology (IT) environments. Emulex solutions are used and offered
by the industry's leading server and storage OEMs including, Cisco,
Dell, EMC, Fujitsu, Hitachi, Hitachi Data Systems, HP, Huawei, IBM,
NEC, NetApp and Oracle. Emulex is headquartered in Costa Mesa,
Calif. and has offices and research facilities in North America,
Asia and Europe. Emulex's common stock trades on the New York Stock
Exchange (NYSE) under the symbol ELX.
About Emulex Bidco:
Emulex Bidco is a company formed for purposes of making offer,
and is a wholly-owned subsidiary of Emulex.
Note: Unless otherwise specified, dates are New Zealand
dates.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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