Citect Enters Merger Agreement with Schneider Electric for $80 Million

  • October 19, 2005
  • Citect Inc.
  • News
Sydney, Australia – Citect today announced it had entered into a Merger Implementation Agreement with Schneider Electric’s main Australian subsidiary, Schneider Electric Australia, for the proposed acquisition by Schneider Electric Australia of all the shares in Citect via a scheme of arrangement.The proposed transaction is subject to a number of conditions including shareholder approval. Attachment 1 to this announcement sets out the key terms of the Merger Implementation Agreement. Under the proposed transaction all Citect shareholders will receive a cash payment of $1.50 per share plus a fully franked special dividend of $0.05 per share. This equates to approximately $80 million for all the issued ordinary shares in Citect. Schneider Electric is a global supplier of electrical distribution, industrial automation and control products. Citect and Schneider Electric have a long standing strategic relationship which has resulted in the launch of a number of hardware and software solutions for customers.The consideration of $1.50 cash per share plus the special dividend $0.05 per share represents a 42.2% premium to the price of Citect shares based on the closing market price on 18 October 2005, and a 59.9% premium to the volume weighted average price of Citect shares for the 30 day period up to and including 18 October 2005.The meeting at which shareholders may vote on the scheme of arrangement is expected to be held in late December.Citect will also propose a scheme of arrangement to cancel all of the options to acquire Citect shares that are on issue in return for amounts of between two and five cents an option, taking into account the terms of the relevant options. The Directors of Citect have unanimously resolved to recommend to shareholders and optionholders that they vote in favour of the proposed schemes of arrangement in the absence of a superior offer. David Mortimer, Chairman of Citect, commented; “The proposed merger with Schneider Electric is an important development for all our stakeholders. Citect’s ability to serve its customers thoroughly and globally will be considerably enhanced with this new development. The Citect Board believes that the strategic fit with Schneider Electric will enable Citect’s customers, employees and partners to participate in a promising future.”Russell Stocker, Executive Vice President, Schneider Electric Asia Pacific Operating Division, commented, “This acquisition clearly signals our commitment to extend our integrated solutions offering to our customers in both the industrial and infrastructure fields, by delivering highly scalable and reliable systems that reduce the client’s cost of ownership and improve product quality, therefore ultimately increasing its return on assets. Citect’s people represent an exceptional pool of talent. They will bring R&D experience, end-user relationships as well as the understanding of SCADA/MES business model and we look forward to working together to make this strategy a success.” Citect has issued performance rights to senior employees. They can be exercised before the scheme meetings. Citect intends to offer to cancel those performance rights for $1.50 per performance right, conditional on the scheme of arrangement being approved by shareholders.Richard Webb, the Chief Executive of the company, has agreed that if the transaction closes with Schneider Electric he will stay with Citect until one month after the closing. Schneider Electric has agreed that his performance rights will also be cancelled for $1.50 each when he leaves Citect.It is expected that a scheme booklet containing information relating to the proposed transaction will be sent to Citect shareholders and option holders in November. The Citect Board has engaged Deloitte Corporate Finance to prepare an independent expert’s report on the proposed transaction and its report will be included in the scheme booklet. Grant Samuel Corporate Finance is acting as financial adviser and Mallesons Stephen Jaques as legal adviser to Citect.About CitectCitect is the leading, independent global provider of industrial automation, real-time intelligence, and next generation manufacturing execution systems (MES). Leveraging open technologies, CitectHMI/SCADA and Ampla connect to multiple plant and business systems. Our products are complemented by professional services, customer support and training, and sold in numerous industries including mining, metals, food and beverage, manufacturing, facilities, water, gas pipelines, power distribution and pharmaceuticals. Citect is headquartered in Sydney Australia, has 19 offices and representation in Oceania, South-East Asia, China and Japan, North and South America, Europe, Africa and the Middle-East, and its products are distributed in more than 50 countries worldwide. About Schneider ElectricSchneider Electric is the world's power and control leader. Through its world-class brands, Merlin Gerin, Square D and Telemecanique, Schneider Electric manufactures and markets a comprehensive range of products and services for the residential, buildings, industry, energy and infrastructure markets. Schneider Electric has 85,000 employees worldwide, operations in 130 countries and recorded sales of €10.4 billion in 2004 through the 13,000 sales outlets of its distributors. www.schneiderelectric.comATTACHMENT 1Citect and Schneider Electric Australia have entered into a Merger Implementation Agreement dated 19 October 2005 (MIA) in relation to two proposed schemes of arrangement, namely:(a) a scheme to acquire all of the shares in Citect (Share Scheme); and(b) a scheme for the cancellation of all options to acquire Citect shares currently on issue (Option Scheme), condition on approval of the Share Scheme. The MIA sets out the obligations of Citect and Schneider Electric Australia in relation to the Schemes. A copy of the MIA will be set out in the Scheme Booklet provided to shareholders and option holders prior to the meetings to vote on the Schemes. However, a summary of the key terms of the MIA is set out below.(1) Conditions of the Implementation AgreementImplementation of the Schemes is subject to a number of conditions precedent which must be satisfied before the second court hearing, including the following:
  • (regulatory approvals) the obtaining of any approvals required from regulatory bodies (including the Australian Securities and Investments Commission and the Foreign Investment Review Board) and government agencies which are necessary to implement the Schemes;
  • (anti-trust) the Australian Competition and Consumer Commission and other anti-trust authorities in relevant countries taking no action to prevent the proposed transaction;
  • (no prescribed occurrences) there being no “prescribed occurrence” (broadly, the events listed in section 652C of the Corporations Act) by Citect or its subsidiaries;
  • (no material adverse change) there being no event which individually, or when aggregated with all such events of a like kind, could reasonably be expected to:(a) result in Citect and its subsidiaries being unable to carry on the business in substantially the same manner as carried on at the time of entry into the MIA;(b) result in a diminution in Citect’s consolidated annual revenue of $3,000,000 or more, or Citect’s consolidated net tangible assets decreasing by more than $1,000,000; or(c) have a material adverse effect on the prospects or profitability of Citect and its subsidiaries or Citect’s ability to perform its obligations under the MIA.The Schemes require Court approval.(2) Reimbursement of costsCitect has agreed to reimburse Schneider Electric Australia $800,000 of its costs if, at any time before 31 March 2006 (or such later date as Citect and Schneider Electric Australia may agree):
  • a competing takeover, scheme or other proposal is announced and the bidder acquires a relevant interest in more than 50% of Citect’s shares and that takeover, scheme or proposal becomes unconditional;
  • a third party acquires or agrees to acquire the whole or a substantial part of any one or more of Citect’s SCADA, MES or professional services, training and support businesses, and Schneider Electric Australia terminates the MIA;
  • any one or more of the directors of Citect fails to make, or withdraws, a recommendation to scheme participants to vote in favour of the Schemes, and Schneider Electric Australia terminates the MIA;
  • any one or more of the directors of Citect recommends a proposal or offer by a third party to acquire the shares of Citect or a substantial part of Citect’s business, and Schneider Electric Australia terminates the MIA; or
  • Schneider Electric Australia terminates the MIA for material breach by Citect.(3) TerminationThe MIA may be terminated at any time prior to the second court hearing in certain circumstances:
  • by either party if:(a) the other party is in material breach;(b) the “End Date” (being 31 March 2006 or such later date as Citect and Schneider Electric Australia may agree) has passed; or(c) there is a breach or non-fulfilment of a condition precedent to which that party has the benefit and the parties are unable to reach agreement on extending the time for satisfaction of the condition precedent or on alternative means or methods by which the Schemes may proceed;
  • by Schneider Electric Australia if:(a) any of the directors of Citect withdraws or changes his recommendation of the proposed transaction;(b) if a “regulated event” (broadly, the entry into significant commitments, significant acquisitions or disposals, or dealings which might have material implications for Citect’s core intellectual property) occurs;(c) if Citect or one of its subsidiaries receives legal advice which concludes that there is a real risk that it has not complied with relevant trade practices or anti-trust laws;(d) if any of the directors of Citect recommends a competing transaction;(e) a third party acquires a relevant interest in at least 20% of Citect’s shares; or(f) any event which would give rise to a reimbursement of Schneider Electric Australia’s costs (as referred to above) occurs.(4) No solicitationCitect has agreed that neither it nor any person acting for or on its behalf will solicit any competing offer or proposal from any third party to acquire 20% or more of Citect’s shares or the shares in any of its subsidiaries, or all or a material part of the business or property of Citect or any of its subsidiaries, or to acquire control of or otherwise acquire or merge with Citect, from the date of the MIA to despatch of the scheme booklet.

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