24th Apr 2007 07:03
SDL PLC24 April 2007 NOT FOR DISTRIBUTION OR TRANSMISSION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN AND THE REPUBLIC OF SOUTH AFRICA News Release 24th April 2007 SDL to acquire Tridion for €69 million (£47 million) Combination creates Global Web Content Management solution Maidenhead, UK - 24th April, 2007. SDL International, one of the leadingproviders of Global Information Management (GIM) solutions, announced today thatit has signed an agreement which is subject to, inter alia, Shareholder approvalto acquire Tridion, one of the leading providers of enterprise class WebContent Management (WCM) solutions. Under the terms of the agreement, SDL will pay €69million (£47 million), whichincludes €16m (£11 million) of cash in the Tridion business. The transaction isexpected to close in May 2007. SDL's acquisition of Tridion will further strengthen SDL's leadership positionin Global Information Management by adding a world class WCM solution to the SDLsolutions portfolio. • SDL helps corporations to drive global brand consistency and accelerate time-to-market by providing software and services to manage the delivery of all corporate information into different languages. • Tridion provides WCM solutions that enable corporations to deliver consistent, interactive and highly targeted customer experiences across multiple Web sites and channels. • Through the integration of SDL's Translation Management System with Tridion's WCM system, SDL and Tridion will deliver a Global Web Content Management solution that allows corporations to communicate and interact with global audiences in multiple languages in an effective, efficient and timely manner. This is achieved by integrating Tridion's BluePrinting technology and SDL's TMS technology to manage the complex translation supply chain to create and maintain multilingual content for global companies. "In today's competitive landscape, global trade is an imperative that companiescannot ignore" says Mark Lancaster, Chairman and Chief Executive of SDL. "Thecombination of SDL's translation management system, providing supply chainmanagement and a virtual centralised multilingual repository, combined withTridion's advanced WCM technology will enable corporations to conquer thesignificant language barriers that often stifle the globalisation of theirbusinesses. The combined solution creates a Global Web Content Managementsolution which will allow companies to not only create, but specificallymaintain multi-lingual web experience for their customers. At a time when access to information is the currency of business, informationassets are critical to the current and future competitiveness of anyorganisation. Tridion enables organisations to use information efficiently andeffectively in order to achieve their business goals. Tridion's uniqueBluePrinting technology enables organisations to address and respond to newmarkets using local knowledge while maintaining strong control of their brand." "We are delighted with today's announcement" says Pieter Varkevisser, CEO ofTridion. "SDL and Tridion share a joint vision and the combination of oursolutions provides a compelling proposition for anyone using the web to competeon the global stage. We are convinced that the transaction brings value to allof our key stakeholders, our investors, our customers and our employees." For more details on the transaction, please see below: SDL plc ("SDL") Proposed Placing and Open Offer Proposed acquisition of Tridion for €69 million (£47 million) Product offering strengthened with Web Content Management solution SDL announced today that its wholly owned subsidiary SDL Holdings BV has agreed,subject inter alia to Shareholder approval, to acquire the entire issued and tobe issued share capital of Tridion Holding BV and its subsidiaries (''TridionGroup'') for a maximum aggregate cash consideration of €69 million(approximately £47 million) which includes approximately €16 million (£11million) of cash in the business. The Company is also pleased to announce that, subject, inter alia, toShareholder approval, it proposes to raise approximately £38 million (net ofexpenses) through the issue of 11,275,684 New Ordinary Shares of SDL at 355pence each by way of a Placing and Open Offer to fund the Acquisition. ThePlacing and Open Offer has been fully underwritten by Investec subject tocertain conditions. The Offer Price of 355 pence per New Ordinary Sharerepresents a discount of 6.0 per cent to the middle market price for an existingOrdinary Share of 377.75 pence on 23rd April 2007. Background to Tridion Tridion provides Web Content Management (''WCM'') software which enablesorganizations to create, manage and deliver content to and lay out their publicweb sites, intranets, extranets and other communication channels. Tridion alsoprovides consulting, professional and technical support services. The company was founded in 1999 through a spin-off from a web design agency andhas benefited from venture capital funding, enabling the Tridion Group to expandin Europe and more recently in the USA. Tridion currently has over 325 customersacross all major industry verticals, including manufacturing & industrial,financial services, government and non-profit organisations. Enterprisecustomers include Toyota, Honda, Ricoh, Canon, Goodyear, KLM, Virgin Atlantic,Emirates Airlines, VisitBritain, Unilever, Renault, Sodexho Alliance, DNV,France Telecom and TDC. Reasons for the Acquisition and the Placing and Open Offer • Global Information Management ("GIM") helps companies successfully manage multi-lingual digital content; • Content management solutions are established, well understood and relatively simple compared to GIM; • Both GIM and content management are equally important to global organisations seeking to deliver multilingual content and supply products to market faster, more cost effectively and with greater brand consistency; • The Group has seen an increased number of proposals where the customer is looking to procure at the same time a content management and translation management system in order to ensure it fully addresses these issues; • The Board believes that the combination of Tridion's WCM and SDL's GIM solutions will give the Enlarged Group significant advantages against the competition in both of the companies' respective markets; • The Directors believe that very few of the Enlarged Group's competitors provide both comprehensive GIM and WCM solutions; • The rationale of the Placing and Open Offer is to enable the Company to fund the acquisition of Tridion as set out in the Prospectus which will be sent to shareholders as soon as is practicably possible; • The Directors believe that, taking into account the impact of the Placing and Open Offer, the Acquisition will be accretive to earnings per share before amortisation of the Enlarged Group in the first full financial year following completion of the Acquisition; and • Tridion Management fully committed to joining the SDL group. Mark Lancaster, Chairman and Chief Executive of SDL, said, "In today's competitive landscape, global trade is an imperative which companiescannot ignore. The combination of SDL's translation management system,providing supply chain management and a virtual centralized multilingualrepository, and Tridion's advanced web-content management technology enablescorporations to control their multi-lingual content processes from start tofinish. The combined solution will allow companies to not only create andmanage content, but specifically maintain multi-lingual web experiences fortheir customers." For more information, contact: SDL plc Tel: 01628 410 127Mark Lancaster, Chief Executive Financial Dynamics Tel: 020 7831 3113Edward Bridges / Haya Chelhot / Juliet Clarke Investec Tel: 020 7597 5000Erik Anderson / Andrew Pinder This announcement has been issued by, and is the sole responsibility of SDL. Investec is authorised and regulated in the United Kingdom by the FSA and isacting exclusively for SDL plc in relation to the matters described in thisdocument. Investec is not acting for, nor will it be responsible to, any personother than SDL plc for providing the protections afforded to their customers orfor advising any other person on the contents of this Prospectus or anytransaction or arrangement referred to herein. This announcement is for information only and does not constitute an offer orinvitation to acquire or dispose of any securities or investment advice in anyjurisdiction. Past performance is no guide to future performance and persons needing adviceshould consult an independent financial advisor. The information contained in this announcement is not for release, publicationor distribution, directly or indirectly, to persons in the United States,Canada, Australia, Japan or the Republic of South Africa. This announcement isnot an offer of securities for sale into the United States. The Placing Shareshave not and will not be registered under the US Securities Act of 1933, asamended and may not be offered or sold directly or indirectly, in the UnitedStates absent registration or an exemption from registration. There will be nopublic offering of securities in the United States. The Placing Shares have notand will not be registered with any regulatory authority of any State within theUnited States. Appendix 1 contains the definitions of certain terms used in this announcement. DETAILED BACKGROUND Information on the Tridion Group Tridion provides Web Content Management (''WCM'') software which enablesorganizations to create, manage and deliver content to and lay out their publicweb sites, intranets, extranets and other communication channels. Tridion alsoprovides consulting, professional and technical support services. The company was founded in 1999 through a spin-off from a web design agency andhas benefited from venture capital funding, enabling the Tridion Group to expandin Europe and more recently in the USA. Tridion currently has over 325 customersacross all major industry verticals, including manufacturing & industrial,financial services, government and non-profit organisations. Enterprisecustomers include Toyota, Honda, Ricoh, Canon, Goodyear, KLM, Virgin Atlantic,Emirates Airlines, VisitBritain, Unilever, Renault, Sodexho Alliance, DNV,France Telecom and TDC. The table below summarises, and has been extracted without material adjustmentfrom, the audited financial information of the Tridion Group for the threefinancial years ended 31 December 2004, 2005 and 2006. Year ended 31 December (IFRS, audited) 2004 2005 2006 €000 €000 €000Revenue 17,116 18,575 21,084Gross Profit 12,733 14,578 16,779Profit (loss) on ordinary activities before tax (293) 3,664 4,172Gross assets at 31 December 13,173 17,325 23,472 Summary of the terms of the Acquisition SDL has conditionally agreed under the terms of the Acquisition Agreement topurchase for a maximum aggregate cash consideration of €69 million(approximately £47 million) all of the issued and to be issued share capital ofTridion including approximately €16 million (£11 million) cash in the business.The cash consideration is to be funded from the proceeds of the Placing and OpenOffer which will raise approximately £38 million (net of expenses), with thebalance of the consideration to be funded from the Group's own existingfinancial resources and bank facilities. The Acquisition Agreement containscertain warranties in favour of SDL relating to the affairs of the Tridion Groupof a nature usual for a transaction of this type. An amount of €3 million (approximately £2 million) will be held in escrow for upto two years from Completion to satisfy any settled or determined claims under the warranties andcertain other provisions of the Acquisition Agreement. Reasons for the Acquisition and the Placing and Open Offer The globalisation of commerce has led to rapid growth for enterprises, but hasbrought with it an ad hoc deployment of disjointed and incompatible informationsystems and related business processes. These global enterprises areincreasingly faced with the challenge of optimising their global operations todeliver on their priorities of cost reduction, performance improvement, brandconsistency and time to market. The rapid convergence of data to digital format and central storage coupled withthe overlap of the various data sources within companies is currently beingacknowledged as both a major cost issue and an opportunity for businesses tosignificantly grow market share through effective management of digital content.Management of single language content is a complex systems problem and isexacerbated where it requires translation into, and management of, multiplelanguage versions. The Directors believe that GIM is therefore considered to bean emerging key business requirement. There has been considerable growth in the content management market with aforecast compound annual growth rate of 12.8% through to 2010 (Source: GartnerGroup - ECM Magic Quadrant 2006). Content management solutions are established,well understood and relatively simple compared to GIM. However, both are equallyimportant to global organisations seeking to deliver multilingual content andsupply products to market faster, more cost effectively and with greater brandconsistency. The Group has seen an increased number of proposals where thecustomer is looking to procure at the same time a content management andtranslation management system in order to ensure it fully addresses theseissues. The amalgamation of Tridion's WCM and SDL's GIM solutions under the proposedAcquisition is expected by the Board to give the Enlarged Group significantadvantages against the competition in both of the companies' respective markets.The Directors believe that very few of the Enlarged Group's competitors provideboth comprehensive GIM and WCM solutions. The rationale of the Placing and Open Offer is to enable the Company to fund theacquisition of Tridion as set out in the Prospectus, which is expected to beposted to shareholders as soon as is practicably possible. Financial effects of the Acquisition The Directors believe that, taking into account the impact of the Placing andOpen Offer, the Acquisition will be accretive to earnings per share beforeamortisation of the Enlarged Group in the first full financial year followingcompletion of the Acquisition. This should not be taken to mean that the futureearnings of the Enlarged Group will necessarily match or exceed the Group'shistorical published earnings. On a pro forma basis and assuming the Acquisition had completed on 1 January2006, the Enlarged Group's adjusted profit (before taking into accounttransaction costs and accounting for fair value adjustments) for the year ended31 December 2006 would have increased compared to SDL's equivalent reportedresult for that year. Summary of the Placing and Open Offer The Company is proposing to raise approximately £38 million (net of expenses)through the Placing and Open Offer. The Placing and Open Offer is in respect of11,275,684 New Ordinary Shares, of which 7,554,708 New Ordinary Shares (thePlacing Shares) will be issued under the Placing and 3,720,976 New OrdinaryShares (the Open Offer Shares) have been placed conditionally, subject toclawback by Qualifying Shareholders under the Open Offer at the Offer Price. TheOffer Price of 355 pence per New Ordinary Share represents a discount of 6.0 percent to the middle market price for an existing Ordinary Share of 377.75 penceon 23 April 2007. Under the terms of the Placing Agreement, Investec acting as agent for and onbehalf of the Company, has placed the Placing Shares and Open Offer Shares atthe Offer Price with institutions and certain other investors. The Open OfferShares have been conditionally placed with institutional investors, subject onlyto clawback in respect of valid applications for Open Offer Shares by QualifyingShareholders at the Offer Price. The Placing Shares are not subject to thisclawback. Investec has fully underwritten the Placing and Open Offer subject tocertain conditions set out in the Placing Agreement which include, inter alia,the passing of the Resolutions at the EGM or any adjournment thereof. Investec, acting as agent for and on behalf of the Company, is invitingQualifying Shareholders to subscribe for Open Offer Shares at the Offer Price,free of all expenses, payable in full on application on the following basis: 1 Open Offer Share for every 16.878787 Existing Ordinary Shares registered in their names at the close of business on the Record Date, and so inproportion for any greater or lesser number of Existing Ordinary Shares thenheld. Qualifying Shareholders may apply for any number of New Ordinary Sharesup to their maximum pro rata allocation. Valid applications will be satisfied infull. Any fractional entitlements of Qualifying Shareholders arising under the OpenOffer will not be allocated but will be aggregated and placed by Investecpursuant to the Placing Agreement for the benefit of the Company, Application has been made to the UK Listing Authority and the London StockExchange for the New Ordinary Shares to be admitted to the Official List and totrade on the London Stock Exchange's market for listed securities. Qualifying Shareholders who take up their Open Offer Entitlement in full will bediluted by 1.0 per cent by the Placing. Qualifying Shareholders who do notparticipate at all in the Open Offer, will be diluted by approximately 1.5 percent. Current trading and prospects for SDL During the first quarter of 2007, the markets for both the Group's translationsoftware, services and GIM solutions have remained consistent with the trendsseen in the second half of 2006, as have the exchange rates of the majorcurrencies that the Group trades in other than the US dollar which has weakenedcirca 4 percent period on period. Gross margin remains in line with 2006, with the mix in the business segmentstracking the immediately preceding months. This is also reflected in the levelsof overhead costs and development expenditure as the headcount in these costcentres has not changed materially though the Group has started to increase itsmarketing expenditure in line with previously announced intentions. The Directors are confident in the underlying financial and trading prospects ofthe Group for the current financial year, and have confidence in the financialand trading prospects of the Enlarged Group for the same period. Working Capital The Company is of the opinion having that, taking into account available bankfacilities and the net proceeds of the Placing and Open Offer, the workingcapital available to the Group and the Enlarged Group is sufficient for itspresent requirements, that is, for at least the next 12 months from the date ofpublication of the Prospectus. Significant Change There has been no significant change in the financial or trading position of theGroup since 31 December 2006, the date to which the Group's last auditedaccounts for the year ended 31 December 2006 were published. There has been no significant change in the financial or trading position of theTridion Group since 31 December 2006, being the date in respect of which thelast published audited accounts and financial information on the Tridion Groupas set out in the Prospectus have been prepared. Expected timetable of principal events Record Date for Open Offer Entitlement close of business on 20 April 2007 Open Offer Entitlements credited to CREST stock accounts ofQualifying CREST Shareholders 25 April 2007 Recommended latest time for requesting withdrawal of Open OfferEntitlements from CREST 4.30 pm 8 May 2007 Latest time for depositing Open Offer Entitlements in CREST 3.00 pm 11 May 2007 Latest time and date for splitting of Application Forms (to satisfybona fide market claims only) 3.00 pm on 14 May 2007 Latest time and date for receipt of Forms of Proxy 9.00 am on 15 May 2007 Latest time and date for receipt of Application Forms and paymentin full under the Open Offer or settlement of the relevant CRESTinstruction 11.00 am on 16 May 2007 Extraordinary General Meeting 9.00 am on 17 May 2007 Admission and dealings in New Ordinary Shares expected tocommence 8.00 am on 18 May 2007 CREST members' accounts expected to be credited by 18 May 2007 Definitive share certificates for New Ordinary Shares in certificatedform (where applicable) expected to be despatched by 25 May 2007 Risk Factors The Prospectus will set out the risk factors relating to the Group which insummary are: Industry specific risks: • Consolidation in the content management industry • Content management industry encompassing GIM • Partnerships • Understanding of and demand for GIM • Extension of the sales cycle • Adverse reaction as a result of inferences by competitors in the service element of the • localisation industry Group, Tridion Group and/or the Enlarged Group specific risks: • Management and growth • Competition • Technological advancements/innovation • New product and technology development • Dependence on senior management • The possible need for additional capital in the future • System failures, capacity constraints and breaches of security • Importance of intellectual property rights • Copyright, database rights and rights in confidential information • Contractual safeguards • Litigation • Foreign currency exchange rate risk Risk factors relating to the Acquisition: • Integration risks • The protections for the Company in the Acquisition Agreement may be inadequate • The Company may not be able to complete the Acquisition Agreement. Security specific risks: • Suitability of Ordinary Shares as an investment • Fluctuation of share price • Possible issue of additional shares • Dilution of ownership of Ordinary Shares • Limitation on the Company's ability to pay future dividends Appendix 1 - Definitions ''£'' UK pounds sterling ''•'' or ''EUR'' Euro ''Act'' the Companies Act 1985 (as amended from time to time) ''Acquisition'' the proposed acquisition of the entire issued share capital of Tridion; ''Acquisition Agreement'' the conditional sale and purchase agreement dated 24 April 2007 relating to the Acquisition further details of which are set out in the Prospectus; ''Admission'' the admission of the New Ordinary Shares to listing on the Official List of the United Kingdom Listing Authority and to trading on the main market of the London Stock Exchange; ''Board'' or ''Directors'' the Executive Directors and the Non-Executive Directors; ''certificated'' or ''certificated not in an uncertificated form;form'' ''Company'' or ''SDL'' SDL plc; ''Completion'' completion of the Acquisition in accordance with the terms of the Acquisition Agreement; ''Enlarged Group'' the Group as enlarged immediately following the Acquisition; ''Executive Directors'' Mark Jonathan Lancaster, Alastair Neil Gordon, Cristina Maria Elisa Lancaster and Keith Thomas Mills; ''Existing Ordinary Shares'' 62,805,560 Ordinary Shares of 1p each in issue as at the date of the Prospectus; ''Extraordinary General Meeting'' or the extraordinary general meeting of the Company to be held at 9:00 am at''EGM'' the offices of DLA Piper UK LLP, 3 Noble Street, London EC2V 7EE on 17 May 2007, notice of which is set out at the end of the Prospectus and, including any adjournment thereof; ''FSA'' the Financial Services Authority of the United Kingdom; ''FSMA'' the Financial Services and Markets Act 2000 (as amended); ''Group'' the Company and its subsidiaries at the date of the Prospectus; ''International Financial Reporting the International Financial Reporting Standards maintained by theStandards'' or ''IFRS'' International Accounting Standards Board (IASB) and which are in force from time to time, as adopted by the European Union; ''Investec'' Investec Investment Banking, a trading division of Investec Bank (UK) Limited, which is authorised and regulated by the Financial Services Authority in the United Kingdom; ''London Stock Exchange'' London Stock Exchange plc; ''New Ordinary Shares'' 11,275,684 new Ordinary Shares to be issued pursuant to the Placing and the Open Offer; ''Non-Executive Directors'' Christopher Michael Batterham, John Waylett Matthews and Joseph Campbell; ''Offer Price'' 355 pence per New Ordinary Share; ''Official List'' the Official List of the UKLA; ''Open Offer'' the conditional offer, being made by Investec acting as agent on behalf of the Company, inviting Qualifying Shareholders to subscribe for the Open Offer Shares at the Offer Price on the terms and subject to the conditions set out in the Prospectus and in the application form; ''Open Offer Entitlement'' an entitlement to apply to acquire Open Offer Shares, allocated to a Qualifying Shareholder pursuant to the Open Offer; ''Open Offer Shares'' 3,720,976 new Ordinary Shares which are being made available to Qualifying Shareholders at the Offer Price pursuant to the Open Offer all of which have been conditionally placed (subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer) by Investec pursuant to the Placing; ''Ordinary Shares'' ordinary shares of 1p each in the capital of the Company; ''Overseas Shareholders'' holders of Ordinary Shares with registered addresses outside the United Kingdom or who are citizens of, incorporated in, registered in or otherwise resident in, countries outside the United Kingdom; ''Placing'' the placing of the Placing Shares and the Open Offer Shares by Investec on behalf of the Company at the Offer Price pursuant to the Placing Agreement; ''Placing Agreement'' the conditional agreement dated 24 April 2007 between the Company and Investec relating to the Placing and Open Offer, details of which are set out in the Prospectus; ''Placing Shares'' the 7,554,708 new Ordinary Shares which have been placed by Investec on the terms and subject to the conditions contained in the Placing Agreement, which shares are not being offered to the Qualifying Shareholders under the Open Offer; ''Prospectus'' the Prospectus dealing with, inter alia, the Acquisition and the terms of the Placing and Open Offer; ''Qualifying Shareholders'' holders of Existing Ordinary Shares on the register of members of the Company at the close of business on the Record Date (and others with bona fide market claims) other than certain Overseas Shareholders who are not entitled to participate in the Open Offer, as described in the Prospectus, other than the Company in its capacity as the holder of Ordinary Shares as Treasury Shares within the meaning of Section 162A of the Act; ''Record Date'' the record date for the Open Offer, being the close of business on 20 April 2007; ''Resolutions'' the resolutions to be proposed at the EGM set out in the Notice of the EGM; ''Shareholder'' a holder of Existing Ordinary Shares; ''Shares'' the entire issued shares of Tridion; ''SDL Holdings'' SDL Holdings B.V., a company incorporated in the Netherlands which is a wholly-owned subsidiary of the Company; ''Tridion'' Tridion Holding B.V.; ''Tridion Group'' Tridion and its subsidiaries at the date of the Prospectus; ''UK'' or ''United Kingdom'' the United Kingdom of Great Britain and Northern Ireland, its territories and dependencies ''UK Listing Authority'' or ''UKLA'' the FSA acting in its capacity as the competent authority for the purposes of Part VI of the FSMA ''US'' or ''United States'' the United States of America, its territories and possessions, any state of the United States and the District of Columbia; ''Vendors'' the vendors under the Acquisition Agreement as more particularly set out in the Prospectus; This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SDL.L