Recommended Offer Agreed with Thrane & Thrane A/S


3 May 2012

 

Recommended Offer Agreed with Thrane & Thrane A/S

 

Cobham plc (“Cobham”) is pleased to announce that it has reached agreement with the Board of Thrane & Thrane A/S (“Thrane & Thrane”) on the terms of a revised voluntary tender offer (the “Revised Offer”) for the shares and warrants in Thrane & Thrane.

Under the terms of the Revised Offer, Thrane & Thrane shareholders will be offered DKK435 in cash for each Thrane & Thrane share, an increase of DKK15 per share over Cobham’s offer announced on 10 April 2012 (the “Initial Offer”).  The Revised Offer takes into account the dividend that would otherwise have been declared in June 2012 in relation to the year ended 30 April 2012.  The Revised Offer values the share capital of Thrane & Thrane on a fully diluted basis at approximately £275 million, a 2.6 per cent increase from the Initial Offer.

Mr. Lars Thrane, founder and member of the Board of management and Board of directors of Thrane & Thrane, has entered into a binding irrevocable undertaking to accept the Revised Offer in relation to his holding of 1,349,084 shares, representing 22.7 per cent of the fully diluted share capital of Thrane & Thrane. In addition, the other members of the Board of Thrane & Thrane have entered into an undertaking to accept the Revised Offer in relation of their respective individual holding, amounting to, in aggregate, 17,040 shares representing 0.3 per cent of the fully diluted share capital of Thrane & Thrane. Cobham now owns or has received undertakings in respect of a total of 2,819,919 shares, representing 47.4 per cent of the fully diluted share capital of Thrane & Thrane.

The Board of Thrane & Thrane has undertaken to Cobham to recommend the Revised Offer to its shareholders and to support and facilitate the making of the Revised Offer.  This undertaking also includes, inter alia, non-solicitation provisions. Their recommendation will allow Cobham to secure a higher acceptance rate which will enable a quicker and more effective integration of Thrane & Thrane into the Cobham group.

The Revised Offer price of DKK435 represents a premium of 48 per cent to the closing price per share as derived from the Nasdaq OMX Copenhagen A/S on 24 February 2012, the last trading day on the Nasdaq OMX Copenhagen A/S prior to Thrane & Thrane's 27 February 2012 announcement that it had received an unsolicited offer for the company.

The Revised Offer price of DKK435 represents a multiple of 15.4x operating profit for the twelve month period up to 31 January 2012 on the basis of an enterprise value of DKK2,621 million (approximately £287 million).

A supplement to the Offer Document formally amending the Offer will be published shortly, subsequent to approval by the Danish FSA.

John Devaney, Cobham’s Executive Chairman said: “We are very pleased that, by increasing our offer to take account of the dividend for the year now ended, we have reached agreement with the Board of Thrane & Thrane. Their recommendation will allow us to move quickly, and with certainty, with the integration of Thrane & Thrane into the Cobham group. We believe that this is an outstanding opportunity to bring together two world-class, highly complementary, commercially focused SATCOM businesses and is line with our aim of prioritising investment that will bring more balance between our defence/security and commercial markets."

 

Background

Cobham has been active in the SATCOM market for many years and has worked with Thrane & Thrane during this time and has been in discussions with it over the last year with a view to a combination of the two businesses. The combination of Thrane & Thrane with Cobham’s SATCOM businesses is highly complementary and will give the combined operation increased technology advantage and scale in maritime, land and airborne SATCOM systems.

Routes to market for the two businesses will be combined so that more customers will have easier access to a wider range of equipment, including highly competitive integrated solutions with equipment from both companies. The business will be able to extend its international reach through a combined dealer network.

The existing engineering centre of excellence in Denmark will be strengthened and therefore able to focus on and accelerate the marketing and development of the next generation of products.  As part of this commitment, once 100 per cent ownership of Thrane & Thrane has been achieved, management responsibility for the combined maritime SATCOM business, which will include Cobham’s largest SATCOM business unit (Sea Tel marine products), will be transferred to Thrane & Thrane in Denmark as soon as practicable. Thrane & Thrane’s Danish facility will be designated as a Cobham Principal Operating Location and will receive investments according to Cobham’s Excellence In Delivery programme.

Cobham will build on the excellent supply chain arrangements Thrane & Thrane has established outside of Denmark, enabling engineers to focus on core, high technology design and development activities.

 

Financial Effects of the Revised Offer

In light of the recommendation from the Board of Thrane & Thrane, the financial effects detailed below assume Cobham secures 100 per cent ownership of Thrane & Thrane.

Cobham anticipates that the transaction will be moderately accretive to 2012 earnings, based on analysts' consensus forecasts for Thrane & Thrane for the year to December 2012 and before the impact of any potential synergies(*).  It is expected that it will cover its cost of capital in the second full year of ownership, rather than the third full year under the Initial Offer.

Cobham anticipates achieving a minimum of £4m per annum of pre-tax synergies as a result of the transaction in the areas of engineering, production, distribution and corporate costs, rather than a minimum of £2m per annum under the Initial Offer.

Cobham is being advised in relation to the Revised Offer by Danske Bank Corporate Finance and Gleacher Shacklock LLP.  Cobham has also received financial advice from Bank of America Merrill Lynch.

 

Enquiries

 

Cobham plc  
   
Warren Tucker, Chief Financial Officer +44 1202 882020
Julian Wais, Director of Investor Relations +44 1202 857998
   
Brunswick  
 
Michael Harrison
 
+44 20 7404 5959
Will Carnwath  

 

Information on Thrane & Thrane

Thrane & Thrane is a manufacturer of equipment and systems for global mobile communication based on satellite and radio technology.  Thrane & Thrane's satellite communication products have been designed for the global mobile communication services offered by Inmarsat, the world's leading satellite operator.  Thrane & Thrane also develops, manufactures and sells maritime radio and TV communication products and satellite access stations that provide the interface between the satellite systems and the terrestrial networks.

Thrane & Thrane's SATCOM business has around 600 employees located in Denmark, the USA, Norway, Sweden, China and Singapore, working with a global network of distributors.

For the twelve months to 31 January 2012, Thrane & Thrane generated revenue of DKK1,092.4 million and profit before tax of DKK169.4 million.  As at 31 January 2012, Thrane & Thrane had net assets of DKK1,003.7 million and gross assets of DKK1,721.4 million.

 

Information on Cobham

Cobham specialises in meeting the growing demand for data, connectivity and bandwidth in defence, security and commercial environments.  Offering a technically diverse and innovative range of technologies and services, the Group protects lives and livelihoods, responding to customer needs with agility that differentiates it.  Employing more than 10,000 people on five continents, the Group has customers and partners in over 100 countries, investing some £70 million / DKK600 million a year in market-led product development.

The Group's strategy is to build and maintain top three market positions in selected higher growth, high technology markets such as satellite communications (SATCOM).  Cobham is the leader in stabilised marine satellite antennas and very-small-aperture terminals (VSATs).  It is also a leading provider of L band antennas and modems for business jets using Inmarsat's services, and is a provider of many other Ku, Ka, X and C band SATCOM antennas for land-based use.

Cobham has successfully acquired nearly 50 companies in the last decade, including marine SATCOM business SeaTel, acquired in 2003, which has since doubled both its revenue and R&D investment.  Land SATCOM business TracStar, acquired in 2005 has grown by 60% since joining Cobham.

Cobham has conducted business in Denmark for more than 20 years, providing slip rings to wind turbines, communications antennas and pilot oxygen systems for Danish F-16s.  In 2004, the Group acquired Danish company Spectronic, based in Grenaa, a world leading provider of high-quality covert audio and video surveillance solutions, with revenue doubling since acquisition.

 

This announcement has been prepared for the purpose of complying with Danish law and the Danish Executive Order on Takeovers and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of other jurisdictions outside of Denmark.  This announcement is not directed at shareholders in Thrane & Thrane ("Shareholders") whose participation in the voluntary public tender offer for the shares in Thrane & Thrane would require the issuance of an offer document, registration or other measures other than what is required under Danish law.  The availability of the Revised Offer to Shareholders who are not resident in Denmark may be affected by the laws of the relevant jurisdictions in which they are resident.  Persons who are not resident in Demark should inform themselves of, and observe, any applicable requirements.  The Revised Offer is not being made, directly or indirectly, to Shareholders resident in any jurisdiction in which the submission of the Revised Offer or acceptance thereof would contravene the law of such jurisdiction.

The Revised Offer is made for the shares in Thrane & Thrane ("Shares"), a Danish issuer with listed shares on Nasdaq OMX Copenhagen A/S.  The Revised Offer is subject to disclosure requirements under Danish law.  This announcement and the Revised Offer are not being made, directly or indirectly, in, into or from Canada, Australia, Japan, or South Africa or any other jurisdiction where to do so would violate the laws in that jurisdiction (a "Restricted Jurisdiction"), and the Revised Offer does not apply and cannot be accepted from or within Canada, Australia, Japan or South Africa or any other Restricted Jurisdiction.  Copies of this announcement will not be, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction.

This announcement does not constitute an offer or invitation to sell or purchase or subscribe for any shares in Thrane & Thrane or a solicitation of an offer to buy any shares or the solicitation of any vote or approval in any jurisdiction pursuant to the Revised Offer or otherwise.  An Offer Document regarding the Revised Offer will be published separately in accordance with Section 3 of the Danish Executive Order on Takeovers.  The Revised Offer will be made solely by means of the Offer Document, which will contain the full terms and conditions of the Revised Offer, including details of how the tender offer may be accepted.  The Offer Document and the appendices thereto contain important information and should be carefully read before any decision is made with respect to accepting the Revised Offer.

This announcement may contain statements relating to future matters or occurrences, including statements on future results, growth or other forecasts on developments and benefits in connection with the Revised Offer.  Such statements may generally, but not always, be identified by the use of words such as "anticipates", "assumes", "expects", "plans", "will", "intends", "projects", "estimates" or similar expressions.  By their nature, forward-looking statements involve risks and uncertainty as they relate to events and depend on circumstances occurring in the future.  There can be no assurance that actual results will not differ, possibly materially, from those expressed or implied by such forward-looking statements due to many factors, many of which are outside of the control of Cobham or Thrane & Thrane, including the effect of changes in general economic conditions, the level of interest rates, fluctuation in the demand for Cobham or Thrane & Thrane products, competition, technological developments, employee relations, regulation, foreign currency exchange rates and the potential need for increased capital expenditures (including those resulting from increased demand, new business opportunities and development of new technologies) and failure to achieve the expected benefits of the proposed combination of Cobham and Thrane & Thrane.

(*) This statement is not intended to constitute a profit forecast for the year ending 31 December 2012 or for any other period and should not be interpreted to mean that the earnings or earnings per share of Cobham will necessarily be greater or less than those for the relevant preceding period.

- ends -

 


Attachments