DANFOSS LAUNCHES A VOLUNTARY RECOMMENDED PUBLIC TENDER OFFER FOR ALL SHARES IN VACON

| Source: Nasdaq Helsinki Oy Nasdaq Helsinki Oy

NOT TO BE RELEASED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, IN OR INTO CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA, HONG KONG OR IN ANY OTHER STATE IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.

 

DANFOSS LAUNCHES A VOLUNTARY RECOMMENDED PUBLIC TENDER OFFER FOR ALL SHARES IN VACON

 

Danfoss A/S together with its group companies (“Danfoss”) and Vacon Plc (“Vacon”) have on 11 September 2014 entered into a combination agreement under which they agree to combine the drives businesses of Danfoss and Vacon (the “Combination Agreement”). In order to effect the combination Danfoss will, through its wholly owned subsidiary Oy Danfoss Ab (the “Bidder”), make a voluntary recommended public tender offer to purchase all the issued and outstanding shares in Vacon (the “Tender Offer”). In the Tender Offer Vacon shareholders are being offered a cash consideration of EUR 34.00 for each share in Vacon representing an aggregate equity purchase price of approximately EUR 1,038 million. Combining the two companies will create a Nordic based, global player – a new drives business with the clear ambition to build a leading position in the drives market.

 

Summary of the Tender Offer

  • Tender Offer of EUR 34.00 in cash for each share in Vacon (the “Offer Price”);
  • The Offer Price represents a premium of:
    • 13.1 percent to the closing price of Vacon on NASDAQ OMX Helsinki Ltd (“NASDAQ OMX Helsinki”) on 11 September, i.e. last day of trading before the announcement of the Tender Offer;
    • 19.0 percent to the 3 months volume weighted average price on the NASDAQ OMX Helsinki; and
    • 20.3 percent to the 12 months volume weighted average price on the NASDAQ OMX Helsinki;
  • The Board of Directors of Vacon has unanimously decided to recommend the shareholders to accept the Tender Offer;
  • The Bidder and Vacon’s largest shareholder, AC Invest Three B.V., have entered into an agreement on the sale of the whole current holding of AC Invest Three B.V. in Vacon corresponding to a 10.56 percent shareholding in Vacon to the Bidder;
  • Certain large shareholders, together representing approximately 14.32 percent of the shares in Vacon, have subject to certain customary conditions undertaken to accept the Tender Offer;
  • The Tender Offer is subject to e.g. approvals by the relevant authorities, such as competition authorities and the Finnish Ministry of Employment and Economy, and the Bidder gaining control of more than 90 percent of the Vacon shares;
  • The Bidder will on or about 24 September, 2014 publish a tender offer document with detailed information on the Tender Offer.

“After a careful examination of the Tender Offer, the Board of Directors of Vacon has unanimously decided to recommend the shareholders to accept it. Vacon is truly one of the great industrial success stories, even globally speaking. By joining forces the two companies will create a Nordic based, global player – a new AC drives business with the clear ambition to build a leading position in the AC drives market,” says Panu Routila, Chairman of the Board at Vacon.

Background and strategic rationale

The background for the Tender Offer is Danfoss’ strategic focus on creating profitable growth. Vacon is a good match to this ambition. Today both Danfoss Power Electronics division and Vacon are significant players in the drives business and combined they will gain an even stronger market position.

“We have a clear strategic ambition of being among the absolute top players in the businesses where we operate. Vacon is a very strong and innovative player and together we can ensure a clear long-term growth trajectory,” says Niels B. Christiansen, CEO at Danfoss.

By joining forces Danfoss and Vacon will become a strong alternative to competitors in the market and be able to give customers a broader and more innovative offering of drives faster. Together the entities will also get a base for enhancing growth from critical mass in mature and emerging markets and be able to invest further in both R&D and sales force and gain scale, which is a key success factor in the drives business.

“I believe that customers will benefit significantly from the two entities joining forces as they will bring even more competitive, innovative and attractive AC drives to the market. Today Vacon is stronger than ever, and it has a great future ahead together with Danfoss,” says Vacon’s President and CEO Vesa Laisi.

Vacon is a global company with unique R&D, Production, Supply Chain competences in China, Finland, India, Italy and US, and highly skilled sales and service organization in 31 countries. They have a crucial role in building a new drives business to challenge the top players in the world. Finland as a hotspot in the global drives business has an especially crucial role and Danfoss will be positioning Finland as one of its future centers of excellence along with the other power electronics centers worldwide.

The Tender Offer

Danfoss A/S and Vacon have on 11 September 2014 entered into the Combination Agreement, according to which the Bidder will make a public tender offer to purchase all issued and outstanding shares in Vacon. For a brief description of the Combination Agreement please see section “Combination Agreement” below.

The completion of the Tender Offer is conditional on, among other things, the following conditions being met or the Bidder waiving the fulfilment thereof on or by the date on which the Bidder announces the final outcome of the Tender Offer:

  1. the valid tender of outstanding shares representing (together with any outstanding shares that may be held by the Bidder or any of its direct or indirect parent companies) more than ninety per cent (90%) of the issued and outstanding shares and voting rights of Vacon calculated in accordance with Chapter 18 Section 1 of the Finnish Companies Act (624/2006, as amended);

 

  1. the receipt of all applicable regulatory permits, consents and approvals, including anti-trust approvals and an approval of the Finnish Ministry of Employment and the Economy or the Finnish Government, as applicable, under the Finnish Act on Monitoring Foreign Acquisitions (laki ulkomaisten yritysostojen seurannasta, 172/2012), necessary to permit the completion of the Tender Offer in such a manner that the terms and conditions possibly included in such permits, consents or approvals are reasonably acceptable to the Bidder in that they do not have material impact as referred to in chapter 4.3 of the Regulations and guidelines 9/2013 (Takeover bid and the obligation to launch a bid) issued by the Finnish Financial Supervisory Authority;

 

  1. no order or regulatory action by a court or regulatory authority of competent jurisdiction preventing, postponing or materially challenging the completion of the Tender Offer or the exercise of the rights of ownership of shares in Vacon by the Bidder having been issued (other than an order or regulatory action related to the permits, consents and approvals referred to in section 2) above);

 

  1. no information made public or disclosed by Vacon being materially inaccurate, incomplete or misleading and Vacon not having failed to make public any information that should have been made public by it under applicable laws and regulations, provided that such disclosure or failure to disclose information constitutes or results in a material adverse change in Vacon and its subsidiaries, taken as a whole;

 

  1. no fact or circumstance having arisen after the date of this announcement that constitutes a material adverse change in respect of Vacon and its subsidiaries, taken as a whole;

 

  1. the external financing committed to the Danfoss for purchasing the shares pursuant to the Tender Offer still being available to Danfoss provided that this condition only applies in situations where the non-availability of said financing is due to conditions or circumstances outside the control of the Bidder and Danfoss A/S or its group companies have not in any way breached the terms and conditions of said financing;

 

  1. the Combination Agreement still being in force;

 

  1. the recommendation of the Board of Directors of Vacon being in force and not amended (other than with respect to amendments which are required under applicable laws and regulations including the Helsinki Takeover Code and which do not amend the material substance of the recommendation); and

 

  1. in the event that a competing offer is made, the Board of Directors of Vacon having confirmed to the Bidder within two business days their intention to uphold the recommendation for the Tender Offer.

The Bidder has on 11 September 2014 entered into an agreement with Vacon’s largest shareholder AC Invest Three B.V. (“AC Invest”) pursuant to which the Bidder has agreed to acquire all shares in Vacon currently held by AC Invest, in aggregate 10.56 percent of all issued shares in Vacon (the “Sale Shares”). In accordance with the agreement the Bidder has simultaneously with the signing of the Combination Agreement by Danfoss A/S acquired such number of Sale Shares that corresponds to 9.98 percent of all shares in Vacon. Further the Bidder has agreed to acquire and AC Invest has agreed to sell the remaining Sale Shares, corresponding to 0.58 percent of all shares of Vacon, subject to the approval by the Finnish Ministry of Employment and the Economy required under the Finnish Act on Monitoring Foreign Acquisitions. Such additional trade shall take place immediately upon receipt of such approval. The sale price of the Vacon shares held by AC Invest is EUR 29.70 per share. If the Tender Offer is successful, the Offer Price of EUR 34.00 per share will be used as the sale price for all Vacon shares sold by AC Invest.

Further, certain large shareholders, together representing approximately 14.32 percent of the shares in Vacon, have subject to certain customary conditions undertaken to accept the Tender Offer;

The Board of Directors of Vacon has unanimously decided to recommend the shareholders to accept the Tender Offer and considers that the terms and conditions of the Tender Offer are fair to the shareholders. The Board of Directors of Vacon has received a fairness opinion from its financial adviser Aventum Partners according to which the consideration to be offered to the shareholders in the Tender Offer is fair. The Board of Directors will issue its complete statement on the Tender Offer in accordance with the Finnish Securities Market Act before the publication of the tender offer document and such statement will be incorporated into the tender offer document.

The intention of the Bidder is to acquire all issued and outstanding shares in Vacon (excluding treasury shares not covered by the Tender Offer) amounting to 30,534,502 shares. Should such amount of shares be tendered in the Tender Offer that the Bidder obtains more than 90 per cent of all shares and voting rights in Vacon, the Bidder intends to initiate compulsory redemption proceedings for the remaining of the shares and thereafter apply for delisting of the shares of Vacon from the NASDAQ OMX Helsinki.

On the date of the announcement of the Tender Offer, the Bidder or Danfoss A/S do not hold any shares or voting rights in Vacon other than Sale Shares acquired from AC Invest.

The Bidder will make all necessary filings to obtain approvals from e.g. the relevant Competition Authorities as soon as possible after this announcement of the Tender Offer as well as the approval of the Finnish Ministry of Employment and the Economy or the Finnish Government, as applicable, under the Finnish Act on Monitoring Foreign Acquisitions.

The acceptance period for the Tender Offer is expected to commence on or about 29 September 2014 and initially expected to run until 21 October 2014.

The Bidder reserves the right to extend the offer period from time to time in accordance with the terms and conditions of the Tender Offer.

The Tender Offer and the combination will not have any immediate impact on the business operations or assets of Vacon. Provided that the Tender Offer is completed, the businesses of Vacon and Danfoss will be combined based on a joint integration plan between Vacon and Danfoss. The integration process will, however, start only upon receipt of all necessary authority approvals and the completion of the Tender Offer.

The detailed terms and conditions of the Tender Offer as well as instructions on how to accept the Tender Offer will be included in the offer document, which the Bidder expects to publish around 24 September 2014.

The Bidder and Vacon have undertaken to comply with the recommendation regarding the procedures to be complied with in Finnish tender offers, the Helsinki Takeover Code.

Vacon has in the Combination Agreement agreed to a standard non-solicitation clause whereby Vacon has undertaken not to solicit any competing proposals and, subject to the fiduciary duties of the Board of Directors of Vacon, promote the progress of such proposals. Having carefully assessed the terms and conditions of the Tender Offer, including the preconditions set by Danfoss for launching the Tender Offer, the Board of Directors of Vacon has concluded that entering into the Combination Agreement, including said non-solicitation clause, is in the interest of Vacon’s shareholders.

The offer consideration

The consideration offered in the Tender Offer is EUR 34.00 in cash for each issued and outstanding share in Vacon. The Offer Price represents a premium of:

  • 13.1 percent to the closing price of Vacon on the NASDAQ OMX Helsinki on 11 September, i.e. the last day of trading before the announcement of the Tender Offer;
  • 19.0 percent to the volume weighted average price on the NASDAQ OMX Helsinki during the three months preceding the date of the announcement of the Tender Offer; and
  • 20.3 percent to the volume weighted average price on the NASDAQ OMX Helsinki during the last twelve months preceding the date of the announcement of the Tender Offer.

Any dividend or other distribution of funds by Vacon decided after the date of the announcement of the Tender Offer, which a shareholder who has accepted the Tender Offer is entitled to, will be deducted from the offer price.

Combination Agreement

The Combination Agreement entered into by and between Danfoss and Vacon sets forth the principal terms under which the Bidder will make the Tender Offer.

Under the Combination Agreement, the Board of Directors of Vacon undertakes to issue a formal recommendation to the shareholders of Vacon to accept the Tender Offer. The Board of Directors of Vacon may nevertheless decide to withdraw, modify or change the recommendation and take actions contradictory to the recommendation if the Board of Directors determines in good faith after taking advice from external legal counsel and its financial advisers and after providing the Bidder with a reasonable opportunity to discuss with the Board of Directors of Vacon, that such withdrawal, modification, or change is required in order for the Board of Directors to comply with its mandatory fiduciary duties to Vacon’s shareholders under Finnish laws and the Helsinki Takeover Code. Further, in the event of a competing offer, the Board of Directors of Vacon may withdraw, modify or change the recommendation if (i) Vacon has not solicited competing offers as described below, (ii) a final announcement regarding a public tender offer is published and a third party shall under such announcement offer to purchase all outstanding shares in Vacon on terms and conditions which are more favorable to the shareholders of Vacon than the terms and conditions of the Tender Offer, (iii) the Board of Directors of Vacon has provided certain time period to the Bidder to upgrade the Tender Offer; and (iv) the Board of Directors of Vacon under its mandatory fiduciary duties reasonably and in good faith considers that it would no longer be in the interest of the shareholders of Vacon to accept the Tender Offer. If a competing offer would be published but the Bidder would upgrade its Tender Offer so as to, in the reasonable opinion of the Board of Directors of Vacon rendered in good faith, be at least equally favorable to the shareholders as the competing offer, the Board of Directors of Vacon shall confirm and uphold the recommendation for the Tender Offer, as amended.

Vacon has also undertaken not to solicit or encourage any competing offers or proposals for such offers or other transactions competing with the Tender Offer, nor to promote any such proposals, except if the Board of Directors of Vacon considers that such promoting measures are required in order for the Board of Directors to comply with its mandatory fiduciary duties. Vacon has agreed to inform the Bidder of any competing proposals and to provide the Bidder with an opportunity to negotiate with the Board of Directors of Vacon of matters arising from such competing proposals.

In the Combination Agreement, Vacon and Danfoss have also agreed on the conditions to completion of the Tender Offer as set out above.

The Combination Agreement further includes certain representations, warranties and undertakings by both parties, such as conduct of business by Vacon in the ordinary course of business before the completion of the Tender Offer, and cooperation by the parties in making necessary regulatory filings.

Subject to the Bidder acquiring more than ninety per cent of the issued and outstanding shares and voting rights of Vacon, the Bidder has undertaken to commence compulsory redemption proceedings of the remaining shares of Vacon and to cause the Vacon shares to be delisted from NASDAQ OMX Helsinki.

The Combination Agreement may be terminated by either Vacon or the Bidder (i) in case of a material breach by the other party of any of the warranties, undertakings or obligations under the Combination Agreement, (ii) if the Board of Directors of Vacon has in accordance with the Combination Agreement withdrawn, modified or changed the recommendation, (iii) if the conditions to completion of the Tender Offer have not been satisfied or waived by the Bidder in accordance with the terms and conditions of the Tender Offer and the Bidder has announced that it will not complete the Tender Offer or (iv) if the closing of the Tender Offer has not occurred on or before 31 May 2015.

Danfoss A/S will in accordance with the Combination Agreement assign the agreement to the Bidder in which case Danfoss A/S shall automatically be deemed to guarantee as for its own debt the obligations of the Bidder.

Financing

Danfoss has secured the necessary financing for the Bidder to complete the Tender Offer, including mandatory redemption proceedings, and plans to use a combination of cash positions, unutilized committed credit facilities and further credit approved financing from its financing institutions.

Authority approvals

The completion of the tender offer is, among other things, conditional upon receipt of all applicable regulatory permits, consents and approvals, including antitrust approvals, necessary to permit the completion of the Tender Offer. The Bidder intends to seek antitrust approvals in several jurisdictions. Furthermore, the Bidder will have to seek for an approval of the Finnish Ministry of Employment and the Economy or the Finnish Government, as applicable, under the Finnish Act on Monitoring Foreign Acquisitions. The Bidder and Vacon have agreed to carry out these approval processes in co-operation so that they can be completed in the most expeditious manner practicable.

According to information currently available to the Bidder, it is uncertain whether all necessary authority approvals can be obtained by the end of the offer period due to some of the authority processes not having a statutory deadline. In case all necessary approvals have not been obtained by the end of the offer period, the Bidder will extend the offer period in order to receive the necessary approvals to be able to complete the Tender Offer. The parties currently estimate that the competition clearances could obtained by the end of November.

Advisers

Danfoss has appointed Nordea Markets Investment Banking as financial adviser, Castrén & Snellman Attorneys Ltd as legal adviser, and Deloitte as financial transaction service provider in connection with the Tender Offer.

Vacon has appointed Aventum Partners as financial adviser and Roschier Attorneys Ltd. as legal adviser.

 

Further information

•  Danfoss Media Relations, phone +45 70 20 44 88

  • Sebastian Linko, Director, Corporate Communications and Investor Relations, Vacon Plc, phone +358 (0)40 8371 634, sebastian.linko(at)vacon.com

 

Analyst meeting at 14:00-15:00 EET, to be held at Restaurant Savoy, Eteläesplanadi 14, Helsinki.

Media conference at 15:15-16:15 EET, to be held at Restaurant Savoy, Eteläesplanadi 14, Helsinki.

These are also all webcasted live at the above mentioned times. The webcast information is as follows:

Link: http://qsb.webcast.fi/c/customers/customers_2014_0912_vacon_live_helsinki/

Username: Vacon

Password: Danfoss

 

Vacon in brief:

Vacon is driven by a passion to develop, manufacture and sell the best AC drives and inverters in the world - and provide customers with efficient product lifecycle services. Our AC drives offer optimum process control and energy efficiency for electric motors. Vacon inverters play a key role when energy is produced from renewable sources. Vacon has production and R&D facilities in Europe, Asia and North America, and sales offices in 30 countries. Further, Vacon has sales representatives and service partners in nearly 90 countries. In 2013, Vacon’s revenues amounted to EUR 403.0 million, and the company employed globally approximately 1,600 people. The shares of Vacon Plc (VAC1V) are quoted on the main list of the Helsinki stock exchange (NASDAQ OMX Helsinki).

Driven by Drives, www.vacon.com

 

Danfoss in brief:

Danfoss engineers technologies that enable the world of tomorrow do more with less. Danfoss meets the growing need for infrastructure, food supply, energy efficiency and climate-friendly solutions. The products and services are used in areas such as refrigeration, air conditioning, heating, motor control and mobile machinery. The company is also active in the field of renewable energy as well as district heating infrastructure for cities and urban communities. Danfoss innovative engineering dates back to 1933 and today the company is a world-leader, employing 22,500 employees and serving customers in more than 100 countries. The company is privately held by the founding family.

THIS RELEASE IS NOT A TENDER OFFER DOCUMENT AND AS SUCH DOES NOT CONSTITUTE AN OFFER OR AN INVITATION TO MAKE A SALES OFFER. INVESTORS SHALL ACCEPT THE TENDER OFFER FOR THE SHARES ONLY ON THE BASIS OF THE INFORMATION PROVIDED IN THE TENDER OFFER DOCUMENT. OFFERS WILL NOT BE MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE EITHER THE OFFER OR PARTICIPATION THEREIN IS PROHIBITED BY APPLICABLE LAW OR WHERE THE TENDER OFFER DOCUMENT WOULD HAVE TO BE PUBLISHED OR REGISTERED OR THE OFFER WOULD BE SUBJECT TO OTHER REQUIREMENTS IN ADDITION TO THOSE UNDERTAKEN IN FINLAND. THE TENDER OFFER IS NOT BEING MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW AND, WHEN PUBLISHED, THE TENDER OFFER DOCUMENT AND RELATED CONSENT FORMS WILL NOT AND MAY NOT BE DISTRIBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW. IN PARTICULAR, THE TENDER OFFER IS NOT BEING MADE, DIRECTLY OR INDIRECTLY, IN OR INTO, OR BY USE OF THE POSTAL SERVICE OF, OR BY ANY MEANS OR INSTRUMENTALITY (INCLUDING, WITHOUT LIMITATION, FACSIMILE TRANSMISSION, TELEX, TELEPHONE OR THE INTERNET) OR THROUGH A NATIONAL SECURITIES EXCHANGE OF CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG. THE TENDER OFFER CANNOT BE ACCEPTED BY ANY SUCH USE, MEANS OR INSTRUMENTALITY OR FROM WITHIN CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG.

 

Special notice to securityholders in the United States

The Tender described in this announcement is subject to the laws of Finland. It is important for US securities holders to be aware that this press release and all tender offer documentation are subject to disclosure and takeover laws and regulations in Finland that are different from those in the United States. As applicable, the Bidder will comply with Regulation 14E under the US Securities Exchange Act of 1934, as amended in connection with the Offer. Any extension of the tender offer into, or any separate tender offer, in the United States will be made solely under the accompaniment of a dealer-manager that is a broker-dealer registered under the US Securities Exchange Act of 1934, as amended.

Securityholders in the United States should read the tender offer documents when they become available for instructions on how to tender their shares and American Depository Shares.

Pursuant to an exemption from Rule 14e-5 under the Exchange Act, the Bidder and certain of its Representatives may, from time to time, purchase or make arrangements to purchase shares outside the Tender from the time the Tender was announced until the expiration of the acceptance period of the Tender, including purchases in the open market at prevailing prices or in private transactions at negotiated prices, in each case, outside of the United States and to the extent permitted under the applicable Finnish laws and regulations. Any such purchases will not be made at prices higher than the price of the Tender provided in this announcement unless the price of the Tender is increased accordingly. Any future purchases will be made in accordance with applicable laws, rules and regulations. Any such purchases of shares will be disclosed to the extent required by Finnish law or rules or regulations and, if so disclosed, will also be disclosed in the US.

NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY U.S. STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THIS OFFER, PASSED UPON THE FAIRNESS OR MERITS OF THIS ANNOUNCEMENT OR DETERMINED WHETHER THIS ANNOUNCEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES.