Statement by the Board of Directors of Orc Group AB in relation to Cidron Delfi Intressenter AB’s public takeover offer (1)

Statement by the Board of Directors of Orc Group AB in relation to Cidron Delfi
Intressenter AB’s public takeover offer (1)

 

Background
This statement is made by the Board of Directors of Orc Group AB (“Orc” or the
“Company”) pursuant to section II.19 of the rules concerning takeover bids on
the stock market adopted by NASDAQ OMX Stockholm (the “Takeover Rules”).

Cidron Delfi Intressenter AB (2) (“Cidron Delfi Intressenter”), a company
indirectly wholly-owned by Nordic Capital VII Limited (3) (“Nordic Capital Fund
VII”), has today, through a press release, announced a public offer to the
shareholders of Orc to transfer all of their shares in Orc to Cidron Delfi
Intressenter for a consideration of SEK 86 in cash per share in Orc (the
“Offer”).

The total value of the Offer amounts to approximately SEK 2,021 million.
Compared to Orc’s volume-weighted average share price on NASDAQ OMX Stockholm
during the last three months up to and including 16 December 2011, of
approximately SEK 56.60, the Offer represents a premium of approximately 52
percent. Compared to the last closing price of SEK 64.75 per share on NASDAQ OMX
Stockholm on 16 December 2011, being the last day of trading prior to
announcement of the Offer, the Offer represents a premium of approximately 33
percent.

The acceptance period for the Offer is expected to run from and including 23
December 2011 to and including 27 January 2012. The Offer is conditional upon
e.g. that it is accepted to the extent that Cidron Delfi Intressenter becomes
the owner to more than 90 percent of the total number of shares in Orc on a
fully diluted basis and receipt of necessary regulatory approvals.

The Board of Directors of Orc has, upon request by Cidron Delfi Intressenter,
allowed Cidron Delfi Intressenter to conduct a limited confirmatory due
diligence investigation in connection with the preparations for the Offer and
Cidron Delfi Intressenter has in connection therewith also met Orc’s management.
In connection with such due diligence, Orc has informed Cidron Delfi
Intressenter that the development in Neonet is a disappointment and is even
worse than Orc’s worst case scenario at the time of the acquisition. In
connection with the due diligence Orc has also informed Cidron Delfi
Intressenter that downsizings and cancellations of customer contracts, the so
called “churn”, has been on a level of approximately 10 to 15 percent of ACV
(“Annualized Contract Value”) on a yearly basis to and including 2007. As from
the beginning of the financial crisis in 2008, the churn on a yearly basis has
been on a level of around 20 to 25 percent. Besides the above, Cidron Delfi
Intressenter has not received any non-public price-sensitive information in the
due diligence investigation.

For further information regarding the Offer, please refer to Cidron Delfi
Intressenter’s press release which was made public today.

The Board of Directors’ Recommendation
The Board of Directors’ opinion of the Offer is based on a joint assessment of a
number of factors that the Board of Directors has considered relevant in
relation to the evaluation of the Offer. These factors include, but are not
limited to, the Company’s present position, the expected future development of
the Company and thereto related possibilities and risks.

On 1 December 2011, Cidron Delfi Intressenter sent a letter to the Board of
Directors of Orc with a price indication, without a financing condition and with
a request to conduct a limited due diligence investigation. After some
negotiations, the parties entered into a confidentiality agreement and on 8
December 2011 Nordic Capital Fund VII had a first meeting with Orc’s management.
The meeting was positive and Orc’s impression was that Nordic Capital Fund VII
was very well informed of Orc and its business. On 11 December 2011, Nordic
Capital Fund VII and its advisers were granted access to a virtual data room.

The Board of Directors reached the conclusion that contacting other potentially
interested financial and industrial parties for Orc would be in the interest of
all shareholders. To assist the Board of Directors in such contacts and also to
evaluate the Offer at large, the Board of Directors has engaged Lazard as
financial adviser. At this point the Board of Directors can neither confirm nor
rule out that any competing offer will materialize.

The Offer shall be considered in relation to currently existing alternatives.
The Board of Director’s conclude that the price that Cidron Delfi Intressenter
offers entails a significant premium of 52 percent compared to Orc’s
volume-weighted average share price on NASDAQ OMX Stockholm during the last
three months up to and including 16 December 2011, of approximately SEK 56.60,
and a premium of approximately 33 percent compared to the last closing price of
SEK 64.75 per share on NASDAQ OMX Stockholm on 16 December 2011.

Under the Takeover Rules, the Board of Directors shall also, based on what
Cidron Delfi Intressenter has expressed in its announcement of the Offer,
present its views on the impact the completion of the Offer may have on Orc,
especially employment, and its views on Cidron Delfi Intressenter’s strategic
plans for Orc and the impact these could be expected to have on employment and
on Orc’s business locations. The information that Cidron Delfi Intressenter has
provided in this respect in connection with announcement of the Offer is not
sufficient for the Board of Directors of Orc to be able to present its view on
any material impact the completion of the Offer may have on Orc, especially
employment, and on Orc’s business locations.  

Based on the above, the Board of Directors unanimously recommends Orc’s
shareholders to accept Cidron Delfi Intressenter’s Offer of SEK 86 per share in
the Company.

This statement shall in all aspects be governed by and interpreted in accordance
with Swedish law. Any disputes relating to or arising in connection with this
statement shall be settled exclusively by Swedish courts.

Stockholm, 19 December 2011
Orc Group AB
The Board of Directors

Advisers
Lazard is financial adviser and Hannes Snellman Attorneys is legal adviser to
Orc.

For additional information, please contact:
Patrik Enblad, Chairman of the Board of Orc Group AB, phone: +46 8 506 477 79

About Orc Group
Orc Group is a leading provider of technology and services for the global
financial industry. Orc delivers trading and market access solutions that are
used by proprietary trading and market making firms, investment banks, hedge
funds and brokerage houses.

The Orc Group serves customers through three business units, each with
distinctive offerings:

  · Orc develops and provides the tools needed to run profitable trading and
brokerage businesses.
  · Neonet offers professional market participants flexible, independent and
transparent execution services.
  · CameronTec is the financial industry leader in FIX infrastructure and
connectivity solutions.

With market presence in all major global financial centers, Orc provides sales
and support services from its offices across the EMEA, Americas and Asia-Pacific
regions.

Orc Group is publicly traded on NASDAQ OMX Stockholm (SSE: ORC).

For additional information, visit www.orc-group.com

The information in this press release shall be released by Orc Group in
accordance with the Swedish securities markets law. The information was handed
in for publication on 19 December 2011 at 8.20 a.m. (CET).

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(1) N.B. The English text is a translation of the Swedish text. In case of
discrepancy between the Swedish and the English text the Swedish version shall
prevail.

(2) A newly formed company indirectly wholly owned by Nordic Capital Fund VII,
under name change from Goldcup 7189 AB to Cidron Delfi Intressenter AB.

(3) Nordic Capital VII Limited, a limited liability company established under
the laws of Jersey, with registered office in St Helier, Jersey, acting, in
relation to the Offer, in its capacity as General Partner for and on behalf of
Nordic Capital VII Alpha, L.P. and Nordic Capital VII Beta, L.P.