UTRECHT, The Netherlands, July 3, 2001 (PRIMEZONE) -- ICT companies Blue Fox Enterprises N.V. ("Blue Fox") and NedGraphics Holding N.V ("NedGraphics") (AEX:NEDG) expect to reach an agreement on the acquisition of NedGraphics by Blue Fox through a legal merger of the two companies. NedGraphics shareholders will receive one Blue Fox share for every two NedGraphics shares. A number of the large shareholders of both companies have also agreed to finance the combination for at least EUR 5 million. This financing will be effected through the placement of ordinary shares in the combined company, following the completion of the legal merger, with the large shareholders, at a price of EUR 12.82. Furthermore, to strengthen the guaranteed capital, EUR 2.0 million in short-term debt will be converted into subordinated debt. This share issue is required to reach a guaranteed capital, after deduction of goodwill, of at least 25% at year-end 2001. The new funds will be used to finance the continued expansion of the joint activities and the refinancing of the debts of NedGraphics. Irrespective of the share issue, the Blue Fox earnings per share are expected to rise further.
The Blue Fox and NedGraphics Management Boards expect the new combination to grow faster than the two companies separately. The combination of the two companies will create new growth opportunities, and enable the realization of cost savings and synergy benefits. Following the merger, the new combination will operate under the name Blue Fox Enterprises, with the NedGraphics operating companies continuing to operate under their own names. The pro-forma turnover of the new combination in 2000 amounted to EUR 82.8 million. The merger will create a company with approximately 500 employees. The acquisition is in line with Blue Fox's strategy of expanding its service activities, increasing the net profit margin and quadrupling net profit within five years. The acquisition offers NedGraphics the opportunity to expand its position as provider of integrated ICT solutions and to increase efficiency.
Reasons for the Merger
The combination of strengths will give a considerable boost to the position of the combined company. Blue Fox and NedGraphics have strong positions in the CAD/CAM and GIS markets, which are largely complementary. The merger will enable the new combination to offer existing and new clients a wider range of services and products. The companies also expect to strengthen and expand the current market-leading positions. The reciprocal contacts between the operating companies will also create new growth opportunities.
The merger is expected to result in cost-savings and synergy benefits in due course. Cost-savings can be generated through a more efficient use of overheads, training facilities, PR activities and software purchasing. The companies can also co-operate in areas such as training courses, consultancy, Management Information Systems, the development of new technologies, internet and software distribution. In addition, the increased scale will reduce the dependence on individual products and markets.
Transaction
The proposed acquisition of NedGraphics by Blue Fox will be effected through a legal merger of the two companies. Under the terms of the proposed share swap ratio, NedGraphics shareholders will receive one Blue Fox share in exchange for two NedGraphics shares. The swap ratio is based on historical and future financial key figures, current market capitalization and expected profit potential of the two companies.
On the basis of the proposed share swap ratio, the Blue Fox shares currently outstanding (1,691,420) and the NedGraphics shares currently outstanding (2,481,384), the effectuation of the acquisition which require the placement of 1,240,692 new Blue Fox shares. The new number of outstanding Blue Fox shares will then be 2,932,112. Blue Fox shareholders will hold 57.7% of Blue Fox shares, with NedGraphics shareholders holding the remaining 42.3%.
The Blue Fox and NedGraphics management boards plan to submit the legal merger of Blue Fox and NedGraphics to their shareholders at an Extraordinary General Meeting of Shareholders. If the legal merger is effected, the company NedGraphics will be incorporated in Blue Fox and will therefore cease to exist. The combined company will continue to be listed under the name Blue Fox Enterprises on the official market of Euronext Amsterdam N.V. The companies expect to publish the merger prospectus (also share issue prospectus) in mid-August 2001. The Extraordinary General Meetings of Shareholders of Blue Fox and NedGraphics are expected to be held around September 1, 2001. The proposed merger will be effected as quickly as possible after the extraordinary shareholders' meetings have passed the resolution to merge. The SER Merger Commission and Euronext Amsterdam N.V. have been informed of the proposed merger. The NedGraphics works council have been asked for a recommendation. The proposed merger will not result in any job losses. Fortis Bank Investment Banking is advising both companies in this transaction.
Financing
In connection with the merger, an increase in shareholders' equity is required to reach a guaranteed capital, after deduction of goodwill, of at least 25% at year-end 2001. To this end, the combined entity will immediately, after the effectuation of the legal merger, issue new Blue Fox shares. In the context of this proposed merger, contact was made beforehand, on a confidential basis, with a number of the large shareholders in the two companies and reached agreement with these large shareholders on the placement of at least 390,000 ordinary Blue Fox shares at a price of EUR 12.82. The placement will therefore be valued at least EUR 5 million. A total of approximately 3.3 million shares will therefore be outstanding as a result of this transaction. To strengthen the guaranteed capital, EUR 2.0 million in short-term debt will be converted into subordinated debt.
The new funds will be used to repay NedGraphics' current bridge loan, for reorganization charges and the expansion of joint activities. The funds will also be used to finance investments in the textile division, to effect the accelerated transition to a provider of total solutions.
Outlook
As of the effectuation of the transaction, NedGraphics' results will be consolidated on the basis of purchase accounting. If the transaction is completed on September 1, 2001, NedGraphics' results for the last four months of 2001 will be included in the Blue Fox figures. NedGraphics has had a difficult second quarter, which is expected to lead to a loss in the first half year of 2001. This loss is caused among others by non-recurring costs in connection with the restructuring of the foreign offices. It is expected that NedGraphics will still achieve a positive net result for the full year because of the seasonal trend of the business. In previous press releases the Blue Fox Executive Board has communicated that it expects an increase in the net profit and the earnings per share for the full year. The transaction is expected to result in an increase in the Blue Fox earnings per share, irrespective of the share issue. A more detailed explanation of the combined company's financial targets will accompany the publication of the merger proposal.
Organization and Management
The current NedGraphics CEO, Mr. A. van Marion will be appointed to the Blue Fox Executive Board and will be responsible primarily for the management of the "ICT solutions for the textile industry" unit. The NedGraphics GIS activities will be incorporated in the Blue Fox services division and report to Mr. R.J. Brolsma, member of Blue Fox Executive Board. In his position as Chairman of the Blue Fox Executive Board, Mr. S.W. Eisma will continue to be responsible for the company's strategy and for Investor Relations. The Blue Fox Supervisory Board will comprise the current members of the Blue Fox Supervisory Board, i.e. B.F.M. Knueppe (chairman) and P.A.M. Pellenaars. The NedGraphics Supervisory Board will be dissolved effective as of the merger date.
Profile Blue Fox
Blue Fox is an ICT services provider, specialized in supplying PC software and ICT services. The services include deployment, recruitment and selection, training courses, tailor-made software, satellite communications and the publication of magazines. Blue Fox has been listed on the Official Market of Euronext Amsterdam N.V. since May 21, 1999.
Profile NedGraphics
NedGraphics provides integrated software solutions for the textile industry at home and abroad, and Geographic Information Systems to Dutch local government bodies. NedGraphics has been listed on the Euro.NM in Amsterdam since April 3, 1998.
The full text of this announcement and additional information can be found on the websites of Blue Fox and NedGraphics: www.bluefox.nl, www.nedgraphics.nl.