AFFECTO PLC -- STOCK EXCHANGE RELEASE -- 29 AUGUST 2017 at 8.00 EET
THIS RELEASE MAY NOT BE RELEASED, PUBLISHED OR OTHERWISE DISTRIBUTED, IN WHOLE OR IN PART, IN OR INTO, DIRECTLY OR INDIRECTLY, THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.
STATEMENT BY THE BOARD OF DIRECTORS OF AFFECTO PLC CONCERNING THE VOLUNTARY PUBLIC TENDER OFFER BY CGI NORDIC INVESTMENTS LIMITED
1. BACKGROUND
CGI Nordic Investments Limited (the "Offeror"), a wholly owned indirect subsidiary of CGI Group, Inc. ("CGI"), and Affecto Plc ("Affecto") have on 21 August 2017 entered into a Combination Agreement (the "Combination Agreement") under which the Offeror undertakes to make a voluntary public cash tender offer to purchase all of the issued and outstanding shares in Affecto that are not owned by Affecto or any of its subsidiaries (the "Tender Offer"). The price offered for each share validly tendered in the Tender Offer will be EUR 4.55 in cash representing an aggregate purchase price of approximately EUR 98 million for Affecto shares that are not owned by Affecto or any of its subsidiaries as of the announcement of the Tender Offer.
The Offeror has on 22 August 2017 announced the Tender Offer pursuant to Chapter 11 of the Finnish Securities Markets Act.
The Tender Offer will be made in accordance with the terms and conditions of a tender offer document (the "Offer Document") to be published by the Offeror on or about 29 August 2017. In the Offer Document, the Offeror will set forth, inter alia, (i) the background and objectives of the Tender Offer, (ii) information on the pricing of the Tender Offer, and (iii) the terms and conditions of the Tender Offer.
The Board of Directors of Affecto (the "Board") has on 28 August 2017 issued this statement (the "Statement") concerning the Tender Offer in accordance with Chapter 11, Section 13 of the Finnish Securities Markets Act. The Statement assesses the Tender Offer from the perspective of Affecto and its shareholders as well as the Offeror's strategic plans and their probable impact on the operations and employment of Affecto.
2. TENDER OFFER IN BRIEF
- The offer price is EUR 4.55 in cash for each Affecto share (the "Offer Price").
- The Offer Price represents a premium of
- approximately 48.5 percent compared to the volume-weighted average trading price of the Affecto shares on Nasdaq Helsinki Ltd. ("Nasdaq Helsinki") during the 12-month period preceding the day of announcement of the Tender Offer;
- approximately 27.6 percent compared to the volume-weighted average trading price of the Affecto shares on Nasdaq Helsinki during the 3-month period preceding the announcement of the Tender Offer; and
- approximately 29.3 percent compared to the closing price of the Affecto shares on Nasdaq Helsinki on 21 August 2017, the last trading day before the announcement of the Tender Offer.
- Cantell Oy, representing approximately 10.17 percent of the shares and votes in Affecto, has, subject to certain customary conditions, irrevocably undertaken to accept the Tender Offer and not to accept any competing offer with a consideration of less than EUR 4.70 per Affecto share.
- The Tender Offer is subject to, among others, approvals, permits and consents by the relevant regulatory authorities, such as competition authorities, and the Offeror gaining control of more than 90 percent of the outstanding Affecto shares and voting rights on a fully diluted basis.
- The unconflicted members of the Board have unanimously resolved to recommend to shareholders of Affecto to accept the Tender Offer (as described in more detail below).
- If the Offeror obtains more than 90 percent of the shares and voting rights in Affecto, the Offeror intends to commence a mandatory redemption proceeding according to the provisions of the Finnish Companies Act in order to acquire title to all the shares in Affecto (the "Squeeze-Out"). The Offeror intends to apply for the delisting of the Affecto shares from Nasdaq Helsinki.
- The Offeror will, on or about 29 August 2017, publish a tender offer document with detailed information on the Tender Offer.
- The offer period for the Tender Offer is expected to commence on or about 30 August 2017 and to expire on or about 27 September 2017. The Offeror reserves the right to extend the offer period from time to time in accordance with the terms and conditions of the Tender Offer.
- If Affecto pays or distributes or resolves to pay or to distribute dividends or distribute assets or funds to its shareholders before the completion of the Tender Offer and should the record date of any such payment or distribution fall before any or all of the settlements of completion trades under the Tender Offer, the Offer Price shall be decreased accordingly.
3. PREPARATION OF THE STATEMENT
The Board has formed a composition to evaluate and process the Tender Offer consisting of Magdalena Persson, Mikko Kuitunen, Tuija Soanjärvi, Timo Vaajoensuu and Olof Sand who are non-conflicted members of the Board and independent of the Offeror and CGI. As Aaro Cantell has, on behalf of Cantell Oy, given his support for the Tender Offer, which may impact his ability to evaluate the bid unconstrained by undue influences, he has not in any way participated in the decision making related to the matter by the Board.
For the purposes of issuing the Statement, the Offeror has submitted to the Board a draft version of the Offer Document dated 22 August 2017 in the form in which the Offeror has filed the Offer Document with the Finnish Financial Supervisory Authority for approval. In preparing the Statement, the Board has relied on the information provided in the Offer Document. The Board has not independently verified the information included in the Offer Document.
In order to support its assessment of the Tender Offer, the Board has received a fairness opinion regarding the Tender Offer from Affecto’s financial advisor, Access Partners Oy (the “Fairness Opinion”). Subject to the assumptions and qualifications set out therein, the Fairness Opinion dated 24 August 2017 states that as of the date of the Fairness Opinion, the Offer Price is fair to the shareholders of Affecto from a financial point of view. The Fairness Opinion is attached as Appendix 1 to this Statement.
4. FINANCING OF THE TENDER OFFER
According to the Offer Document, the Offeror has sufficient financing for the Tender Offer and the Squeeze-Out through access to cash and draw-down facilities of CGI. Such financing is available for the Offer Period, including any extension. The completion of the Tender Offer is not conditional upon obtaining financing for the Tender Offer.
Further, according to the Offer Document, other than any market standard conditions associated with normal group financing arrangements, the financing for the Tender Offer will not have any impact on the operations or obligations of Affecto following completion of the Tender Offer.
5. ASSESSMENT OF THE TENDER OFFER FROM THE PERSPECTIVE OF AFFECTO AND ITS SHAREHOLDERS
In evaluating the Tender Offer, analysing alternative opportunities available to Affecto and concluding the Statement, the Board has considered several factors, such as Affecto's recent financial performance, current position and future prospects. The Board has also assessed the possibility of Affecto continuing its business operations as a standalone company and based its assessment on reasonable estimates for the future financial performance. The Board has also carefully evaluated the Tender Offer and its terms and conditions based on the Offer Document, the Fairness Opinion and other available information including, but not limited to:
- the Offer Price and premium offered for Affecto's issued and outstanding shares;
- information and estimates of Affecto's business operations and financial performance on the date of the Statement and their expected future development;
- historical trading price of Affecto’s share;
- valuation multiples of Affecto's shares prior to the announcement of the Tender Offer;
- the fact that the Offer Price will be paid in cash;
- transaction certainty, including that the completion of the Tender Offer is not conditional upon financing;
- other terms of the Tender Offer;
- the undertaking by Cantell Oy to accept the Tender Offer as referred to above; and
- alternative strategic options for Affecto.
Based on the investigations and evaluations of the Board, the Board considers the Offer Price to be fair from the perspective of the shareholders of Affecto.
The Board has concluded that the relevant business prospects of Affecto provide opportunities for Affecto to develop its business as an independent company for the benefit of Affecto and its shareholders. However, taking into consideration the risks and uncertainties associated with such stand-alone approach as well as the terms and conditions of the Tender Offer, the Board has concluded that the Tender Offer is a more favorable alternative for Affecto's shareholders.
Affecto has in the Combination Agreement agreed to a non-solicitation clause whereby Affecto has, subject to the fiduciary duties of the Board, undertaken not to solicit competing proposals or promote the progress of such proposals. Having carefully assessed the terms and conditions of the Tender Offer, the Board has concluded that entering into the Combination Agreement, including the non-solicitation undertaking, is in the interest of Affecto’s shareholders.
6. ASSESSMENT REGARDING STRATEGIC PLANS PRESENTED BY THE OFFEROR AND THEIR LIKELY EFFECTS ON THE OPERATIONS AND EMPLOYMENT OF AFFECTO
The Board has assessed the Offeror's strategic plans and their probable impact based on the information included in the Offer Document. According to such information, it is the intention of CGI, following completion of the Tender Offer, to integrate Affecto into its Nordic operations over a period expected to last up to one year. CGI expects that the combination will deliver integration benefits which, once realized, should enable the combined entity to be more competitive in the Nordic IT services market through a combination of expanded product and service offerings, combined talent and deeper market coverage. The specific initiatives to be implemented pursuant to the integration will be determined following completion of a detailed review of both Affecto’s and CGI’s Nordic operations.
According to the Offer Document, CGI views that realization of integration benefits is subject to completion of a detailed review of the operations to assess and identify opportunities including the potential for the removal of duplication, optimizing fixed assets and combining procurement. Such review is intended to be carried out in consultation with stakeholders taking into account the views of colleagues at both CGI and Affecto. Following the review, the expanded client base brought to the Affecto business by CGI may lead to deferral or reconfiguration of certain aspects of it and/or reconfiguration of CGI's own resources, subject to this being considered by CGI to the both appropriate and likely to lead to improved quality of client service and efficiencies.
According to the Offer Document, all existing employment rights, including pension entitlements, of all Affecto employees will be fully respected following completion of the acquisition contemplated by the Tender Offer. In addition, according to the Offer Document, CGI fully respects and is committed to continue supporting the different employee representation structures, where applicable, in the countries in which Affecto operates, and recognizes the constructive relationship that Affecto has developed with employee representative groups across its business.
The chairperson and the members of the Board intend to resign from the Board upon completion of the acquisition contemplated by the Tender Offer.
The Board has carefully reviewed the information on the Tender Offer provided by CGI and believes that CGI recognises the strategic value of Affecto. The combination would bring complementary skills to Affecto and a vast number of CGI owned solutions to Affecto's customers who operate in an increasingly global market and therefore benefiting the activities of Affecto. The Board also believes that the larger size and financial strength of CGI could enhance Affecto's position with respect to its existing and potential customers. Becoming part of a larger and highly professional global organisation would open up new opportunities for Affecto's employees as well.
The Board considers the information on the Offeror's strategic plans concerning Affecto included in the Offer Document to be of a general nature. However, based on information available to Affecto and to the Board, the Board evaluates that the completion of the Tender Offer is not expected to have any immediate material impact on Affecto’s operations or employment.
As of the date of this statement the Board has not received any formal statement from Affecto's employees as to the effects of the Tender Offer on employment at Affecto.
7. Recommendation of the Board of Directors
Based on the foregoing, the Board, in its aforementioned composition comprising all unconflicted members of the Board, deems that the Tender Offer and the Offer Price are under the prevailing circumstances fair to Affecto's shareholders, and it unanimously recommends that the shareholders of Affecto accept the Tender Offer.
The Board further states that Affecto's shareholders should also consider the potential risks associated with not accepting the Tender Offer. The completion of the Tender Offer would reduce the number of Affecto's shareholders and the number of shares that would otherwise be publicly traded. Depending on the number of shares validly tendered in the Tender Offer, this could have an adverse effect on the liquidity and value of Affecto's shares.
Notwithstanding the above, the Board also states that this Statement shall not constitute investment or tax advice to Affecto's shareholders, nor does the Board evaluate the general price development or the risks relating to investments in general. Acceptance or refusal of the Tender Offer is always a matter to be decided by the shareholders themselves, and such decision should be primarily based on the information presented by the Offeror in the Offer Document.
8. Other matters
Pursuant to Chapter 18 of the Finnish Companies Act, a shareholder with more than 90 per cent of all shares and votes in a company shall have the right to acquire, and subject to a demand by the other shareholders also be obligated to redeem, the shares owned by the other shareholders. The shares held by Affecto's shareholders who have not accepted the Tender Offer may be redeemed through compulsory redemption proceedings under the Finnish Companies Act under the conditions set out therein.
Affecto is committed to complying with the Helsinki Takeover Code issued by the Securities Market Association referred to in Chapter 11 Section 28 of the Finnish Securities Markets Act.
ADVISORS
Access Partners Oy acts as the financial advisor and Dittmar & Indrenius Attorneys Ltd. as the legal advisor to Affecto in connection with the Tender Offer.
HPP Attorneys Ltd acts as the legal advisor to CGI and the Offeror in connection with the Tender Offer. OP Corporate Bank plc acts as the financial adviser to the Offeror and arranger of the Tender Offer.
AFFECTO PLC
Board of Directors
ADDITIONAL INFORMATION
For additional information, please contact:
Affecto
Chairperson of the Board, Magdalena Persson
tel. +46 733 920 508
e-mail magdalena.persson@affecto.com
CEO, Juko Hakala
tel. +358 20 577 7450
e-mail juko.hakala@affecto.com
CGI IN THE NORDICS IN BRIEF
With nearly 8,000 professionals in 55 offices across Denmark, Estonia, Finland, Norway and Sweden, CGI has a strong local presence across the Nordic IT services market. With a deep commitment to being the best in its industry across the Nordics and around the world, CGI serves as a market leader in end-to-end IT and business consulting services, solutions and outsourcing services. CGI's Nordic operation serves thousands of clients in public and private organisations to help them achieve operational efficiencies while harnessing innovation to better serve the digital needs of their customers and citizens.
CGI IN BRIEF
Founded in 1976, CGI Group Inc. is the fifth largest independent information technology and business process services firm in the world. Approximately 70,000 professionals serve thousands of global clients from offices and delivery centers across the Americas, Europe and Asia Pacific, leveraging a comprehensive portfolio of services including high-end business and IT consulting, systems integration, application development and maintenance, infrastructure management as well as 150 IP-based services and solutions. With annual revenue in excess of C$10 billion and an order backlog exceeding C$20 billion, CGI shares are listed on the TSX (GIB.A) and the NYSE (GIB). Website: www.cgi.com
AFFECTO IN BRIEF
Affecto is a Northern European full-stack data house with expertise in data intensive technologies. Affecto's expertise ranges from enterprise information management to artificial intelligence. Affecto creates business value for its customers by helping them become data driven, thus transforming their businesses. Affecto has long term, committed customer relationships with a large number of essential Northern European companies as well as public institutions. Affecto has a local presence with 18 offices forming a powerful grid, and is a unique home for its 1000+ employees.
Appendix 1: Fairness Opinion
DISCLAIMER
THIS RELEASE IS FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER TO PURCHASE, OR ANY SOLICITATION OF AN OFFER TO SELL OR ANY INVITATION TO PARTICIPATE. INVESTORS MAY ACCEPT THE TENDER OFFER FOR THE SHARES ONLY ON THE BASIS OF THE INFORMATION PROVIDED IN A TENDER OFFER DOCUMENT WHEN AVAILABLE.
THE TENDER OFFER FOR THE SHARES IS NOT BEING AND WILL NOT BE MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE EITHER THE MAKING OF SUCH AN OFFER OR PARTICIPATION THEREIN IS PROHIBITED BY APPLICABLE LAW OR WHICH WOULD REQUIRE FURTHER OFFER DOCUMENTS, REGISTRATION OR OTHER MEASURES IN ADDITION TO THOSE REQUIRED UNDER FINNISH LAW.
ACCORDINGLY, WHEN PUBLISHED, THE TENDER OFFER DOCUMENT AND RELATED ACCEPTANCE FORMS WILL NOT AND MAY NOT BE DISTRIBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW OR WHICH WOULD REQUIRE FURTHER OFFER DOCUMENTS, REGISTRATION OR OTHER MEASURES IN ADDITION TO THOSE REQUIRED UNDER FINNISH LAW. IN PARTICULAR, THE TENDER OFFER FOR THE SHARES IS NOT BEING AND WILL NOT BE 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, E-MAIL OR OTHER FORMS OF ELECTRONIC COMMUNICATION) OF INTERSTATE OR FOREIGN COMMERCE OF, OR ANY FACILITIES OF A NATIONAL SECURITIES EXCHANGE OF, THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG, AND MAY NOT BE ACCEPTED BY ANY SUCH USE, MEANS, INSTRUMENTALITY OR FACILITY FROM OR WITHIN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG OR BY PERSONS LOCATED OR RESIDENT THEREIN, OR PERSONS (INCLUDING AGENTS, FIDUCIARIES OR OTHER INTERMEDIARIES) ACTING FOR THE ACCOUNT OR BENEFIT OF PERSONS LOCATED OR RESIDENT THEREIN. ANY PURPORTED ACCEPTANCE OF THE TENDER OFFER FOR THE SHARES RESULTING DIRECTLY OR INDIRECTLY FROM A VIOLATION OF THESE RESTRICTIONS WILL BE INVALID.
