RuggedCom Inc., a Canadian provider of rugged communications networking solutions designed for mission-critical applications in harsh environments, announced today that its Board of Directors, on the recommendation of its Special Committee of independent directors and with input from its financial and legal advisors, unanimously recommends that RuggedCom shareholders reject the unsolicited offer by a subsidiary of American company Belden Inc. to acquire RuggedCom for $22 in cash per common share and not tender their shares to the Belden Offer.
The basis for the RuggedCom Board’s recommendation with respect to the Belden Offer is contained in a Directors’ Circular to be filed with Canadian securities regulators later today. A copy of the Directors’ Circular will be available online at Sedar. The Directors’ Circular will also be mailed to RuggedCom shareholders later today.
Peter Crombie, Chairman of the RuggedCom Board of Directors, said, “The RuggedCom Board is unanimous in its view that the Belden Offer fails to adequately compensate shareholders for RuggedCom’s strong prospects for continued growth, profitability and shareholder value creation. The Special Committee, in fulfilling its duties to RuggedCom, with the assistance of its financial advisor, TD Securities Inc., is now aggressively exploring and evaluating alternatives to the Belden Offer. We are encouraged by the response we have received from interested parties thus far and will provide a further update in due course. In the meantime, RuggedCom shareholders are urged to reject Belden’s inadequate and opportunistic offer.”
Reasons to Reject the Belden Offer
The RuggedCom Board unanimously concluded that the Belden Offer is inadequate and not in the best interests of RuggedCom or its shareholders. The Board cited a number of reasons for its recommendation to reject the Belden Offer, including the following:
- The Belden Offer substantially undervalues RuggedCom and does not reflect RuggedCom’s strong prospects for continued growth, profitability and shareholder value creation;
- TD Securities, the financial advisor to the Special Committee, has delivered a written opinion dated January 3, 2012, that, based on and subject to the scope of review, assumptions and limitations and other matters described therein, as of such date, the consideration being offered to the RuggedCom shareholders pursuant to the Belden Offer is inadequate, from a financial point of view, to RuggedCom shareholders;
- Superior proposals providing greater value to shareholders may emerge as a result of the Special Committee’s active value maximization process;
- The timing of the Belden Offer is highly opportunistic and disadvantageous to RuggedCom shareholders;
- Market sentiment supports the financial inadequacy of the Belden Offer, including the fact that the offer represents a discount to the current market price of RuggedCom shares;
- The Belden Offer is highly conditional for the benefit of Belden shareholders; and
- RuggedCom’s directors and officers who own or exercise control or direction over an aggregate of 2,149,607 RuggedCom shares on a fully-diluted basis, representing 16.1% of RuggedCom’s shares on a fully-diluted basis, intend to REJECT the Belden Offer.
The full reasons for the RuggedCom Board’s recommendation that shareholders reject the Belden Offer are detailed in the Directors’ Circular. RuggedCom encourages shareholders to read the Directors’ Circular in its entirety and reject the Belden Offer by not tendering their shares to the Belden Offer.
Exploration of Alternatives to the Belden Offer in Order to Maximize Shareholder Value
In fulfilling its duties to RuggedCom, the Special Committee, with the assistance of its financial advisor, TD Securities, is aggressively exploring and evaluating alternatives to the Belden Offer in order to determine the alternative that is in the best interests of RuggedCom and its shareholders. RuggedCom has been solicited by and has initiated contact with numerous third parties who have expressed an interest in pursuing an alternative transaction with RuggedCom. A number of these third parties have entered into non-disclosure and standstill agreements with RuggedCom, and have begun a due diligence review of confidential financial, operating and other relevant information relating to RuggedCom contained in a “data room” established for this purpose. While there can be no assurance that any financially superior alternative will emerge from the process, the Board believes that the ongoing process undertaken by the Special Committee demonstrates that RuggedCom and its assets are highly strategic and attractive to various third parties that are in a position to propose a financially superior alternative to the Belden Offer.
Tendering shares to the Belden Offer before the Special Committee has had an opportunity to fully explore all available alternatives to the Belden Offer may preclude the possibility of a financially superior alternative.
How to Withdraw Your Shares From the Inadequate Belden Offer
Shareholders with questions about the Directors’ Circular or who may have already tendered their shares to the Belden Offer and wish to withdraw them are asked to contact RuggedCom’s information agent, Georgeson Shareholder Communications Canada Inc., at 1-866-374-9877 or firstname.lastname@example.org.