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MagIndustries Corp. (TSX:MAA) announced that it has entered into a definitive agreement pursuant to which Evergreen Industries Group, a diversified industrial company based in Shanghai, China, has agreed, subject to the terms of the Support Agreement, to make an offer to acquire all the outstanding MagIndustries common shares by way of a friendly take-over bid for C$0.25 per share in cash, valuing the Company’s equity at approximately C$115 million.
The Offer represents a premium of approximately 64% to MagIndustries’s 20-day volume weighted average trading price of $0.15 on the Toronto Stock Exchange for the period ending on April 19, 2011. The Support Agreement provides for, among other things, customary board support and non-solicitation covenants subject to customary "fiduciary out" provisions and a reciprocal non-completion fee of C$3 million, payable if the acquisition is not completed in certain specified circumstances. In connection with the Offer, all of the directors and officers of MagIndustries have agreed to enter into lock-up agreements with Evergreen pursuant to which they will, among other things, agree to tender of all their MagIndustries shares to the Offer. The MagIndustries Board of Directors, after consulting with its financial and legal advisors, has unanimously determined that the Offer is fair and in the best interests of the MagIndustries shareholders and to recommend acceptance of the Offer. BMO Capital Markets, the financial advisor to the MagIndustries Board of Directors, has provided an opinion that the Offer is fair, from a financial point of view, to the MagIndustries shareholders. The Board of Directors has also deferred the Separation Time of the Rights (as such terms are defined in the Company’s Shareholder Rights Plan) in respect of the Offer and will, immediately prior to the expiry of the Offer, waive or suspend the operation of the Shareholder Rights Plan in respect of the Offer. Gerard Munera, Chairman of MagIndustries, commented, “Over a period of several years, MagIndustries has thoroughly reviewed, analyzed and assessed all the possible options for the Company to finance the Mengo project and we have now come to the conclusion that the Evergreen's offer is the best available option to our shareholders and to the Company. We are delighted that a company of the financial and technical strength of Evergreen is going to take the Mengo project to the next stage of its development.” Full details of the Offer will be included in the formal offer and take-over bid circular to be mailed to MagIndustries shareholders by Evergreen in mid-May 2011. The Offer will be open for acceptance for a period of not less than 35 days following commencement of the Offer and will be conditional upon, among other things, valid acceptances of the Offer by MagIndustries shareholders holding not less than 66 2/3% of the outstanding MagIndustries shares. In addition, the Offer will be subject to certain customary conditions, including receipt of the relevant government and regulatory approvals and the absence of any material adverse change with respect to MagIndustries. The obligation of Evergreen to take up and pay for shares pursuant to the Offer is also subject to the receipt of certain Chinese Government approvals. Evergreen may choose to waive the conditions of the Offer in certain circumstances. |
