Hexagon AB and NovAtel Inc have entered into a definitive agreement under which Hexagon has agreed to acquire all the outstanding shares of NovAtel for USD 50 per share. NovAtel is a leading provider of precision Global Navigation Satellite System (GNSS) components and subsystems. NovAtel develops quality OEM products including receivers, enclosures, antennas and firmware that are integrated into high precision positioning applications worldwide. These applications include surveying, Geographical Information Systems (GIS) mapping, precision agriculture machine guidance, port automation, mining, timing and marine industries. NovAtel’s reference receivers are also at the core of national aviation ground networks in the USA, Japan, Europe, China and India.
NovAtel recorded sales of CAD 77.6 million and net income of CAD 21.5 million in 2006. Hexagon expects that NovAtel’s organic revenue growth will be approximately 20 per cent per year. NovAtel is based in Calgary, Canada and has about 300 employees worldwide.
Background and reasons for the transaction
NovAtel has a long standing partnership with Hexagon’s subsidiary, Leica Geosystems, focused on the development of high-precision GNSS technologies. NovAtel has been a core supplier of these technologies to Leica Geosystems since 2002.
The combination of Hexagon and NovAtel will add new applications to the Hexagon product portfolio and give Hexagon access to technologies applicable to new high growth markets.
“The acquisition of NovAtel will enable Hexagon to accelerate the development of new applications and markets within the GNSS sector and secure an exciting, rapidly growing core business,” says Ola Rollén, CEO and President of Hexagon AB.
“We are pleased that Hexagon has recognized NovAtel’s value and selected us to play a key role in their GNSS strategy, as it acknowledges NovAtel’s leading GNSS technology, focused OEM strategy, and profitable growth over the past five years,” adds Jon Ladd, President and CEO of NovAtel Inc. “Hexagon’s commitment to being a market leader, combined with their strategy to accelerate their entry into new GNSS applications and markets is very synergistic with NovAtel’s existing goals and will, we believe, provide expanded opportunities for our customers and employees.”
The transaction in brief
Under the terms of the agreement, Hexagon will commence a cash tender offer to acquire all of the issued and outstanding shares of NovAtel for USD 50 per share. The offer price represents a 31 per cent premium to NovAtel’s 30-day volume weighted average share price. The aggregate purchase price of the transaction is expected to be approximately USD 390 million, net of NovAtel’s cash balance on 30 June 2007.
In addition, pursuant to the agreement, Hexagon will acquire NovAtel shares and a debenture convertible into NovAtel shares totalling 19.9 per cent of the issued and outstanding shares of NovAtel in a private placement transaction at a purchase price of USD 50 per share. Excluding the shares acquired in the tender offer and after giving effect to the shares issued and issuable to Hexagon in the private placement, Hexagon will own 16.6 per cent of NovAtel’s outstanding shares.
Hexagon has committed funds available to finance the total cash requirements under the agreement pursuant to a facility agreement with certain banks. The acquisition is financially attractive to Hexagon and is expected to contribute to earnings as of consolidation date.
The agreement has been approved by NovAtel’s Board of Directors and is fully supported by NovAtel’s senior management. Completion of the transactions is expected during the fourth quarter of 2007 and is subject to customary regulatory approval, minimum tender and other conditions.
Telephone conference today at 15:00 CET
A telephone conference will be held today at 15:00 CET by Hexagon’s CEO and President Ola Rollén.
