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Bae System Canadain merger agreement with Oncap
Montreal, Feb. 2 - Bae System Canada Inc.
and Oncap L.P. announced the signing of an agreement under which ONCAP
will acquire all of the outstanding shares of Bae System Canada at a price of
$25.25 per share in cash for an aggregate purchase price of approximately
$594 million. Bae Systems p.l.c., the majority shareholder of Bae System Canada with approximately 54% of the outstanding common shares, has agreed to
irrevocably support the transaction. In addition, Bae Systems p.l.c. has
agreed, if the transaction is not completed, to sell to ONCAP, at ONCAP's
option, shares of Bae System Canada representing approximately 49% of the
outstanding shares for $25.25.
Pierre Ducros, Chairman of the Board of Bae System Canada, stated: "I am
delighted for the Bae System Canada shareholders that we have executed an
agreement with ONCAP. RBC Dominion Securities has provided the independent
committee of the Bae System Canada board of directors with an opinion that
the offer price is fair to Bae System Canada shareholders from a financial
point of view. The board of directors of Bae System Canada, upon the
recommendation of its independent committee, unanimously recommends that its
shareholders approve this transaction." The independent committee of the board
of directors of Bae System Canada was mandated to review any offer proposed
and to report on the fairness of any proposal to the minority shareholders of
Bae System Canada.
Jim Close, President and CEO, Bae System Canada, stated: "We enjoy good
relations with Bae Systems, but I believe that Oncap is committed to the
implementation of strategic growth initiatives for the Company and will give
us the necessary support and focus to succeed."
The proposed transaction will be completed by way of statutory Plan of
Arrangement, which requires the approval of 66 2/3% of shareholders of Bae
Systems Canada, and is subject to customary conditions contained in the Merger Agreement, including the receipt of all necessary consents and approvals,
including the approval of the Ontario Superior Court of Justice. A proxy
circular will be mailed to Bae System Canada shareholders within 30 days in
respect of a special shareholders' meeting anticipated to be held in April
2001. The transaction is expected to close shortly thereafter.
"We are enthusiastic about the opportunity to partner with management and
the employees of Bae System Canada, one of Canada's pioneering high-
technology companies," said Michael Lay, Managing Director of Oncap. "The
Company has a demonstrated history of innovative product development and
strong customer service, which has enabled it to become a leader in a number
of growing markets and, we believe, an excellent platform to build a much
larger aerospace and defence electronics company."
Bae System Canada Inc. deals in design, manufacture, sales and
support of high-technology electronic products, which include avionics,
aircraft satellite communication antennas, specialized electronic components,
military radios, space electronics, infrared cameras, medium-and high-end GPS
and marine electronics. Formerly known as Canadian Marconi Company, Bae
Systems Canada has been designing and building innovative communication and
electronics systems since 1903. The Company, with approximately $300 million
in annual sales, is a supplier to aerospace and high-technology industries,
airlines, communications enterprises, military agencies and government
customers around the world.
Oncap L.P. is a $400 million investment partnership established in
December 1999 by Onex Corporation and several of Canada's largest pension
funds and financial institutions. Oncap was established to invest in small-
and mid-cap North American-based companies in partnership with their
management teams.
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