Combining EDB and ErgoGroup to create a Nordic IT champion

Transcription

1 Combining EDB and ErgoGroup to create a Nordic IT champion (Oslo, 7 June 2010) The boards of directors of EDB Business Partner ASA and ErgoGroup AS have agreed to recommend to their shareholders a combination of EDB and ErgoGroup to create a leading Nordic IT vendor, with the capacity for accelerated organic growth and financial strength that will allow it to take advantage of strategic and structural opportunities EDB shareholders to own 53.0% of the combined company on a fully diluted basis Posten will receive 81,064,078 new shares in EDB, representing 47.0% of the combined company, and become the largest shareholder. Posten has committed to reduce its ownership in the combined company to maximum 40% within two years following completion of the combination Following the transaction, the combined company will conduct a share issue of up to NOK1.0bn in new equity The interim name of the combined company is EDB ErgoGroup ASA The transaction is expected to benefit from annual synergies in the range of NOK m On a combined basis, EDB and ErgoGroup reported revenue of NOK 12.7bn in 2009 Key characteristics of the combined company: Largest IT company in Norway Second largest IT services company in the Nordics Significant service provider in Sweden Strong delivery capabilities within growing segments Long term partnership with Nordic customers enables growth Financially strong with platform for further expansion Posten Norge has developed ErgoGroup into a strong player in the Nordic market for IT services. To achieve continued growth and economies of scale, combining ErgoGroup and EDB stands out as an industrially strong solution. We will see a Norwegian-based service provider with significant competitive strength towards international players in the Nordic market, said Dag Mejdell, CEO of Posten Norge. We have for a long period of time said that Telenor will support a good and long term industrial solution for EDB Business Partner. This transaction is an excellent opportunity to create a major player in this market. From our point of view, this combination will be beneficial to EDB and its shareholders, said Jon Fredrik Baksaas, President and CEO of Telenor Group. "EDB has been an important driving force in the development and consolidation of the Nordic IT services market for many years. Together with ErgoGroup, we are now taking a historic leap forward in the best interests of our customers, employees and shareholders. We are bringing together 50

2 years of IT innovation in Norway and the Nordic market, establishing a unique foundation for continued growth and technological development, commented John-Arne Haugerud, acting CEO of EDB. This is a marvellous opportunity to put Norway's IT industry on the world map, while convincing Nordic customers that they are best served by a provider that knows Nordic business from the inside. Two very strong IT players with a significant customer interface, highly qualified manpower and solid ownership will result in a new IT company with a position to be reckoned with. In realising this Nordic IT adventure we enter a critical period, and our key focus will be directed at creating value for our customers, says Terje Mjøs, managing director of Ergo Group and proposed CEO of the new EDB ErgoGroup. Ownership of the combined company EDB s shareholders will hold 53.0% and ErgoGroup s sole shareholder, Posten, will hold 47.0% of the combined company following completion of the combination. Telenor will hold approx 27.2% of the combined company. In the agreement entered into between the two companies, it has been agreed that the combined company will conduct a share issue of up to NOK 1.0bn in new equity following the transaction in order to strengthen the combined balance sheet and to provide strategic and financial flexibility going forward. The board of directors in the combined company will evaluate and decide upon the final size and structure of the share issue. Telenor will participate pro rata to its ownership in the combined company in the share issue. Posten has, as part of the transaction, committed to reduce its ownership in the combined company to maximum 40% within two years following completion of the transaction in order to increase the free float of the shares in the combined company. Corporate governance The combination is unanimously approved by the board of directors of both EDB and ErgoGroup. The proposed combination is subject to the approval by the general meetings of the two companies, as well as clearance by relevant competition authorities and confirmation from Oslo Børs that EDB will fulfil the conditions for listing also after completion of the transaction. Telenor owning 51.3% of EDB, and Posten, owning 100.0% of ErgoGroup, have agreed to vote in favour of the transaction in the respective extraordinary general meetings. The board of EDB will prepare an information memorandum pursuant to section 3-5 of Oslo Børs Continuing Obligations for listed Companies in connection with the proposed transaction, which will be made available to the shareholders in EDB as basis for their decisions in the extraordinary general meetings. The general meetings are expected to be held in the beginning of July 2010, and closing of the transaction is expected to occur in Q In the meantime, EDB and ErgoGroup will be managed as separate companies. The interim name of the combined company is EDB ErgoGroup ASA.

3 The boards of directors in EDB and ErgoGroup have proposed that Arve Johansen, the chairman of EDB, shall be chairman of the board of the combined company, and that Terje Mjøs, the CEO of ErgoGroup, shall be appointed CEO of the combined company. The head office of the merged entity will be in Oslo. The combined company will have approx 10,000 employees in 135 offices across 16 countries. The transaction The combination is based on an agreed ratio between the equity value of EDB and ErgoGroup of 53:47 (EDB:ErgoGroup), which means that the ownership ratio in EDB ErgoGroup between EDB s and ErgoGroup s shareholders after completion of the Merger will be 1: The combination will be structured as a triangular merger in which ErgoGroup is merged with EDB Holding AS, a newly incorporated subsidiary of EDB, with EDB Holding being the surviving entity. The merger consideration will be settled in full by the issuance of 81,064,078 new shares in EDB to Posten, the sole shareholder of ErgoGroup, through an increase of the share capital of EDB. The consideration for the new shares will be settled through the establishment of a claim on EDB Holding in favour of EDB, w hich claim will correspond to the net equity received by EDB Holding in the merger. Transaction rationale The Nordic IT industry is experiencing increasing competitive pressure as the result of international trends. This is driving the need to build scal e in organizational competence, products and services, and to improve cost efficiency and financial strength. The management of EDB and ErgoGroup see that joining forces is a strategic and appropriate move in order to respond proactively to the changing competitive landscape, and at the same time to create a strong Nordic-based IT provider which will be sustainable over time. The combined company will have a strong product portfolio, strong organizational capabilities and expertise, and a sound customer base. EDB ErgoGroup will be firmly anchored in its local markets with offices throughout the Nordic region, and backed up by extensive resources and expertise. At the same time EDB ErgoGroup will be a true leading Nordic IT vendor, with the capacity for accel erated organic growth and financial strength that will allow it to take advantage of strategic and structural opportunities. EDB ErgoGroup will have the Nordic region as its home market with headquarters in Oslo, and it will be listed on the Oslo Stock Exc hange. This position will form a solid platform for accelerated organic growth in the Nordic region, as well as for focusing on international growth opportunities in targeted areas where the company has competitive advantage. The combined company will also have greater ability to follow its customers outside the Nordic region. The two companies currently have substantial activities in banking & finance, municipalities, central government, the health sector and oil & gas, as well as the process and manufacturing segment. EDB ErgoGroup will be very well positioned to further exploit these opportunities.

4 There are substantial synergies related to the combined cost base, product portfolios and organizational capabilities of the two companies. In addition, the units in the Ukraine and India will help to ensure an improved cost position and greater delivery capacity. This will make the company an attractive supplier, employer and investment opportunity. The combination is well-aligned with the stated strategic goals of both companies for Nordic leadership, and will enable a step-change in the pace at which this goal can be realised. Integration planning and synergies The integration planning will be managed through an Integration Management Office led by Ole Urd ahl from EDB and Jakob van der Hagen from ErgoGroup. At the appropriate time, employee representatives will be involved in the process in all relevant areas. A 100 day plan will ensure that the integration planning is executed according to a clear strategic direction. The key principles for the integration planning are openness, timeliness, involvement and dialogue. Based on preliminary analyses, the transaction is expected to benefit from annual synergies in the range of NOK m. Most of the synergies are cost related and will come from IT operations in connection with server consolidation and single accounting of software licenses. There will be equal job opportunities for EDB and ErgoGroup employees in the combined company, but personnel reduction in overlapping functions will be necessary. The realisation of synergies will take up to 18 months and will have one-off cost estimated to one year of full synergies. About ErgoGroup ErgoGroup provides IT solutions and operating and consultancy services, and its business concept is to combine business know-how, technological expertise and an in-depth knowledge of its customers in order to develop, supply and operate comprehensive IT solutions. ErgoGroup offers the full spectrum of ICT services, products and solutions covering: Consultancy services, Business Solutions, Applications, Infrastructure, IT operations and outsourcing. ErgoGroup has its headquarters in Oslo and has a local presence in almost 90 locations throughout the Nordic region. The registered business and postal address of ErgoGroup is: ErgoGroup AS, Nydalsveien 28, N-0484, Oslo, Norway. For further information see: The board of directors of ErgoGroup consists of Dag Mejdell (Chairman), Erik Johannessen, Gro Bakstad, Inger Roll-Matthiesen, Per Atle Pedersen, Ole Hugo Jordhøy, Hanne Tomren Bjørnås. The senior management of ErgoGroup consists of: Terje Mjøs (Managing Director and CEO), Eli Giske (CFO), Morten Søgård (Director IT-operations), Håvard Larsen (Director Solutions), Olav Folkestad (Managing Director Bekk Consulting), Hans-Henrik Merckoll (Director Regional Services), Niclas Ekblad (Director Nordic Region), Jakob van der Hagen (Director Strategy and Business Development), Hilde M. Solegaard (Director Communications), Matthias Peter (Sales Director), Ingeborg Aass Holten (Director Human Resources), Eivind Sundbø (Director Projects).

5 Below is a summary of key figures from the profit and loss statement and balance sheet of ErgoGroup based on reported figures 1 : NOKm Q Q Total revenues 5,031 5,689 5,214 1,378 1,282 Operating costs (4,472) (4,985) (4,669) (1,254) (1,075) EBITDA EBITA PBT Net income NOKm Q Q Goodwill 2,557 2,667 2,575 2,549 2,591 Non current assets Current assets 1,392 1,389 1,302 1,468 1,293 Bank deposits Total assets 5,228 5,359 5,203 5,221 5,091 Total interest bearing debt 2,143 1,738 1,631 1,720 1,480 Current liabilities 1,213 1,328 1,395 1,323 1,432 Other liabilities Total liabilities 3,613 3,356 3,230 3,335 3,022 Equity 1,610 1,996 1,970 1,883 2,066 Minority interest Total equity 1,615 2,003 1,973 1,886 2,069 Total liabilities and equity 5,228 5,359 5,203 5,221 5,091 About EDB EDB is a leading IT services provider in the Nordic region. We help our customers unlock substantial value from the entire IT services value chain, spanning solutions, consulting and outsourcing. The company has almost 6,000 employees and reported annual turnover of around NOK 7.5bn in EDB aims to be a close and attentive partner that combines its local expertise and deep industry knowledge with substantial international delivery capacity. EDB is listed on the Oslo Stock Exchange. For further information see: Combined financial information On a combined basis, the two companies based on 2009 reported figures had NOK 12.7bn in revenues, NOK 1.8bn in EBITDA, net debt of NOK 3.9bn and an equity book value of NOK 4.3bn. Advisors SEB Enskilda AS is acting as financial advisors to EDB, while Arctic Securities ASA is acting as financial advisors to ErgoGroup. Advokatfirmaet Thommessen AS is acting as legal advisors to EDB, while Bugge, Arentz-Hansen & Rasmussen (BAHR) are acting as legal advisors to ErgoGroup. Further information 1 Tax calculations are performed on an annual basis

6 Further information will be provided at the joint presentation to be held today, Monday 7 June at Thon Hotel Vika Atrium, Oslo at CET. Presentation material will be posted on and after the conference. There will be a Q&A session on a conference call at CET today with: - Arve Jo hansen, chairman of EDB - Jon Arne Haugerud, CEO of EDB - Terje Mjøs, CEO of ErgoGroup - Kristian Kuvaas Johansen, CFO of EDB Dial in at followed by *6539* Contact Kristian Kuvaas Johansen, Executive Vice President and Chief Financial Officer of EDB Telephone: Kristian.johansen@edb.com Geir Remman, Executive Vice President Corporate Communications of EDB Telephone: edb@edb.com Terje Mjøs, Chief Executive Officer of ErgoGroup Telephone: terje.mjos@ergogroup.no Hilde M. Solegaard, Executive Vice President Corporate Communications of ErgoGroup Telephone: hilde.solegaard@ergogroup.no This information is subject of the disclosure requirements according to 5-12 vphl (Norwegian Securities Trading Act)