Iweb Group Com (TSXV:IWB)
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MONTREAL, May 3 /CNW/ --
MONTREAL, May 3 /CNW Telbec/ - Following the execution of a non-binding
proposal on March 4, 2011, iWeb Group Inc. (TSXV: IWB) ("iWeb"), a global provider of Internet hosting services and IT
infrastructure, announces today that it has entered into a merger
agreement (the "Merger Agreement") with 7807201 Canada Inc. (the "Purchaser") and 7807210 Canada Inc. ("Newco"), two corporations controlled directly or indirectly by Novacap
Technologies III, L.P., Caisse de dépôt et placement du Québec and an
investment vehicle affiliated with Bank Street Capital Partners and
certain of their affiliates, in order to effect an amalgamation of iWeb
with Newco (the "Amalgamation").
Pursuant to the Amalgamation, each holder (the "Shareholders") of common shares of iWeb, except for part of or all of the common shares
held by the Principal Shareholders (as defined below) and FONDACTION
(as defined below), will receive one redeemable preferred share (an "Amalco Redeemable Share") of the amalgamated company ("Amalco") for each common share held immediately prior to the Amalgamation.
Each Amalco Redeemable Share will be redeemed immediately upon the
Amalgamation for a cash consideration of $1.50 (the "Redemption Price"). The Redemption Price to be received by the Shareholders under the
Amalgamation represents a premium of 45.6% and of 31.5% to the volume
weighted average trading price of the common shares on the TSX Venture
Exchange (the "TSXV") for the respective 60 and 20 days ending on March 3, 2011, being the
trading day prior to the announcement of the non-binding proposal
review process. The transaction, which values iWeb's equity at
approximately $47 million, will be implemented by way of an
amalgamation under the Canada Business Corporations Act and is subject to customary conditions precedent, including approval of
the Amalgamation by the Shareholders.
Under the Merger Agreement, iWeb has agreed not to solicit competing
acquisition proposals but has retained the ability to consider
unsolicited acquisition proposals which the board of directors of iWeb
(the "Board") believes, in the exercise of its fiduciary duties, constitute or
could reasonably be expected to lead to a superior proposal and to make
a change of recommendation in the event of a superior proposal, subject
to the Purchaser's right to match, and payment of a break-fee of $3
million. Expenses of the Purchaser incurred in connection with the
Amalgamation (not to exceed $700,000) shall be paid by iWeb should,
among others, the required number of votes of the Shareholders (as more
fully described below) not be obtained.
Éric Chouinard, Martin Leclair and Robert Brouillette (the "Principal Shareholders") holding, in the aggregate, 18,321,349 common shares, representing
approximately 63.48% of the currently outstanding common shares of
iWeb, have agreed, pursuant to support and voting agreements with the
Purchaser, to irrevocably support and vote in favour of the
Amalgamation. Pursuant to their support and voting agreements, the
Principal Shareholders cannot agree to or contemplate any competing
transaction until 120 days from the date of the Merger Agreement in
accordance with its terms.
Various other Shareholders of the public holding, in the aggregate,
2,311,161 common shares, representing approximately 8,01% of the
currently outstanding common shares, have also agreed, pursuant to
support and voting agreements with the Purchaser, to irrevocably
support and vote in favour of the Amalgamation. Pursuant to their
support and voting agreements, such shareholders cannot agree to or
contemplate any competing transaction until 120 days from the date of
the Merger Agreement in accordance with its terms.
Finally, Messrs. Martin Cauchon and Daniel Leclair, members of the
Board's special committee (the "Special Committee") holding, in the aggregate 133,000 common shares of iWeb, have agreed,
pursuant to support and voting agreements with the Purchaser, to
support and vote in favour of the Amalgamation. Pursuant to their
support and voting agreements, such shareholders cannot agree to or
contemplate any competing transaction unless the Merger Agreement is
terminated or if the Board approves or recommends or publicly proposes
to or publicly states that it intends to approve or recommend another
acquisition proposal.
As part of the transactions contemplated in the Merger Agreement, the
Principal Shareholders and Fondaction, le Fonds de développement de la Confédération des syndicats nationaux
pour la coopération et l'emploi ("Fondaction") will exchange, immediately prior to the Amalgamation, part or all, as
the case may be, of their common shares of iWeb for shares of the
Purchaser.
The Amalgamation was considered at length by the Board and was approved
unanimously thereby (with Messrs. Chouinard, Leclair and Brouillette
abstaining) following the report and a favourable unanimous
recommendation of the Special Committee comprised of three independent
members of the Board, namely René Bousquet (Chair), Martin Cauchon and
Daniel Leclair. In doing so, the Board determined that, without
consideration as to the interests of the Principal Shareholders and
Fondaction, the Amalgamation is fair to the remaining Shareholders
(the "Public Shareholders"), and in the best interests of iWeb, and authorized the submission of the
Amalgamation to the Shareholders for their approval. The Board has also
determined unanimously (with interested directors abstaining) to
recommend to the Public Shareholders that they vote in favour of the
Amalgamation.
In making their respective determinations, the Board and the Special
Committee considered, among other things, a fairness opinion from
ModelCom Inc. ("ModelCom") to the effect that, as of May 3, 2011, and based upon and subject to
the limitations, assumptions and qualifications contained therein, the
Redemption Price is fair, from a financial point of view, to the Public
Shareholders. A copy of the fairness opinion will be included in the
management information circular that will be sent to the Shareholders
in connection with the special meeting of Shareholders to consider the
Amalgamation which is expected to take place in Montréal on June 13,
2011. Copies of the management information circular, the Merger
Agreement, the amalgamation agreement, the support and voting
agreements and certain related documents will be filed with Canadian
securities regulators and will be available on SEDAR at www.sedar.com as part of iWeb public filings. The management information circular in
connection with the special meeting of Shareholders to consider the
Amalgamation is expected to be mailed to Shareholders in the coming
days.
Furthermore, the Board considered the following reasons for its
recommendation:
Significant Premium
The Redemption Price to be received by the Shareholders under the
Amalgamation represents a premium of 25% over the closing price of
$1.20 per share on March 3, 2011, and a premium of 45.6% and 31.5%
respectively, over the 60-day and 20-day volume weighted average
trading price on the TSXV for the periods ended on March 3, 2011, being
the last trading day prior to iWeb's announcement of its receipt of a
non-binding offer from Novacap.
Extensive Review Process
In the course of the last months, the Board and iWeb's management
initiated a number of actions to identify and assess strategic and
financial options available to iWeb for delivering its business plan
and maximizing shareholder value. To assist iWeb in this process, the
Board retained the services of DH Capital Partners Inc. During its
mandate, the Special Committee reviewed each of these options in light
of the proposed Amalgamation.
Realize Immediate Value and Liquidity and All-Cash Consideration
The all-cash consideration offered in the Amalgamation permits the
Shareholders to immediately realize fair value without incurring the
inherent risks of iWeb's business plan or the risks of the market
volatility inherent in technology stocks generally. iWeb's shares are
thinly traded and the Amalgamation provides immediate liquidity to all
Shareholders.
Fairness Opinion
ModelCom provided the Board and the Special Committee with a written
opinion to the effect that, as of May 3, 2011, and based upon and
subject to the limitations, assumptions and qualifications contained
therein, the consideration to be received by the Shareholders under the
Merger Agreement is fair, from a financial point of view, to the Public
Shareholders.
Strong Support from Shareholders
Shareholders which beneficially own, directly or indirectly, or exercise
control or direction over, in the aggregate, 20,826,310 common shares
of iWeb as at May 3, 2011, which represent approximately 72.16% of the
outstanding common shares of iWeb, have expressed their intention,
under the support and voting agreements, to vote in favour of the
Amalgamation. These Shareholders include members of iWeb's management,
its founders, members of the Special Committee and various Public
Shareholders.
Reasonableness of the Merger Agreement
The terms and conditions of the Merger Agreement were reviewed by the
members of the Special Committee in consultation with its legal
advisors and were determined to be fair and reasonable in the
particular circumstances of the Amalgamation. Such terms and conditions
are the result of arm's length negotiations between iWeb and the
Purchaser. The Special Committee has been kept informed of the
negotiations at all times and had the opportunity to provide its
comments to the parties.
Low Execution Risk
There are no regulatory issues which are expected to arise in connection
with the Amalgamation and prevent its completion. The Amalgamation is
not subject to further due diligence on the part of the Purchaser.
Ability to Respond to Superior Proposals
Under the Merger Agreement, the Board maintains the ability to consider
and respond, in certain circumstances and in accordance with its
fiduciary duties, to unsolicited proposals that would be more
favourable to Shareholders from a financial point of view than the
Amalgamation. The termination fee payable to the Purchaser in certain
circumstances involving superior proposals is, in the Board's judgment,
reasonable in the context of break-up fees negotiated in other
transactions and the particular circumstances of the Amalgamation.
BCF LLP is acting as legal counsel to iWeb and Jarry Bazinet is acting
as legal counsel to the Special Committee. Fasken Martineau DuMoulin
LLP is acting as legal counsel to the Purchaser. Gowling, Lafleur,
Henderson LLP is also acting as legal counsel to Caisse de dépôt et
placement du Québec and Goodwin Procter LLP is acting as legal counsel
to BSCP IW Holdings, LLC. ModelCom is acting as financial advisor to
the Special Committee.
Subject to receiving the required Shareholder approval and the
satisfaction of the other customary conditions, it is anticipated that
the Amalgamation, if approved by the Shareholders, will be completed
shortly after the special meeting of Shareholders and that full payment
of $1.50 per share will be effected at that time.
About iWeb
iWeb provides Internet hosting services and IT infrastructure to more
than 24,000 customers in 150 countries. With its four data centers,
iWeb's total capacity has reached 34,000 dedicated servers, over
1,100 co-location cabinets and 77 Gigabits per second (Gbps) of
Internet connectivity, from 9 separate providers.
One of Canada's 100 fastest growing companies according to PROFIT
Magazine, iWeb now generates more than 60% of its revenues, which
reached US$29 millions in 2010, from abroad. Founded in 1996 in
Montreal, iWeb shares are traded on the TSXV under the symbol "IWB".
About Novacap
With over $750 million in assets under management, Novacap is one of
Canada's leading private equity and venture capital firms. Since 1981,
its partnership strategy has helped over 50 companies accelerate growth
and maximize value. Novacap is one of North America's top private
equity firms, with first-quartile returns in North America.
About Caisse de dépôt et placement du Québec
The Caisse de dépôt et placement du Québec is a financial institution
that manages funds primarily for public and private pension and
insurance plans. As at December 31, 2010, it held $151.7 billion in net
assets. As one of Canada's leading institutional fund managers, the
Caisse invests in major financial markets, private equity and real
estate.
About Bank Street Capital Partners
Bank Street Capital Partners is a private equity fund focused on growth
equity, acquisition finance, and special situations for small and
mid-size growth companies in the Communications, Media and Technology
sectors. Bank Street Capital Partners is led by a senior investment
team that has originated, structured, and executed more than 1,000
financial and strategic transactions during the course of their
careers. Bank Street Capital Partners leverages the extensive resources
of The Bank Street Group.
Forward-Looking Statements
Except for historical information provided herein, this press release
contains "forward-looking statements" within the meaning of the
applicable securities legislation regarding the proposal to privatize
iWeb, including the statement regarding the terms of the proposed
transaction. Therefore, readers are cautioned not to place undue
reliance on forward-looking statements. Forward-looking statements
involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of iWeb to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements in
this press release. These risks and uncertainties include, but are not
limited to, the satisfaction of the conditions to consummate the
Amalgamation, including the approval of the Amalgamation Resolution by
the Shareholders, the occurrence of any event, change or other
circumstances that could give rise to termination of the Merger
Agreement, a delay in the consummation of the Amalgamation or failure
to complete the Amalgamation for any other reason, the amount of the
costs, fees, expenses and charges related to the Amalgamation, and the
risks associated with general economic conditions. The forward-looking
statements in this press release are made as of the date of this press
release and, except as required by law, iWeb disclaims any obligation
to update or revise publicly any forward-looking statements, whether as
a result of new information or future events.
To view this news release in HTML formatting, please use the following URL: http://www.cnw.ca/en/releases/archive/May2011/03/c9146.html
p Philip Tousignantbr/ Chief Financial Officerbr/ iWeb Group Inc.br/ (514) 286-4242 ext. 2149br/ a href="mailto:ptousignant@iweb.com" cr="true"ptousignant@iweb.com/a /p p align="justify" Stéphane Josebr/ Communications officerbr/ (514) 286-4242 ext. 2114br/ a href="mailto:sjose@iweb.com" cr="true"sjose@iweb.com/a /p