Offer for Orbital Soft.Hldgs
Sopheon PLC
22 October 2001
PART 1
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN CANADA,
AUSTRALIA, THE REPUBLIC OF IRELAND OR JAPAN
For immediate release on 22 October 2001
Sopheon plc ('Sopheon') and
Orbital Software Holdings plc ('Orbital')
Merger by way of recommended Offer by Sopheon for Orbital
* The boards of Sopheon and Orbital are pleased to announce
that they have reached agreement on the terms of a merger by way of
recommended offer to be made by HSBC Investment Bank on behalf of Sopheon for
Orbital.
* The Offer will be on the basis of 8 New Sopheon Shares for
every 9 Orbital Shares.
* Based on Sopheon's Closing Price of 46.0p on 19 October
2001 (the last business day prior to the date of this announcement), the
Offer:
- values each Orbital Share at approximately 40.9p;
- represents a premium of approximately 147.8% to the
Closing Price of 16.5p per Orbital Share on 19 October 2001, the last
business day prior to the date of this announcement;
- represents a premium of approximately 127.2% to the
Closing Price of 18.0p per Orbital Share on 13 September 2001, the last
business day prior to the announcement that Orbital and Sopheon were in
merger discussions;
- values Orbital's entire current issued share capital at
approximately £18.4 million.
* Sopheon has received irrevocable commitments and letters of
intent to accept the Offer in respect of approximately 34.6% of Orbital's
current issued share capital, comprising:
- irrevocable undertakings from the Orbital Directors
and certain other Orbital Shareholders representing approximately 23.1%
of Orbital's current issued share capital; and
- non-binding letters of intent from Orbital
Shareholders holding a further 11.5% of Orbital's current issued share
capital.
* The Orbital Directors, having reviewed the strategic options
for Orbital, have concluded that Sopheon is a highly suitable merger partner
and that a merger with Sopheon will build on some of the strategic growth and
cost reduction initiatives already underway at Orbital.
* The merger of Sopheon and Orbital will create an Enlarged
Group with a strong working capital position and which aspires to be a leading
provider of software and services within the R&D market for major
corporations.
* Brian Gray, Chief Executive Officer & Chief Operating Officer
of Orbital, commented:
'We have reviewed the strategic options available and have concluded that the
merger with Sopheon will result in greater opportunities for Orbital's
existing business than may otherwise have been available. The Orbital board
unanimously recommends that our shareholders accept Sopheon's offer.'
* Barry Mence, Executive Chairman of Sopheon, commented:
'Sopheon and Orbital are an excellent match, complementing each other in three
areas - product, sales and marketing, and financial. The merger will create a
business with a strong working capital position, focused on becoming a leading
provider of software and services to improve effectiveness within R&D and new
product development activities at major corporations. I am delighted that the
board of Orbital have unanimously recommended the Offer and I look forward to
welcoming Orbital Shareholders to the Enlarged Group.'
Enquiries:
Sopheon plc Orbital Software Holdings plc
Barry Mence Ian Ritchie
Today - Tel. +44 (0)20 7466 5000 Brian Gray
Arif Karimjee Tel. +44 (0)131 348 3000
Thereafter - Tel. +44 (0)1483 883 000
HSBC Investment Bank plc Broadview International Limited
John Mellett Tel. +44 (0)20 7336 9000 Tom S. Tel. +44 (0)20 7968 3700
Dalia Joseph Anthofer
Roger Manship
Buchanan Communications
Steve Tel. +44 (0)20 7466 5000
Liebmann
This summary should be read in conjunction with and is subject to the full
text of the attached press announcement.
The Sopheon Directors accept responsibility for the information contained in
this announcement other than the information relating to the Orbital Group,
the Orbital Directors, their immediate families and related trusts and persons
connected with the Orbital Directors. To the best of the knowledge and belief
of the Sopheon Directors (who have taken all reasonable care to ensure that
such is the case), the information contained in this announcement, for which
they accept responsibility, is in accordance with the facts and does not omit
anything likely to affect the import of such information.
The Orbital Directors accept responsibility for the information contained in
this announcement relating to the Orbital Group, the Orbital Directors, their
immediate families and related trusts and persons connected with the Orbital
Directors. To the best of the knowledge and belief of the Orbital Directors
(who have taken all reasonable care to ensure that such is the case), the
information contained in this announcement, for which they accept
responsibility, is in accordance with the facts and does not omit anything
likely to affect the import of such information.
HSBC Investment Bank, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting exclusively for Sopheon
and no one else in relation to the Offer and will not be responsible to anyone
other than Sopheon for providing the protections afforded to customers of HSBC
Investment Bank, or for providing advice in relation to the Offer or in
relation to the contents of this announcement or any matter referred to
herein.
Broadview International Limited, which is regulated in the United Kingdom by
The Securities and Futures Authority Limited, is acting exclusively for
Orbital and no one else in relation to the Offer and will not be responsible
to anyone other than Orbital for providing the protections afforded to
customers of Broadview International Limited, or for providing advice in
relation to the Offer or in relation to the contents of this announcement or
any matter referred to herein.
The attention of member firms of Amsterdam, London and the NASD is drawn to
certain UK dealing disclosure requirements following the announcement of
preliminary merger discussions between Sopheon and Orbital. That announcement
(made on 14 September 2001) commenced an offer period ('the Offer Period') in
accordance with the Code which is published and administered by the Panel. An
offer period is deemed to commence at the time when an announcement is made of
a proposed or possible offer, with or without terms. Sopheon has equity
securities traded on the Amsterdam Stock Exchange, London Stock Exchange and
through an ADR programme in the United States.
The disclosure requirements referred to above are set out in more detail in
Rule 8.3 of the Code. In particular Rule 8.3 requires public disclosure of
dealings in relevant securities during the Offer Period by persons who own or
control, or who would as a result of any transaction own or control, 1 per
cent. or more of any class of relevant securities. Relevant securities
include Sopheon and Orbital securities (including options and derivatives) and
instruments convertible into Sopheon and Orbital securities, respectively.
This requirement will apply until the end of the Offer Period.
Where two or more people act pursuant to an agreement or understanding to
acquire relevant securities, they are deemed to be a single person for the
purposes of Rule 8.3. Persons who manage investment accounts on a
discretionary basis will be treated as controlled by that person for the
purposes of Rule 8.3. Rule 8.3 does not apply to recognised market makers
acting in that capacity.
Disclosure should be made on an appropriate form no later than 12 noon London
time on the business day following the date of the dealing transaction. These
disclosures should be sent to the Company Announcements Office of the London
Stock Exchange (fax number: +44 (0)20 7588 6057) and to the Panel's Monitoring
Section (fax number: +44 (0)20 7256 9386 or email
monitoring@disclosure.org.uk). The Panel requests that member firms advise
those of their clients who wish to deal in the relevant securities of Sopheon
and/or Orbital, whether in London, Amsterdam or the United States, that they
may be affected by these requirements. If there is any doubt as to their
application, the Panel should be consulted (telephone number: +44 (0)20 7638
0129, fax number: + 44 (0)20 7638 1554). Copies of appropriate disclosure
forms may be obtained from the Panel's website www.thetakeoverpanel.org.uk.
This announcement does not constitute an offer or an invitation to acquire or
dispose of shares or securities.
Additional notice to US holders of Orbital securities: A share offer by
Sopheon for Orbital, if made, would involve an offer for the securities of a
non-US company. Any such offer would be subject to disclosure requirements of
the United Kingdom, which are different from those of the United States.
Financial statements included in the Offer Document, if any, will have been
prepared in accordance with foreign accounting standards that may not be
comparable to the financial statements of US companies. It may be difficult
for US holders of Orbital Shares to enforce their rights and any claim they
may have arising under the US federal securities laws, since the issuer is
located in a foreign country, and some or all of its officers and directors
may be residents of a foreign country. US holders of Orbital Shares may not
be able to sue a foreign company or its officers or directors in a foreign
court for violations of the US securities laws. It may be difficult to compel
a non-US company and its affiliates to subject themselves to a US court's
judgement.
The Offer will not be made, directly or indirectly, in or into, or by use of
the mails or any means or instrumentality (including, without limitation,
telex, facsimile transmission, telephone and internet) of interstate or
foreign commerce of, or any facilities of a national securities exchange of,
Canada, Australia, the Republic of Ireland or Japan and the Offer will not be
capable of acceptance by any such use, means, instrumentality or facilities or
from within Canada, Australia, the Republic of Ireland or Japan. Accordingly,
copies of this announcement are not being, and must not be, mailed or
otherwise forwarded, distributed or sent in or into or from Canada, Australia,
the Republic of Ireland or Japan and persons (including, without limitation,
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send this announcement in or into or from Canada, Australia, the
Republic of Ireland or Japan.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN CANADA,
AUSTRALIA, THE REPUBLIC OF IRELAND OR JAPAN
For immediate release on 22 October 2001
Sopheon plc ('Sopheon') and
Orbital Software Holdings plc ('Orbital')
Merger by way of recommended Offer by Sopheon for Orbital
1. Introduction
On 14 September 2001, the boards of Sopheon and Orbital announced that they
were in preliminary discussions concerning a merger of the two companies,
intended to be facilitated by way of a recommended all share offer by Sopheon
for Orbital. The boards of Sopheon and Orbital are pleased to announce today
that they have reached agreement on the terms of a merger by way of a
recommended all share offer for Orbital.
2. The Offer
On behalf of Sopheon, HSBC Investment Bank will offer to acquire all of the
issued and to be issued share capital of Orbital on the following basis:
for every 9 Orbital Shares 8 New Sopheon Shares
and so in proportion for any other number of Orbital Shares held.
On the basis of the Closing Price of 46.0 pence per Sopheon Share at the close
of business on 19 October 2001 (the latest practicable date prior to this
announcement), the Offer equates to a value of 40.9 pence per Orbital Share
and values the entire current issued share capital of Orbital at approximately
£18.4 million, representing a premium of approximately 147.8 per cent. to the
Closing Price of 16.5 pence per Orbital Share on 19 October 2001 (the latest
practicable date prior to this announcement) and a premium of approximately
127.2 per cent. to the Closing Price of 18.0 pence per Orbital Share on 13
September 2001 (the last business day prior to the announcement that Orbital
and Sopheon were in merger discussions).
3. Irrevocable undertakings and letters of intent to accept the Offer
The Orbital Directors have given irrevocable undertakings to accept the Offer
in respect of their entire beneficial holdings, and those of certain members
of their immediate families and companies controlled by them, amounting in
total to 4,571,995 Orbital Shares, representing 10.2 per cent. of Orbital's
issued share capital at the date of this announcement. These undertakings will
cease to be binding if the Offer is withdrawn or lapses or in the event that a
higher competing offer is made by not later than 3.00 p.m. on 6 November 2001
which represents a higher consideration (calculated on the day prior to the
date of announcement of such competing offer) than that available under the
Offer.
Sopheon has received further irrevocable undertakings to accept the Offer from
Kevin Dorren and Alan Slater in respect of an aggregate of 5,802,769 Orbital
Shares, representing 12.9 per cent. of Orbital's current issued share capital.
These undertakings are on comparable terms to those described above.
In addition, Novell, Inc. and The Hamilton Portfolio Limited have signed
non-binding letters of intent indicating their intention to accept the Offer
in respect of their entire beneficial holdings of Orbital Shares, being
5,173,931 Orbital Shares, representing 11.5 per cent. of Orbital's current
issued share capital.
Consequently, at the date of this announcement Sopheon has received, in
aggregate, irrevocable undertakings and letters of intent to accept the Offer
in respect of 15,548,695 Orbital Shares, representing approximately 34.6 per
cent. of Orbital's current issued share capital.
4. Lock-in arrangements
The Orbital Directors and Alan Slater have entered into lock-in agreements
with Sopheon and HSBC Investment Bank. Under these agreements the Orbital
Directors and Alan Slater undertake not to dispose of any Sopheon Shares prior
to the earlier of the announcement of the preliminary results of the Sopheon
Group for the year ended 31 December 2001 and 30 April 2002. After the expiry
of this period they are bound by orderly market provisions until the earlier
of the announcement of the preliminary results of the Sopheon Group for the
year ended 31 December 2003 and 30 April 2004.
The Sopheon Directors have entered into lock-in agreements with Orbital. These
agreements have the same terms as the lock-in agreements described above save
that there are no orderly market provisions.
5. Background to the Offer and strategy of the Enlarged Group
Sopheon's strategy is to become a leading provider of software and services
within the R&D market for major corporations. Orbital, in its strategic
review, has identified addressing the R&D process market and content
integration as key development requirements. The Sopheon Directors believe
that the proposed merger offers the potential for acceleration of the
implementation of these common objectives. The Enlarged Group will implement a
number of initiatives which draw upon the resources of the combined
businesses. Highlights of the proposed merger are set out below, grouped into
product, sales and marketing and financial areas.
Products
- Orbital's Organik functionality will be integrated into Accolade,
extending the solution's application and benefit to customers.
- By leveraging the expanded product development resources of the combined
business, Accolade V 4.0 (which will incorporate Sopheon's patented linguistic
technology) is expected to reach the market months sooner than planned.
- Sopheon's information management customers, who generate tens of
thousands of questions annually, will be offered Organik's 'capture and reuse'
technology. Such technology is already in demand from Sopheon's existing
customers.
- Sopheon's 50 information analysts and its network of experts with deep
and broad coverage of science and technology will be used to enrich and
differentiate the Organik offering.
Sales and marketing
- Organik will be offered to Sopheon's existing base of over 500 customers
with its significant focus on the technology-driven Fortune 500.
- Existing and potential Organik customers will be offered Sopheon's
information management services.
- The combined product set will be easier to differentiate from
competitors.
- Sales representatives will be given a wider range of products to sell.
Marketing investment will leverage complementary products across the same
targeted markets. The two organisations already share a similar sales process
and buyer profile.
- Organik will benefit from expanded distribution through a 34 strong
planned sales organisation in the combined business and 19 referral partners
already signed up by Sopheon.
Financial
- The Sopheon Directors believe the cash resources available post merger
will provide the Enlarged Group with a strong working capital position with
which to implement its combined business plan.
- As a result of management actions currently being taken and planned to
be continued in the Enlarged Group, there is the potential for an approximate
£6.5 million annualised reduction in the Enlarged Group's pro forma cost base
from December 2001, as compared to pro forma cost base in June 2001. The
element of this potential cost saving which arises from actions already taken
as at the date of this announcement is some £2.8 million. It is possible that
certain of the remaining £3.7 million potential cost saving could be achieved
by the companies even if the merger were not to proceed. The cost savings
have been, and are expected to continue to be, sourced from reductions in
corporate overheads, staff and office facilities. This is in addition to the
effect of the staff reductions and other cost controls introduced by both
companies during the first half of 2001.
- Following the integration of the two businesses, the Sopheon Directors
will maintain focus on management of the cost base in line with market
conditions.
The Sopheon Directors believe that the market for the automation of knowledge
intensive business processes, like NPD, is set for substantial growth. The
merger of Sopheon and Orbital will create an Enlarged Group with a strong
working capital position which aspires to be a leading provider of software
and services within the R&D market for major corporations.
6. Background to and reasons for the recommendation
As announced previously, on 10 July 2001 the Orbital Directors commenced a
full review of Orbital's strategic options, including independent development
of the business, development via merger and acquisition activity and a return
of cash to shareholders, with a view to increasing shareholder value. This was
in response to Orbital's trading results for the three month period to 30 June
2001 being significantly below expectations.
The review of the development strategy was conducted with the assistance of
the Chasm Group; a consultancy group focused on technology markets. One of the
results of this review was that Orbital should direct its commercial focus
toward a specific business process, being research and development, and a
specific industry group, in this case research and development intensive
manufacturing industries such as automotive, chemical, aerospace, computer
equipment and network equipment. Orbital already has a number of customers
within these areas, including Ericsson and Atofina. The Orbital Directors
continue to believe that the Organik product brings significant benefits to
companies.
On 15 August 2001, having reviewed the strategic options of independent
development, merger and acquisition activity and a return of cash to
shareholders, the Orbital Directors announced that they believed that Orbital
could deliver increased shareholder value by pursuing a merger and acquisition
strategy. As part of this strategy, discussions have been held with a number
of potentially suitable companies.
Incorporating the outcome of the development review, the focus of the Orbital
Directors has been on identifying companies with complementary technology, and
a customer base that provides an opportunity for increasing revenues.
During this process, Sopheon emerged as what the Orbital Directors believe to
be a highly suitable merger partner when measured against these criteria.
Sopheon is an international provider of software and information management
products and services. Its Accolade software solution will benefit from
extended application through integration with Orbital's Organik product, and
will allow the Enlarged Group to benefit from product differentiation. Sopheon
has a large customer base which may provide opportunities to increase Organik
product sales.
In addition, the Orbital Directors believe the Enlarged Group has the
opportunity to benefit from greater development and sales resources, improved
market presence in both the UK and the US, and a wider product and service
offering. The combination of the two businesses will, the Orbital Directors
believe, result in greater opportunities for Orbital's existing business than
may otherwise have been available.
7. Information on Sopheon
Sopheon is an international provider of software and information management
products and services that help its customers to innovate and to improve key
business processes. The Sopheon Directors believe that Sopheon's
differentiating strength is its focus on integrating technology with human
expertise. Its solutions are designed to improve the client return on R&D
investments through the acquisition and management of information and
expertise. Its customer base is largely blue chip and focused on R&D intensive
companies, including nearly half of those companies in the Fortune 500 which
are technology driven. Sopheon has received market recognition in the form of
media coverage by publications including Forbes, Business Week, KM World,
Darwin and R&D magazines.
Sopheon began in 1993 when PolyDoc was founded in the Netherlands to focus on
the development of language management software. This technology, which has
recently secured a patent from the European Patent Office, is designed to
enable groups of people who are not professional writers to collaborate and
create documents that communicate at a professional level, with consistency in
terminology and structure. Initial applications focused on the management of
hospital protocols and quality standards.
PolyDoc was admitted to trading on AIM in 1996, and then also joined the
Nieuwe Markt of the Amsterdam Exchanges (now the Euro.NM segment of the stock
market of Euronext Amsterdam N.V.) in 1997.
PolyDoc embarked on an acquisition strategy geared to assembling further
software skills, and information management capabilities, with a view to
creating integrated solutions for specific vertical markets, and also to
expanding geographical reach and critical mass.
In November 1999, Sopheon (then named PolyDoc) completed the acquisition of
AppliedNet Limited, a UK based supplier of software products and services with
particular skills in search and portal technologies, exemplified by the Public
Records Office Census project announced last year.
In September 2000, Sopheon completed the acquisition of Teltech Resource
Network Corporation, a Minneapolis, USA based information management and
consultancy business with a 16 year history, a core revenue base and an R&D
intensive, blue chip US client base.
In June 2001, Sopheon completed the acquisition of an operating division of
Frankfurt based Aventis Research & Technologies. This company, now Sopheon
GmbH, is an information management business with complementary information
technology skills and a core revenue base rooted in the Aventis Group,
enabling Sopheon to secure a substantial footprint in Germany and in the key
life sciences market.
The information management business secured with the Teltech and Aventis
acquisitions is targeted at vertical industry segments which include consumer
goods, high technology, chemicals, pharmaceuticals and foods, and offers
customers outsourcing of the management of business and technical information.
Customers can access Sopheon's teams of research analysts, its network of
external experts and its third party content resources through Sopheon's
proprietary portals to find answers to their questions. These portals are
accessed via public web-sites or intranets within the customer environment.
The information management business represents an annualised revenue base of
over £12 million for 2001 and is charged for on a subscription or usage basis.
It experiences high customer and revenue retention, with long standing
customer relationships.
Concurrent with the development of its information management business,
Sopheon has created a software application, Accolade, to address the needs of
the new product development (NPD) process. This application will benefit from
the customer access afforded by Sopheon's information management business and
will also leverage its services.
Market analysis suggests that innovation and time to market are among the top
priorities of today's CEO. Recent studies indicate that for an average firm
only 59 per cent. of the products succeed upon commercialisation (source: PDMA
report 1997). Sopheon has entered into an exclusive partnership with the
authors of the Stage-Gate(TM) product development methodology, used by 60 per
cent. of technology driven companies in the USA (source: PDMA report 1997), to
develop its Accolade solution. Accolade automates the Stage-Gate(TM) process,
helping teams to terminate bad product ideas sooner, improve time to market,
and improve resource allocation and decision making. This solution has already
been accepted by market leading companies Pennzoil, Cargill and Vodafone and
Sopheon has been able to demonstrate strong returns on investment cases for
Accolade with attractive forecast payback periods.
Sopheon's information management services will be integrated with Accolade to
provide analytical insight to support NPD decisions from concept to launch.
These services provide access to research analysts and experts who can answer
technical and scientific questions, assess markets, review trends and evaluate
product concepts.
Sopheon reported consolidated turnover of £6.1 million and LBITDA of £5.7
million for the six months ended 30 June 2001. Sopheon's pro forma turnover
and LBITDA (including the performance of its new German subsidiary) were £9.1
million and £5.5 million respectively for the same period. LBITDA represents
loss before interest, tax, depreciation and amortisation and also excludes
non-recurring equity-based costs incurred in connection with acquisitions.
8. Sopheon current trading update
As described in Sopheon's interim statement announced on 14 September 2001,
the first half of the year witnessed several developments on both operational
and corporate fronts. Particular highlights included the commercial
introduction of Accolade and the acquisition of Sopheon GmbH in Frankfurt.
Announced in the latter part of 2000, with the beta version released in March
of this year, Accolade has been well received in the market with initial
revenues contributing to reported results. The pipeline for the solution
continued to develop in the third quarter of 2001 and we were able to announce
that Vodafone had chosen our solution to help manage its NPD process which
together with Cargill and Pennzoil represents another significant step in
establishing a reference base. As at the end of the third quarter, these
launching installations represented an overall order value of approximately £
450,000. Our expectation for the final quarter is for a similar number of
orders to come through. As previously reported in the interim statement, the
overall slowdown in the IT sector has lengthened purchasing cycles, and while
we expect that conversion of the pipeline will gather pace, the timing of this
transition is uncertain. Nevertheless, media reports indicating that R&D
spending holds up in times of economic contraction, support our continued
confidence in the potential of this product. In addition, our partner program
has continued to grow, with a total of 19 referral partners now signed up for
Accolade.
As has been widely reported, market conditions have remained difficult. While
our information services business continued to contribute a regular stream of
revenue in the third quarter of 2001, we experienced partial interruption in
certain accounts where customer M&A and restructuring activity have disrupted
normal trading. Our consultancy and integration teams, which we have been
re-orienting to support anticipated Accolade implementations, continued to be
awarded bespoke assignments, though at a reduced level, as we complete this
transition. Meanwhile, we have used the current economic conditions to promote
information management outsourcing, and this has identified opportunities for
new business that we are pursuing.
Our new German operation is facing the significant challenge of operating as a
Sopheon company having emerged from the umbrella of Aventis Group. This
transition has started well with certainty of service provision to customers
and implementation of stand alone administrative functions such as billing. We
have recruited a sales director for the territory, with a strong track record
in both software and information businesses, and the local team is actively
pursuing sales opportunities.
Group cash resources as at 30 September 2001 were £5.3 million and as noted in
our interim statement, the board of Sopheon remains very focused on the need
to take further steps to reduce the cost base of the business, and to pursue
alternatives to ensure that sufficient cash reserves are available to support
operations. In addition to being an excellent strategic fit, our proposed
merger with Orbital, as set out above, would address both of these issues.
9. Information on Orbital
Orbital, founded in 1994 by Calum Smeaton and Alan Slater, is a provider of
knowledge management solutions. Orbital's primary product is Organik, a
software application that can be used by organisations to create knowledge
sharing environments. Organik brings people and information together, creating
an environment in which users can ask questions, find experts and share
knowledge. Organik's patented user profiling engine, which produces constantly
evolving user profiles, is a powerful feature that can facilitate the right
connection between users and experts, helping to establish and build viable
communities of knowledge.
Orbital operates from offices in the UK and the US and employs over 75 people.
Major clients include Ericsson, Atofina, Textron and PR Newswire.
10. Orbital current trading statement
At the time of Orbital's announcement of sales results for the quarter ended
30 June 2001 the Orbital Directors noted that they expected the sales results
for the quarter ended 30 September 2001 to be flat compared to the first
quarter. Since that statement market conditions have continued to deteriorate
in light of increasing economic uncertainty. This deterioration has led to a
further lengthening of sales cycles. The result of this is that Orbital's
unaudited results for the six months ended 30 September 2001 show turnover of
£214,127, compared to £365,604 for the same period in 2000. The Company
continues to enjoy a significant cash position, with approximately £13 million
at the end of the second quarter.
Interest in Organik, the Company's principal product, remains strong and the
Orbital Directors believe that the prospects for the Company's innovative
technology remain good in the longer term. As discussed further below, the
Orbital Directors believe a merger with Sopheon will build on some of the
strategic growth and cost reduction initiatives already underway at Orbital.
11. Issue of further Sopheon Shares
In June 2001, Sopheon acquired the issued share capital of Sopheon GmbH,
formed from a division of Aventis Research & Technologies. The transaction is
subject to earn-out arrangements equivalent to 50 per cent. of the profit
before tax of Sopheon GmbH in each of 2001, 2002 and 2003, and subject to an
overall maximum of Deutsche Mark 3.4 million (which was equivalent to £1.1
million based on an exchange rate prevailing on 19 October 2001, the latest
practicable date prior to this announcement). This further consideration (if
any) will probably be satisfied by the issue of further Sopheon Shares;
however it may be satisfied in cash if the issue of such Sopheon Shares would
result in Aventis Research & Technologies holding 29.9 per cent. or more of
the voting rights of Sopheon and Sopheon so elects or, in any event, if such
an issue of Sopheon Shares would trigger an obligation on Aventis Research &
Technologies to make a mandatory offer (within the meaning of Rule 9 of the
City Code) for the share capital of Sopheon and a waiver of that obligation
cannot be obtained from the independent Sopheon Shareholders under the
whitewash procedures of the City Code.
In addition, further Sopheon Shares may be issued on a conversion of the
Sopheon Convertible Loan Stock or exercise of the Sopheon Warrants. The
conversion rate of the Sopheon Convertible Loan Stock is currently 58.5 pence
per Sopheon Share but this rate may be adjusted in certain circumstances and
the exercise price of the Sopheon Warrants is 70.0 pence per Sopheon Share.
The issue of further Sopheon Shares pursuant to the acquisition of Sopheon
GmbH or a conversion of Sopheon Convertible Loan Stock would result in the
dilution of the percentage shareholding in Sopheon which Orbital Shareholders
would, assuming successful completion of the Offer, have in Sopheon following
such completion.
In connection with the Offer an extraordinary general meeting of the holders
of Sopheon Convertible Loan Stock has been convened for 10.30 a.m. on 7
November 2001 for the purpose of passing, conditional on the Offer becoming of
being declared unconditional in all respects, resolutions to amend the terms
of the Sopheon Convertible Loan Stock such that:
- the redemption date of the Sopheon Convertible Loan Stock would be
extended (if not previously converted, redeemed or repurchased) to 20 June
2004 (the current equivalent redemption date of the Sopheon Convertible Loan
Stock is 20 June 2003);
- the conversation rate at which the Sopheon Convertible Loan Stock may be
converted into Sopheon Shares would be adjusted to 46.0 pence per share being
a price equal to the Closing Price of a Sopheon Share on 19 October 2001; and
- the conversion rate of the Sopheon Convertible Loan Stock, may be
further adjusted in the event of an offer of Sopheon Shares by way of a rights
issue, placing, open offer or similar issue at less than 46.0 pence per
Sopheon Share, to the offering price or, if greater 31.5 pence per Sopheon
Share (currently an adjustment to the conversion rate occurs in the event of
an offering at less than 70 pence per share but there is no price per Sopheon
Share below which the conversion rate can not be adjusted).
The resolutions require a majority of not less than three fourths of the votes
attaching to the Sopheon Convertible Loan Stock represented at such meeting.
Irrevocable undertakings to vote in favour of the above resolutions have been
received from holders of Sopheon Convertible Loan Stock representing 78.5 per
cent. of the votes entitled to vote at such meeting.
Further details of the Sopheon Convertible Loan Stock are set out in the Offer
Document.
12. Board of the Enlarged Group
The executive and non-executive Orbital Directors have agreed that following
the Offer becoming or being declared unconditional in all respects they will
resign from the board of Orbital and as directors of every other company in
the Orbital Group. Brian Gray and Calum Smeaton will join the Enlarged Group's
executive management team, and Andrew Davis will join the Enlarged Group's
board, to assist with transitional matters and integration of the businesses
following the merger. Accordingly, the board and executive management of the
Enlarged Group will be as follows:
Board of directors
Barry Mence Executive Chairman
Andrew Michuda Chief Executive Officer
Arif Karimjee Chief Financial Officer and Company Secretary
Stuart Silcock Non-executive Director, Audit Committee Chair
Bernard Al Non-executive Director, Remuneration Committee Chair
Joseph Shuster Non-executive Director
Andrew Davis Non-executive Director
Executive management (in addition to executive directors)
Paul Heller Chief Technology Officer
Christopher Hawver Chief Marketing Officer
Brian Gray Transition management - operations
Calum Smeaton Transition management - product development
Following the Offer becoming or being declared wholly unconditional and with
the appointment of Dr Bernard Al earlier this year, the Sopheon Directors
intend to continue to strengthen their non-executive team and will seek to
appoint a non-executive director with public company credentials who is likely
to have a background in the software industry. An appropriate candidate has
not yet been identified.
13. Orbital's management and employees
The board of Sopheon has given assurances to the board of Orbital that the
existing employment rights, including pension rights, of all employees of the
Orbital Group will be fully safeguarded.
14. Orbital Share Option Schemes
The Offer extends to any Orbital Shares which are unconditionally allotted or
issued as fully paid (or credited as fully paid) prior to the date on which
the Offer closes (or such earlier date(s) as Sopheon may, subject to the City
Code, decide) as a result of the exercise of options granted under the Orbital
Share Option Schemes. If the Offer becomes or is declared wholly
unconditional, Sopheon will make appropriate proposals to participants in the
Orbital Share Option Schemes to the extent that such options have not been
exercised.
15. Compulsory acquisition and de-listing of Orbital
If acceptances are received under the Offer in respect of, and/or Sopheon
otherwise acquires, 90 per cent. or more of Orbital Shares to which the Offer
relates, Sopheon will be entitled, and intends, to exercise its rights
pursuant to the provisions of sections 428 to 430F of the Act to acquire
compulsorily the remaining Orbital Shares. Following the Offer becoming or
being declared unconditional in all respects and subject to any applicable
requirements of the UK Listing Authority, Sopheon intends to procure that
Orbital will apply to the UK Listing Authority for the Orbital Shares to be
de-listed from the Official List and for the cancellation of trading of
Orbital Shares on the market for listed securities of the London Stock
Exchange. It is anticipated that the de-listing and cancellation of trading of
the Orbital Shares will take effect no earlier than 20 business days following
the Offer becoming or being declared unconditional in all respects. De-listing
would significantly reduce the marketability and liquidity of any Orbital
Shares not acquired by Sopheon.
16. Listings and dealings
Application will be made for the New Sopheon Shares to be admitted to trading
on AIM. It is expected that Admission will become effective and dealings in
the New Sopheon Shares will commence on the first dealing day following the
day on which the Offer becomes or is declared unconditional in all respects
(save only for Admission). Dealings will be for normal settlement. Pending the
issue of definitive certificates for the New Sopheon Shares, transfers will be
certified against the register held by Capita IRG Plc. No temporary documents
of title in respect of the New Sopheon Shares will be issued. The New Sopheon
Shares will not be available to the public in conjunction with the application
except by way of valid acceptance of the Offer. Application will also be made
for the New Sopheon Shares to be admitted to trading on the Euro.NM segment of
the stock market of Euronext Amsterdam N.V.. In order to comply with Euronext
Amsterdam N.V. listing rules and issuing rules, an information memorandum will
be published following the issue of the New Sopheon Shares. It is expected
that the New Sopheon Shares will be admitted to trading on the Euro.NM segment
of the stock market of Euronext Amsterdam N.V. upon publication of such an
information memorandum. Like the existing Sopheon Shares, the New Sopheon
Shares traded on the stock market of Euronext Amsterdam N.V. will be settled
through Nederlands Interprofessioneel Effectencentrum NIEC B.V..
17. Offer Document
The Offer Document containing the full terms and conditions of the Offer,
together with a Form of Acceptance, will be despatched to Orbital Shareholders
and, for information only, to participants in the Orbital Share Option Schemes
today. A circular describing the Offer and convening an extraordinary general
meeting of Sopheon Shareholders to increase Sopheon's authorised share capital
and to grant the Sopheon Directors authority to allot New Sopheon Shares
pursuant to, inter alia, the Offer, will also be despatched to Sopheon
Shareholders together with the Offer Document today.
18. Further details of the Offer
The New Sopheon Shares to be issued pursuant to the Offer will be issued
credited as fully paid, free from all liens, equities, charges, encumbrances
and other interests, and will rank pari passu in all respects with the
existing Sopheon Shares, including the right to all dividends and other
distributions declared, made or paid after 22 October 2001.
Fractions of New Sopheon Shares will not be allotted or issued to Orbital
Shareholders who accept the Offer (including any Orbital Shareholders who are
deemed to accept the Offer) but will be disregarded and the number of New
Sopheon Shares to which accepting Orbital Shareholders are entitled will be
rounded down to the nearest whole number and no payment will be made in
respect of such fractional entitlements.
The Offer is subject to the conditions and certain further terms set out in
Appendix I of this announcement. The Offer will initially remain open for
acceptance until 12 November 2001, unless Sopheon (with the prior consent of
the Panel) agrees to extend it.
19. Overseas Shareholders
The availability of the Offer to such Orbital Shareholders may be affected by
the laws of the relevant jurisdictions. Orbital Shareholders who are subject
to the law of any jurisdiction other than in the United Kingdom should inform
themselves about and observe any applicable requirements.
The Offer is not being, and will not be, made, directly or indirectly, in or
into, or by use of the mails of, or by any means or instrumentality
(including, without limitation, fax, telex or telephone) of interstate or
foreign commerce of, or of any facilities of a national securities exchange
of, Canada, Australia, the Republic of Ireland or Japan and the Offer will not
be capable of acceptance by any such use, means, instrumentality or facilities
or from within Canada, Australia, the Republic of Ireland or Japan.
The New Sopheon Shares to be issued in consequence of the Offer have not been
nor will they be registered under the United States Securities Act of 1933 (as
amended) or under the securities laws of any jurisdiction of the United States
nor under any of the relevant securities laws of Canada, Australia, the
Republic of Ireland or Japan. Accordingly, unless an exemption is available,
the New Sopheon Shares may not be offered, sold or delivered, directly or
indirectly, in or into Canada, Australia, the Republic of Ireland or Japan or
any other jurisdiction if the Offer will constitute a violation of the
relevant laws of or require the registration thereof in such jurisdiction, nor
to any resident of Canada, Australia, the Republic of Ireland or Japan.
The Offer is being made in the United States pursuant to an exemption from the
United States tender offer rules provided by Rule 14d-l(c) under the United
States Securities Exchange Act of 1934 (as amended) and pursuant to an
exemption from the registration requirements of the United States Securities
Act of 1933 (as amended) provided by Rule 802 thereunder. The relevant
clearances have not been and will not be obtained from any securities
authority in any jurisdiction outside the United Kingdom and no prospectus in
relation to the New Sopheon Shares has been registered by any United States
federal or state securities commission or regulatory authority.
20. Shareholder resolutions
The Offer is conditional, inter alia, upon the passing of resolutions by
Sopheon Shareholders at an extraordinary general meeting to increase Sopheon's
authorised share capital and to grant the Sopheon Directors authority to allot
New Sopheon Shares pursuant to, inter alia, the Offer.
The Sopheon Directors consider the Offer to be in the best interests of
Sopheon. Accordingly, the Sopheon Directors unanimously recommend Sopheon
Shareholders to vote in favour of the resolutions relating to the Offer at the
extraordinary general meeting as they have irrevocably undertaken to do in
respect of their own beneficial shareholdings.
21. Recommendation
The Orbital Directors, who have been so advised by Broadview, consider the
terms of the Offer to be fair and reasonable. In providing advice to the
Orbital Directors, Broadview has taken into account the commercial assessments
of the Orbital Directors. The Orbital Directors unanimously recommend that
Orbital Shareholders accept the Offer, as they have irrevocably undertaken to
do with respect to their beneficial holdings and those of certain members of
their immediate families and companies controlled by them amounting in total
to 4,571,995 Orbital Shares, representing approximately 10.2 per cent of
Orbital's current issued share capital.
22. General
Certain terms used in this announcement are defined in Appendix II.
This announcement does not constitute an offer or invitation to purchase any
securities.
Enquiries:
Sopheon plc Orbital Software Holdings plc
Barry Mence Ian Ritchie
Today - Tel. +44 (0)20 7466 5000 Tel. +44 (0)131 348 3000
Arif Karimjee Brian Gray
Thereafter - Tel. +44 (0)1483 883 000
HSBC Investment Bank plc Broadview International Limited
John Mellett Tel. +44 (0)20 7336 9000 Tom S. Tel. +44 (0)20 7968 3700
Dalia Joseph Anthofer
Roger Manship
Buchanan Communications
Steve Tel. +44 (0)20 7466 5000
Liebmann
The Sopheon Directors accept responsibility for the information contained in
this announcement other than the information relating to the Orbital Group,
the Orbital Directors, their immediate families and related trusts and persons
connected with the Orbital Directors. To the best of the knowledge and belief
of the Sopheon Directors (who have taken all reasonable care to ensure that
such is the case), the information contained in this announcement, for which
they accept responsibility, is in accordance with the facts and does not omit
anything likely to affect the import of such information.
The Orbital Directors accept responsibility for the information contained in
this announcement relating to the Orbital Group, the Orbital Directors, their
immediate families and related trusts and persons connected with the Orbital
Directors. To the best of the knowledge and belief of the Orbital Directors
(who have taken all reasonable care to ensure that such is the case), the
information contained in this announcement, for which they accept
responsibility, is in accordance with the facts and does not omit anything
likely to affect the import of such information.
HSBC Investment Bank, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting exclusively for Sopheon
and no one else in relation to the Offer and will not be responsible to anyone
other than Sopheon for providing the protections afforded to customers of HSBC
Investment Bank, or for providing advice in relation to the Offer or in
relation to the contents of this announcement or any matter referred to
herein.
Broadview International Limited, which is regulated in the United Kingdom by
The Securities and Futures Authority Limited, is acting exclusively for
Orbital and no one else in relation to the Offer and will not be responsible
to anyone other than Orbital for providing the protections afforded to
customers of Broadview International Limited, or for providing advice in
relation to the Offer or in relation to the contents of this announcement or
any matter referred to herein.
The attention of member firms of Amsterdam, London and the NASD is drawn to
certain UK dealing disclosure requirements following the announcement of
preliminary merger discussions between Sopheon and Orbital. That announcement
(made on 14 September 2001) commenced an offer period ('the Offer Period') in
accordance with the Code which is published and administered by the Panel. An
offer period is deemed to commence at the time when an announcement is made of
a proposed or possible offer, with or without terms. Sopheon has equity
securities traded on the Amsterdam Stock Exchange, London Stock Exchange and
through an ADR programme in the United States.
The disclosure requirements referred to above are set out in more detail in
Rule 8.3 of the Code. In particular Rule 8.3 requires public disclosure of
dealings in relevant securities during the Offer Period by persons who own or
control, or who would as a result of any transaction own or control, 1 per
cent. or more of any class of relevant securities. Relevant securities
include Sopheon and Orbital securities (including options and derivatives) and
instruments convertible into Sopheon and Orbital securities, respectively.
This requirement will apply until the end of the Offer Period.
Where two or more people act pursuant to an agreement or understanding to
acquire relevant securities, they are deemed to be a single person for the
purposes of Rule 8.3. Persons who manage investment accounts on a
discretionary basis will be treated as controlled by that person for the
purposes of Rule 8.3. Rule 8.3 does not apply to recognised market makers
acting in that capacity.
Disclosure should be made on an appropriate form no later than 12 noon London
time on the business day following the date of the dealing transaction. These
disclosures should be sent to the Company Announcements Office of the London
Stock Exchange (fax number: +44 (0)20 7588 6057) and to the Panel's Monitoring
Section (fax number: +44 (0)20 7256 9386 or email
monitoring@disclosure.org.uk). The Panel requests that member firms advise
those of their clients who wish to deal in the relevant securities of Sopheon
and/or Orbital, whether in London, Amsterdam or the United States, that they
may be affected by these requirements. If there is any doubt as to their
application, the Panel should be consulted (telephone number: +44 (0)20 7638
0129, fax number: + 44 (0)20 7638 1554). Copies of appropriate disclosure
forms may be obtained from the Panel's website www.thetakeoverpanel.org.uk.
This announcement does not constitute an offer or an invitation to acquire or
dispose of shares or securities.
Additional notice to US holders of Orbital securities: A share offer by
Sopheon for Orbital, if made, would involve an offer for the securities of a
non-US company. Any such offer would be subject to disclosure requirements of
the United Kingdom, which are different from those of the United States.
Financial statements included in the Offer Document, if any, will have been
prepared in accordance with foreign accounting standards that may not be
comparable to the financial statements of US companies. It may be difficult
for US holders of Orbital Shares to enforce their rights and any claim they
may have arising under the US federal securities laws, since the issuer is
located in a foreign country, and some or all of its officers and directors
may be residents of a foreign country. US holders of Orbital Shares may not
be able to sue a foreign company or its officers or directors in a foreign
court for violations of the US securities laws. It may be difficult to compel
a non-US company and its affiliates to subject themselves to a US court's
judgement.
The Offer will not be made, directly or indirectly, in or into, or by use of
the mails or any means or instrumentality (including, without limitation,
telex, facsimile transmission, telephone and internet) of interstate or
foreign commerce of, or any facilities of a national securities exchange of,
Canada, Australia, the Republic of Ireland or Japan and the Offer will not be
capable of acceptance by any such use, means, instrumentality or facilities or
from within Canada, Australia, the Republic of Ireland or Japan. Accordingly,
copies of this announcement are not being, and must not be, mailed or
otherwise forwarded, distributed or sent in or into or from Canada, Australia,
the Republic of Ireland or Japan and persons (including, without limitation,
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send this announcement in or into or from Canada, Australia, the
Republic of Ireland or Japan.
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