Geotab Inc has agreed to acquire the issued and outstanding common shares it does not already own of BSM Technologies Inc (TSX: GPS), a Toronto-based provider of GPS telematics and asset management solutions.
Geotab agreed to pay $1.40 per share, which represents an equity value of about $117.3 million. The deal is expected to close in Q2 2019.
BSM shareholders holding or controlling about 23 percent of outstanding shares have agreed to vote for the transaction.
They include U.S. hedge fund Crescendo Partners and Canadian mutual fund company Penderfund Capital Management.
Based in Oakville, Ontario, Geotab is a provider of fleet management software and GPS vehicle tracking devices.
BSM Technologies to be Acquired by Geotab for Cash Consideration of CDN $1.40 per Share
Transaction represents a 58% premium to the 20-day volume weighted average price ending April 5, 2019
Transaction provides immediate liquidity and certainty of value to BSM shareholders
Acquisition will enhance and accelerate BSM’s strategic vision under Geotab’s ownership
Transaction has received unanimous approval by BSM’s Board of Directors
23% of BSM Shareholders have entered into voting support agreements in favour of the transaction
TORONTO, April 8, 2019 /CNW/ – BSM Technologies Inc. (“BSM” or the “Company”) (TSX: GPS), a leading provider of Internet of Things (IoT) enabled telematics and asset management solutions, is pleased to announce that it has entered into a definitive arrangement agreement dated April 7, 2019 (the “Arrangement Agreement”) with Geotab Inc. (“Geotab”) and 2689285 Ontario Inc. (“Geotab Subco”), a wholly-owned subsidiary of Geotab, pursuant to which Geotab Subco has agreed to acquire all of the issued and outstanding common shares of BSM (the “BSM Shares”) not already owned by Geotab, in exchange for cash consideration of CDN $1.40 per BSM Share (the “Arrangement”). The Arrangement will be completed by way of statutory plan of arrangement under the Business Corporations Act (Ontario).
The purchase price of CDN $1.40 per BSM Share represents a total equity value, on a fully-diluted basis, of approximately CDN $117.3 million. The purchase price of CDN $1.40 per BSM Share also represents a premium of approximately 41%, 58%, and 77% to the closing price, 20-day volume weighted average price, and 60-day volume weighted average price, respectively, of BSM Shares on the Toronto Stock Exchange (the “TSX”) as of close of markets on April 5, 2019 (being the last trading day prior to the announcement of the Arrangement).
“This acquisition will allow BSM’s technology and know-how in important verticals like government and rail to be made available through Geotab’s cost effective, reliable, scalable and secured fleet management platform,” stated Neil Cawse, Chief Executive Officer at Geotab. “The government telematics markets are key opportunities for Geotab and the addition of BSM’s existing activity, level of knowledge and experience will not only benefit Geotab’s government customers but also our strong partner ecosystem that is focused on serving this vertical market. Our expanded team will further equip both Geotab and our network of trusted Resellers with the tools necessary for future success in key growth areas including; municipal, state and provincial government and the electric vehicle market.”
“Following the announcement of our expanded partnership with Geotab in late 2018, it became clear that BSM’s growing analytics and optimization capabilities, combined with Geotab’s best in class telematics solution, results in an enhanced product offering to fleet management customers. As part of the Geotab team, we will be able to offer these enhanced capabilities across all of Geotab’s partner network,” said Mr. Louis De Jong, President and Chief Executive Officer of BSM. “Geotab’s all-cash offer not only provides liquidity at a significant premium for BSM shareholders but it is also a great outcome for our employees and our customers.”
Particulars of the Arrangement
Under the terms of the Arrangement Agreement, shareholders of BSM (the “BSM Shareholders”), other than Geotab, will be entitled to receive cash consideration of CDN $1.40 per BSM Share following the effective time of the Arrangement. The Arrangement is not conditional on Geotab obtaining financing.
The Arrangement will require the approval of BSM Shareholders at a special meeting expected to take place in May 2019 (the “BSM Meeting”). In order to become effective, the Arrangement must be approved at the BSM Meeting by at least 66⅔ percent of the votes cast by BSM Shareholders. As described below, BSM Shareholders who own or control, directly or indirectly, approximately 23% of the outstanding BSM Shares have entered into a voting support agreement with Geotab to, among other things, vote their BSM Shares in favour of the Arrangement, subject to the provisions thereof.
Both Crescendo Advisors II LLC (“Crescendo Advisors”), the investment manager of Crescendo Partners II L.P., Series R2 and Crescendo Partners III L.P. (collectively, the “Crescendo Funds”) and in such capacity has discretionary investment management authority over the investment portfolio of the Crescendo Funds and has control or direction over the securities held by each of them, together with its joint actors, the Crescendo Funds and Jamarant Capital, L.P. (“Jamarant”), and PenderFund Capital Management Ltd., who collectively own or control, directly or indirectly, approximately 20.8% of the BSM Shares, have entered into a voting support agreement with Geotab to, among other things, vote their BSM Shares in favour of the Arrangement, subject to the provisions thereof. In addition, all of the other directors and senior officers of BSM, who collectively own, directly or indirectly, or exercise control or direction over approximately 2.2% of the BSM Shares, have entered into a voting support agreement with Geotab to, among other things, vote their BSM Shares in favour of the Arrangement, subject to the provisions thereof.
Court and Regulatory Approvals
The Arrangement is subject to, among other things, (i) the approval of the TSX, (ii) the approval of the Ontario Superior Court of Justice (Commercial List) by way of interim and final orders, and (iii) the satisfaction or waiver of certain closing conditions customary in transactions of this nature, including the absence of material adverse changes in the business and affairs of BSM. The Arrangement is expected to close in late Q2 2019.
Board and Special Committee Approval
The board of directors of BSM (the “Board”) established a special committee of the Board (the “Special Committee”), comprised of independent members of the Board, to assist in the evaluation, supervision and negotiation of the Arrangement.
TD Securities Inc. (“TD Securities”) delivered a fairness opinion (the “Fairness Opinion”) to the Special Committee and the Board to the effect that, as of April 7, 2019, the consideration to be received by the BSM Shareholders pursuant to the Arrangement is fair, from a financial point of view, to such BSM Shareholders. Based on, among other things, the unanimous recommendation of the Special Committee and the receipt of the Fairness Opinion, the Board unanimously approved the Arrangement having determined that the Arrangement is in the best interests of BSM and BSM Shareholders.
The full text of the Fairness Opinion, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations and qualifications on the review undertaken, and the terms and conditions of the Arrangement, will be included in the management information circular of BSM in connection with the BSM Meeting, which is expected to be mailed to BSM Shareholders in April or early May 2019.
The Board unanimously recommends that BSM Shareholders vote “FOR” the Arrangement.
The Arrangement Agreement includes representations, warranties and covenants typical of a transaction of this nature, along with customary non-solicitation, right to match, and fiduciary provisions. In addition, BSM has agreed to pay a termination fee of CDN $3.5 million to Geotab if the Arrangement Agreement is terminated in certain circumstances, including if BSM enters into an agreement with respect to a superior proposal or if the Board or Special Committee withdraws its recommendation with respect to the Arrangement.
The Arrangement Agreement, which describes the full particulars of the Arrangement, will be made available on SEDAR (www.sedar.com) under BSM’s issuer profile.
In connection with the announcement of the Arrangement, BSM has terminated its automatic securities repurchase plan (the “ASRP Plan”) with Paradigm Capital Inc., effective immediately. Except for the termination of the ASRP Plan and the obligations contained therein, BSM’s current normal course issuer bid, which is scheduled to terminate on December 26, 2019, will continue upon the same previously- announced terms and conditions.
TD Securities Inc. is serving as financial advisor to BSM and Bennett Jones LLP is acting as BSM’s legal advisor.
National Bank Financial Inc. is serving as financial advisor to Geotab and Stikeman Elliott LLP is serving as legal advisor to Geotab.
About Geotab Inc.:
Geotab is advancing security, connecting commercial vehicles to the internet and providing web-based analytics to help customers better manage their fleets. Geotab’s open platform and Geotab Marketplace, offering hundreds of third-party solution options, allows both small and large businesses to automate operations by integrating vehicle data with their other data assets. As an IoT hub, the in-vehicle device provides additional functionality through IOX Add-Ons. Processing billions of data points a day, Geotab leverages data analytics and machine learning to help customers improve productivity, optimize fleets through the reduction of fuel consumption, enhance driver safety, and achieve strong compliance to regulatory changes. Geotab’s products are represented and sold worldwide through Authorized Geotab Resellers. To learn more, please visit www.geotab.com and follow @GEOTAB and on LinkedIn.
About BSM Technologies:
With more than 20 years of experience, BSM Technologies Inc., through its subsidiaries and affiliates, is a leading provider of Internet of Things (IoT) enabled telematics and asset management solutions. Focused on the Government, Service, Rail and Construction markets, BSM provides the technology, tools and services required to connect, analyze and optimize fleets, equipment and people – empowering data- driven operational decision-making. BSM illuminate, BSM’s software platform, enables companies to leverage data insights, analytics and optimization tools for competitive advantage.
For more information, please visit http://www.bsmtechnologies.com. The Toronto Stock Exchange has neither approved nor disapproved of the information contained in this news release.
For further information: For inquiries, please contact: Louis De Jong, President & CEO, BSM Technologies Inc., (416) 675-1201, firstname.lastname@example.org; Craig MacPhail, Investor Relations, NATIONAL Capital Markets, (416) 586-1938, email@example.com