The Independent Director Committee of SLI Systems Limited (SLI.NZ) (SLI) has formally and unanimously recommended
Texas-based ESW Holdings, Inc.’s (ESW) full takeover offer for the company.
SLI Independent Chairman Greg Cross said: “ESW’s offer provides an attractive opportunity for shareholders and
option-holders to realise value in their securities while eliminating the risks SLI faces pursuing its new product
strategy.”
The Independent Director Committee made the recommendation in the Target Company Statement, released today. The
statement also included independent adviser Northington Partners’ report on the merits of the offer. Northington
Partners valued SLI’s shares at a range of between $0.37 and $0.53 per share.
ESW has offered or is about to offer to acquire all SLI shares a price of 65 cents per share and all unlisted options
for prices ranging between 3 cents and 40 cents per option. The offer is conditional on, among other things, ESW gaining
more than 90% of the shares in SLI.
The Independent Director Committee recommended shareholders and option-holders should accept the offer because:
• The offer price represents a 117% premium to the closing price on 19 October 2018 (being the last trading day
before SLI received ESW’s takeover notice) of $0.30 per share. The offer price is also a 132% premium to the 12-month
VWAP1 of $0.28 per share in the 12 months before SLI received ESW’s takeover notice.
• The offer is a 23% premium to the top end of the Northington Partners’ valuation range.
• The offer allows shareholders and option-holders to receive an attractive price for their securities while
eliminating the execution risks of the company’s existing strategic plan.
• SLI has negotiated with ESW to achieve the best offer price and offer conditions for shareholders and
option-holders. The premium built into ESW’s offer price reflects the synergies and opportunities that ESW considers can
be achieved between ESW and SLI by implementing ESW’s key strategies.
1 VWAP means the cumulative volume weighted average price at which SLI shares have traded on the NZX Main board
for the relevant period. VWAP is calculated by summing the value of all the trades which occurred during the relevant
period and dividing that sum by the volume of shares transacted in those trades.
• Shareholders, together holding over 51% of SLI’s shares, have committed to accept the offer when made by ESW in
respect of all of their shares
“The SLI Board and Executive Team have for some time been considering a range of strategic options for the company as it
has steered its managed services business into profitability and invested in the development of new products to return
SLI to growth,” Mr Cross said.
“As part of this process we have tested the market for roll-up opportunities and potential acquirers of SLI. The
Independent Director Committee’s view is that ESW’s offer is superior to any other indications of interest received in
relation to SLI to date. For these reasons and those set out in the Target Company Statement we are recommending
shareholders accept the offer.”
The offer is open until at least 10 December 2018. However, Mr Cross said he encouraged shareholders to accept the offer
promptly.
“ESW already has obtained acceptances in excess of 50%, thereby overcoming Takeovers Code restrictions on it acquiring a
controlling stake in the company. Should it so choose, it can waive the 90% acceptance condition and declare the offer
unconditional shortly after it is made.”
Mr Cross said shareholders and option-holders should read the Target Company Statement, including the independent
adviser’s report, carefully before making any decisions. He also said they should seek professional financial advice in
relation to their individual circumstances.