First transaction supporting WiLAN's new
strategy to grow via M&A
Conference call to discuss
transaction today at 4:30 PM Eastern
Time
OTTAWA and SASKATOON, April 17,
2017 /CNW/ - Wi-LAN Inc. ("WiLAN" or the "Company")
(TSX:WIN) (NASD:WILN) and International Road Dynamics ("IRD") (TSX:
IRD) today announced that the two companies have entered into a
definitive agreement for WiLAN to acquire all of the issued and
outstanding shares of IRD for $4.25
(US $3.17) per share in cash, or an
equity value of approximately $63.5
million (US $47.4 million).
The purchase price represents a 51% premium to IRD's closing price
on April 13, 2017, and a 35% premium
to its 90-day volume-weighted average trading price. All amounts,
unless stated otherwise, are in Canadian dollars. WiLAN plans to
operate under the Quarterhill Inc. ("Quarterhill") name, commencing
on or about June 1, 2017, as outlined
in a separate press release issued earlier today by the
Company.
IRD is an Industrial Internet of Things ("IIoT") company
specializing in Intelligent Transportation Systems ("ITS") and
producing a portfolio of integrated hardware and software solutions
to better detect, measure and analyze a variety of transportation
challenges. IRD's ITS are used worldwide and are vital as highway
agencies address increasing traffic volumes and the need to embrace
automation of roadway systems. IRD's systems detect vehicles,
measure characteristics, and analyze traffic data thereby providing
input that helps highway agencies protect infrastructure, enhance
safety and optimize highway design. IRD's current solutions include
commercial vehicle weight enforcement, toll systems, traffic data
collection, fleet management, bridge monitoring, traffic safety,
security and access control, and maintenance services.
"As discussed in WiLAN's press release issued earlier today, the
natural progression of our business has us focused on growth by
identifying, acquiring and supporting IIoT companies with strong
management teams, attractive financial performance and promising
growth potential; IRD fits this profile perfectly," said
Shaun McEwan, Interim CEO of WiLAN.
"Terry Bergan and his team are well
respected in the ITS industry and will remain in place to run the
business following the acquisition. IRD has built an attractive
portfolio of IP protected technology and an enviable track record
of financial performance that includes a growing base of recurring
revenue and solid cash flow generation."
James Skippen, Executive Chairman
of WiLAN added: "IRD comes with a strong portfolio of more than 80
pending and issued patents. We were impressed with both the quality
and depth of the portfolio. Adding to our patent portfolio in this
exciting growth industry will serve to bolster our IoT patent
strength and makes this acquisition particularly attractive and
synergistic. It is also comforting to know the IRD product
offerings have solid patent protection."
"This transaction provides compelling and certain value for IRD
shareholders and also provides significant opportunity for our
employees and customers to benefit from our future growth plans,"
said Terry Bergan, President and CEO
of IRD. "The Quarterhill platform, once in place, will give us the
opportunity to focus 100% of our energy on strengthening and
accelerating the growth of our business. We have a history of
innovation and look forward to having the expertise of the WiLAN
team under the same corporate umbrella."
Financial Highlights of the Acquisition
IRD generated
$65.4 million in revenue in fiscal
2016 with $4.9 million in earnings
before interest, taxes, depreciation and amortization ("EBITDA"),
$2.8 million in net income and
$2.3 million of cash from operations.
The acquisition will be immediately accretive to WiLAN's EBITDA. On
a combined pro forma basis, for fiscal 2016 WiLAN would have
generated revenue of $188.4 million
and EBITDA of $76.1 million.
WiLAN will fund the acquisition with cash from its balance
sheet, which at December 31, 2016 was
$143.1 million (US $107.7 million).
Transaction Details
The Boards of Directors of both
WiLAN and IRD have unanimously approved this transaction, and IRD's
Board recommends that IRD shareholders vote in favour of the
transaction. In making their determination, the IRD Board
considered, among other factors, a fairness opinion from Duff &
Phelps Canada Limited.
IRD directors and officers, as well as certain IRD shareholders,
representing approximately 25.4% of the total IRD shares
outstanding, have agreed to tender their IRD shares into this
transaction.
As is customary in a "friendly" transaction of this nature, IRD
has agreed not to solicit competing acquisition proposals, subject
to customary fiduciary provisions, which entitle IRD to consider
and accept a superior proposal. The definitive agreement between
IRD and WiLAN also provides for the payment of a termination fee of
$3.0 million to WiLAN if a superior
proposal were to be accepted by IRD.
The acquisition is expected to close in the second quarter of
2017, will be completed by way of a statutory plan of arrangement
under the Canada Business Corporations Act, and is subject to court
approval and the approval of at least two-thirds of the votes cast
by holders of IRD's shares at a meeting called for that purpose on
May 24, 2017.
Further information regarding the transaction, copies of the
arrangement agreement, the plan of arrangement, and IRD's
information circular and other related documents will be filed with
the Canadian securities regulators on or about May 1, 2017 and will be available on SEDAR at
www.sedar.com.
Advisors
Sampford Advisors is acting as a financial
advisor to WiLAN; Norton Rose Fulbright Canada LLP is acting as
legal advisor to WiLAN and PricewaterhouseCoopers LLP is acting as
accounting advisors to WiLAN. Duff & Phelps Canada
Limited is acting as financial advisor to the Board of IRD and
McKercher LLP is acting as legal advisor to IRD.
Conference Call Information: April 17, 2017 at
4:30 PM ET
WiLAN will conduct
a conference call to discuss this announcement today at
4:30 PM Eastern Time. WiLAN Executive
Chairman, James Skippen and Interim
CEO, Shaun McEwan will host the call
along with Terry Bergan, President
and CEO of IRD.
Access Information
A live audio webcast will be
available at http://bit.ly/2p2ScSK
- To access the call from Canada
and U.S., dial 1.888.231.8191 (Toll Free)
- To access the call from other locations, dial 1.647.427.7450
(International)
Replay Information
A webcast of the call will be
archived for 90 days and is available at http://bit.ly/2p2ScSK
A replay will also be accessible by telephone until 11:59 PM ET on April 24,
2017.
Replay Number (Toll Free): 1.855.859.2056
Replay Number (International): 1.416.849.0833
Replay Password: 7567329
About IRD
IRD is a highway traffic management
technology company specializing in supplying products and systems
to the global Intelligent Transportation Systems industry.
IRD is a North American company based in Saskatoon, Saskatchewan Canada with sales and
service offices throughout the United
States and overseas. Private corporations,
transportation agencies and highway authorities around the world
use IRD's products and advanced systems to manage and protect their
highway infrastructures.
About WiLAN
WiLAN is one of the most successful patent
licensing companies in the world and helps companies unlock the
value of intellectual property by managing and licensing their
patent portfolios. The Company operates in a variety of markets
including automotive, digital television, Internet, medical,
semiconductor and wireless communication technologies. Founded in
1992, WiLAN is listed on the TSX and NASDAQ. For more information:
www.wilan.com.
Forward-looking Information
This news release contains
forward-looking statements and forward-looking information within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995 and other United States and
Canadian securities laws. Forward-looking statements and
forward-looking information are based on estimates and assumptions
made by WiLAN in light of its experience and its perception of
historical trends, current conditions, expected future developments
and the expected effects of new business strategies, as well as
other factors that WiLAN believes are appropriate in the
circumstances. Many factors could cause WiLAN's actual performance
or achievements to differ materially from those expressed or
implied by the forward-looking statements or forward-looking
information. Such factors include, without limitation, the risks
described in WiLAN's February 10,
2017 annual information form for the year ended December 31, 2016 (the "AIF"). Copies of the AIF
may be obtained at www.sedar.com or www.sec.gov. WiLAN recommends
that readers review and consider all of these risk factors and
notes that readers should not place undue reliance on any of
WiLAN's forward-looking statements. WiLAN has no intention, and
undertakes no obligation, to update or revise any forward-looking
statements or forward-looking information, whether as a result of
new information, future events or otherwise, except as required by
law.
All trademarks and brands mentioned in this release are the
property of their respective owners.
SOURCE Wi-LAN Inc.