Public company to launch Mobile X, a
disruptive new wireless service provider
MINNETONKA, Minn. and LOS ANGELES, June 13,
2022 /PRNewswire/ -- Electro-Sensors, Inc. (Nasdaq:
ELSE), a leader in industrial monitoring systems, and Mobile X
Global, Inc., one of the world's first connectivity-as-a-service
companies, announced today that they have entered into definitive
agreements to merge and re-name the combined company Mobile X
Global, Inc.
Mobile X Global, Inc. will launch Mobile X, a new wireless brand
positioned to disrupt the wireless industry. The merger partners
also expect Mobile X Global's cloud-native platform to enable
synergies between Mobile X and Electro-Sensors' wireless industrial
sensor business.
The definitive merger agreement and related transactions have
been approved by each company's board of directors and are subject
to approval by the shareholders of each company. The
directors, officers, and major shareholders of each company, who
collectively own a majority of the shares of each company, have
entered into agreements obligating them to approve the
transactions.
Shares of the combined company are expected to continue to trade
on the Nasdaq Capital Market under the ticker symbol "MOBX" upon
closing of the merger, expected in the third quarter of 2022.
Launch of Mobile X
In October 2021, Mobile X Global
announced a network access agreement to enable the launch of a new
AI-powered mobile business for wireless customers. The company will
use its proprietary CaaS-AI (Connectivity-as-a-Service-AI)
cloud-native platform, XO.1, and its network agreement, to provide
personalized wireless data, voice, and messaging services,
initially to customers nationwide across the U.S., with a
commercial launch expected later this year. The company expects to
further expand internationally under the Mobile X brand, leveraging
the XO.1 platform capabilities to create a seamless global
connectivity experience for its customers.
Mobile X intends to employ artificial intelligence, machine
learning, and real-time usage information to learn each customer's
unique connectivity requirements and provide optimized individual
pricing, supported by a premier app-enabled experience. The
seamless experience and potential cost savings for the majority of
customers are expected to lead the industry, enabling customers to
pay only for the services they use. The XO.1 platform will allow
customers to seamlessly switch across multiple global networks,
with one number and one service that extends beyond borders.
"This merger, like the one that I engineered to create Digital
Turbine, will position us for rapid growth," stated Peter Adderton, founder and CEO of Mobile X
Global. "We believe the new combined company will also provide the
vehicle for future expansion, so that we can serve a new generation
of borderless consumers and use our proprietary XO.1 platform to
help connect the billions of IoT devices expected worldwide. Mobile
X customers will get unprecedented levels of customized service and
only pay for what they use. We expect to help millions of wireless
customers save money at a time when they really need it."
Merger Structure and Ownership
After the merger, Mobile X Global shareholders are expected to
own approximately 76% of the combined company, Electro-Sensors
shareholders approximately 11%, and new equity investors
approximately 13%, all based on current ownership of the two
companies and $20 million of new
equity financing on the terms in a commitment letter described
below. In addition to their continuing interest in the combined
company, Electro-Sensors shareholders as of a record date to be
determined before the closing will receive special cash dividends
expected to total approximately $18
million, with the actual amount of the dividends subject to
adjustment based on the transaction expenses, working capital
balance, and any indebtedness of Electro-Sensors at
closing.
Cash dividends of $18 million
would be approximately $4.83 per
fully diluted share of Electro-Sensors, whose closing price on
June 10, 2022, was $4.85. In addition, the continuing ownership of
Electro-Sensors' legacy shareholders will give them the opportunity
to participate in the long-term value to be created by the combined
company through Mobile X's planned disruptive entry into wireless
communications, synergies expected from enhancing Electro-Sensors'
wireless sensor business with the capabilities of Mobile X Global's
XO.1 platform, the increased scale of the new organization, and the
sharing of best practices.
In connection with the merger, a third-party institutional
investor has entered into a commitment letter with Mobile X Global
to provide equity financing of up to $20
million upon closing of the merger, subject to diligence and
definitive agreements satisfactory to the investor, including an
agreement for a $50 million equity
line of credit to be provided by the investor. The equity line of
credit will provide significant additional liquidity, at the option
of Mobile X Global.
Electro-Sensors Voting Agreement and Special Meeting of
Shareholders
In connection with the execution of the merger agreement,
Electro-Sensors' directors, officers, and major shareholders, who
collectively own a majority of Electro-Sensors' outstanding shares,
have entered into agreements to vote their shares in favor of the
merger at a special meeting of shareholders to be held before the
closing on a date to be announced.
Closing will follow the special meeting of shareholders of
Electro-Sensors, consent of shareholders of Mobile X Global, and
satisfaction of other customary closing conditions, including the
U.S. Securities and Exchange Commission (the "SEC") having declared
effective a registration statement, and The Nasdaq Stock Market
having approved the listing of the common stock of the combined
company.
David Klenk, CEO of
Electro-Sensors, said, "We believe this merger will be very good
for the customers, employees and shareholders of Electro-Sensors.
Our shareholders will receive a significant cash dividend and
retain a meaningful share of an exciting platform company that we
expect will also create new opportunities for our sensor
business."
Other Information about the Merger and Related
Transactions
The transaction is structured as a statutory reverse triangular
merger under Delaware and
Minnesota law, under which a newly
formed subsidiary of Electro-Sensors, Inc. will be merged with and
into Mobile X Global, Inc., with Mobile X Global, Inc. surviving
the merger and becoming a wholly owned subsidiary of
Electro-Sensors, Inc. Electro-Sensors, Inc. will reincorporate in
Delaware, be re-named Mobile X
Global, Inc., and operate both the new Mobile X wireless business
and the Electro-Sensors business.
Additional information about the proposed transaction, including
a copy of the merger agreement, will be provided in a Current
Report on Form 8-K to be filed by Electro-Sensors with the SEC and
made available at www.sec.gov. More information about the proposed
transaction will also be described in Electro-Sensors' registration
statement and related documents relating to the merger, which it
will file with the SEC.
Management and Governance
Upon closing of the merger, Peter
Adderton, chairman and chief executive officer of Mobile X
Global, will become the chairman and chief executive officer of the
combined company. Mr. Adderton has decades of experience creating
and operating digital platform businesses, including his former
roles with Digital Turbine (Nasdaq: APPS), which currently has a
market capitalization of approximately $1.7
billion and mobile virtual network operator (MVNO) Boost
Mobile. Mobile X Global's management team has decades of experience
operating large telecom providers and rapidly scaling private and
public companies. Mobile X Global and Electro-Sensors are committed
to retaining Electro-Sensors' existing employees and customers.
Senior management of Electro-Sensors is expected to continue and
assist in the integration of the combined company and the operation
of the existing sensor business.
When the transaction closes, the current directors of
Electro-Sensors will resign, and the Board of Directors of the
combined company will initially consist of five members appointed
by Mobile X Global.
Advisors
B. Riley Securities is financial advisor and Proskauer Rose LLP
is legal counsel to Mobile X Global on the transactions. Lake
Street Capital Markets is financial advisor and Ballard Spahr, LLP is legal counsel to
Electro-Sensors for the transactions.
About Mobile X Global, Inc.
Mobile X Global, Inc., one of the world's first
connectivity-as-a-service-AI companies, is a new entrant in the
global mobile industry founded by Peter
Adderton, who also founded Boost Mobile and Digital Turbine
(Nasdaq: APPS). Mobile X Global plans to launch a new mobile brand
called Mobile X in the U.S. in 2022, designed to attract displaced
and mistreated wireless customers by offering simple, great value
prepaid wireless services and experiences. Enabled by a network
access agreement with a major carrier and supported by Mobile X
Global's proprietary XO.1 cloud platform and an AI-powered
on-device application, Mobile X will offer each customer their own
unique service and ensure they only pay for what they use.
About Electro-Sensors, Inc.
Electro-Sensors, Inc. is an industry leading designer and
manufacturer of rugged and reliable machine monitoring sensors and
wireless/wired hazard monitoring systems applied across multiple
industries and applications. These products improve processes by
protecting people, safeguarding systems, reducing downtime, and
preventing waste. Electro-Sensors is proud to be an ISO9001:2015
quality certified company and is committed to providing excellent
customer service and technical support. Founded in 1968 and located
in Minnetonka, Minnesota,
Electro-Sensors provides its loyal customers with reliable products
that improve safety and help plants operate with greater
efficiency, productivity, and control.
Important Information and Where to Find It
A full description of the terms of the transaction will be
provided in a proxy statement/prospectus/consent solicitation
statement included in a Form S-4 Registration Statement that
Electro-Sensors will file with the SEC. ELECTRO-SENSORS URGES
INVESTORS, SHAREHOLDERS AND OTHER INTERESTED PERSONS TO READ, WHEN
AVAILABLE, THE PROSPECTUS/PROXY STATEMENT/CONSENT SOLICITATION
STATEMENT AS WELL AS OTHER DOCUMENTS FILED WITH THE SEC BECAUSE
THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT
ELECTRO-SENSORS, MOBILE X GLOBAL, AND THE PROPOSED TRANSACTIONS.
When final, the definitive proxy statement will be mailed to
Electro-Sensors' shareholders as of a record date to be established
for voting on the proposed transaction, and a definitive consent
solicitation statement will be sent to the Mobile X shareholders.
Shareholders will also be able to obtain a copy of the documents
(when available), without charge, by directing a request to:
Electro-Sensors, Inc., 6111 Blue Circle Drive, Minnetonka, MN 55343. These documents, once
available, can also be obtained, without charge, at the SEC's
website (www.sec.gov).
Participants in the Solicitation
Electro-Sensors, Inc., Mobile X Global, Inc., and their
respective directors and executive officers may be considered
participants in the solicitation of proxies by Electro-Sensors,
Inc. in connection with the proposed transaction. Information about
the directors and executive officers of Electro-Sensors, Inc. is
set forth in its Annual Report on Form 10‐K for the fiscal year
ended December 31, 2021, and its 2022
Proxy Statement, which were filed with the SEC on March 31, 2022. Information regarding the persons
who may, under SEC rules, be deemed participants in the
solicitation of proxies from Electro-Sensors' shareholders in
connection with the proposed merger will be included in the
definitive proxy statement/prospectus that Electro-Sensors intends
to file with the SEC.
Non‐Solicitation
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of that jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, or an exemption therefrom.
Forward Looking Statements
This press release includes certain forward‐looking statements
concerning Electro-Sensors, Mobile X Global and the proposed
transactions within the meaning of the Private Securities
Litigation Reform Act of 1995, including, but not limited to,
statements regarding future financial performance, future growth,
and the development of future products and services; the benefits
of the proposed transactions, including anticipated growth and
synergies; the combined company's plans, objectives and
expectations and intentions; the expected timing of the proposed
transactions; and future acquisitions. These statements are based
on current expectations or beliefs and are subject to uncertainty
and changes in circumstances. There can be no guarantee that the
proposed transactions described in this press release will be
completed, or that they will be completed as currently proposed, or
at any particular time. Actual results may vary materially from
those expressed or implied by the statements here due to changes in
economic, business, competitive or regulatory factors, and other
risks and uncertainties affecting the operation of Electro-Sensors
as well as the business of Mobile X Global. Many of these risks,
uncertainties and contingencies related to Electro-Sensors are
presented in Electro-Sensors' Annual Report on Form 10‐K and, from
time to time, in Electro-Sensors' other filings with the SEC. These
and other risks related to the business of Mobile X Global will be
presented in the proxy statement/prospectus/consent solicitation
statement to be filed with the SEC.
The information here should be read considering these risks and
the following considerations: the ability of the merger parties to
obtain definitive investment documents and close on the equity
investments necessary to complete the merger; the ability of
Mobile X to successfully launch its business, attract subscribers,
and achieve the levels of customer service, revenues and costs that
it currently expects; the ability of the combined company to
successfully maintain a Nasdaq Capital Market listing; the ability
of the combined company to successfully access the capital markets
to finance expansion and acquisitions; the ability of the combined
company to identify and acquire appropriate acquisition targets and
successfully integrate these companies into its operations; the
ability of the combined company to achieve synergies between its
legacy sensor business and its new Mobile X business; the
conditions to the closing of the merger may not be satisfied or an
event, change or other circumstance could occur that could give
rise to the termination of the merger agreement; the merger may
involve unexpected costs, liabilities or delays, resulting in the
merger not being consummated within the expected time period; risks
that the announced merger may disrupt current Electro-Sensors plans
and operations or that the business or stock price of
Electro-Sensors may suffer as a result of uncertainty surrounding
the merger; the outcome of any legal proceedings related to the
merger; and Electro-Sensors or Mobile X Global may be adversely
affected by other economic, business, or competitive factors.
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SOURCE Mobile X Global, Inc.