Scientific Technologies Inc. Announces Agreement to Sell Its Safety Products Group to Omron Corporation Through a Corporate Mer
April 25 2006 - 4:40AM
Business Wire
Scientific Technologies Inc. ("STI" or the "Company") (NASDAQ:STIZ)
announced today that it had entered into a definitive agreement
with Omron Corporation ("Omron") whereby Omron will acquire the
Safety Products Group ("SPG") of STI. STI has also separately
entered into an agreement to sell its Automation Product Group
("APG") to a new company formed by members of the Lazzara family
who currently serve as officers and directors of STI. The estimated
value of the transaction is comprised of $94 million for SPG, $6
million for APG, plus an estimate for certain corporate assets,
including cash net of certain liabilities and estimated transaction
related expenses. In total, STI estimates that the transactions
would value the equity of the company at approximately $107
million, or approximately $10.76 per basic share. The Board of
Directors of STI has unanimously approved STI's entry into the
merger agreement with Omron and will recommend that the
shareholders of STI vote to approve the merger. The closing of the
transaction is subject to customary conditions, including
regulatory review, shareholder approval and the lack of a material
adverse change with respect to the company's SPG business. The sale
of the SPG business to Omron is conditioned upon a separate sale of
the Company's APG business. Pursuant to a process managed by an
independent committee of STI's Board of Directors, the Company has
agreed to sell the APG business to a new company formed by the
Lazzara family. As part of its agreement to sell APG, the
independent committee has contractually reserved the right to
consider superior offers for the APG business. The closing of each
transaction is expected to occur by the end of the third calendar
quarter of 2006 and the agreements may be terminated if a closing
has not occurred by September 30, 2006. Mr. Joseph J. Lazzara,
President and Chief Executive Officer of STI, said, "We are very
pleased to have come to this agreement with Omron Corporation. We
believe the Company will benefit enormously from the global reach
and substantial capital and technology resources that Omron brings
to STI. Our customers will benefit from having the best, most
technologically advanced suite of industrial safety and factory
automation products from which to choose." "In addition, Omron's
global presence will better enable the Company to bring its
products to customers on a worldwide basis. Furthermore, this is
clearly a win- win transaction, as STI's leadership position in the
safety market and our extensive regional sales and distribution
channels in North America will further enhance Omron's reach within
this important market. We believe this transaction enhances the
ability of the Company to live up to its motto of 'making people
safe and productive' on a global basis." After the closing of the
merger, STI will be part of Omron Management Center of America,
Inc., Omron's North American holding company. It will also report
business and financial results through Omron Electronics LLC to
Omron's Industrial Automation business, the largest business
segment within Omron. Mr. Fumio Tateisi, Executive Vice President
of Omron Corporation and President of Omron's Industrial Automation
Business, said, "Together, Omron and STI will create a global
safety equipment supplier of safety, sensing and control
technologies that satisfies customers' demands for not just labor
productivity but also product quality, employee safety, and
environmental friendliness. By acquiring the Safety Products Group
of STI, we will be able to offer a wider range of cutting-edge
safety products and consultancy services to our customers." The
operations of STI's Safety Products Group will remain in Fremont
and Anaheim, California. Mr. Lazzara added, "From our modest
beginnings, STI has grown to become the leading provider of safety
automation products and services in North America. We are very
proud of our accomplishments, but realize that as our markets
become more global, STI would be able to achieve greater success if
it could become part of a larger, global automation supplier
organization. Omron is that organization." Mr. Lazzara also said,
"In addition, it has become increasingly more expensive to remain a
small public company, particularly with the high costs associated
with the regulatory environment post-Sarbanes Oxley. For example,
we estimate that it costs us more than $1 million dollars a year
just to be a public company, money that we cannot use for other
purposes, such as investing in new products and services and
growing our company." Mr. Lazzara concluded, "Accordingly, when we
received a proposal from a large strategic buyer last fall, we
engaged financial and legal advisors to analyze our strategic
alternatives with a goal to maximize value for all shareholders. We
are pleased that this competitive process resulted in a value that
we estimate will provide shareholders a 40% premium over the stock
price as of the end of March and a 30% premium over the average
closing stock price over the past 30 trading days." As part of the
merger, Omron has made it a condition that the Automation Products
Group, based in Logan, Utah, be sold separately. Accordingly,
representatives of the Lazzara family have agreed to purchase APG
for $6 million. The Lazzara family also controls Scientific
Technology Inc., which owns 86% of STI. An independent committee of
the STI Board of Directors was formed, consisting of independent
directors unrelated to the Lazzara family, to oversee the sale of
the APG business. Using the company's financial advisor as agent, a
number of proposals were solicited to acquire the APG business with
the Lazzara family participating in the bidding process on an
arms-length basis. The independent committee evaluated all offers
received and reached the determination that the offer from the
Lazzara family was superior in terms of the value offered for the
APG business. The definitive agreement for the APG business
provides that the independent committee may consider superior
offers for the APG business; however, no assurances can be made
that a superior offer for the APG business can be obtained on
acceptable terms. Omron has made it a condition to the closing of
the merger not only that the APG business be sold but also that any
sale of the APG business be completed on a "where is, as is" basis.
The terms of the transaction are outlined in detail in the stock
purchase agreement between Omron and Scientific Technology Inc. and
the merger agreement between Omron and STI. The terms of the sale
of the APG business are outlined in detail in the APG stock and
asset purchase agreement. These agreements will be filed with the
SEC and incorporated by reference in proxy statements and other
documents to be filed with the SEC regarding the merger. Wilson
Sonsini Goodrich & Rosati, Professional Corporation acted as
legal advisor and The Spartan Group LLC acted as financial advisor
to STI. About Omron Corporation Omron Corporation, headquartered in
Kyoto, Japan, is a global leader in the field of automation with
approximately $6 billion in annual revenues. Established in 1933
and headed by President and CEO Hisao Sakuta, Omron has more than
26,000 employees in 35 countries working to provide products and
services to customers in a variety of fields including industrial
automation, electronic components, social systems (ticket gate
machines, ticket vending machines and traffic control) and
healthcare. Further information on Omron is located at
www.omron.com. About Scientific Technologies Inc. Scientific
Technologies Inc. ("STI") is a North American leading provider of
automation safeguarding products and services through its Safety
Product Group ("SPG"). STI's Optical Sensor Division ("OSD"), part
of the SPG, provides safety products that are used to protect
workers around machinery, automated equipment and industrial
robots. STI's products serve a wide variety of applications and
markets, including semiconductor, automotive, electronics
manufacturing, packaging and consumer markets. OSD also
manufactures sensors used in factory automation and vehicle
separating systems. STI's Machine Services Division ("MSD"), also
part of the SPG, provides safety services such as safeguarding
equipment installations, machine safety assessments, and the design
and custom fabrication of guarding solutions. MSD specializes in
machinery services including the repair, relocation, installation
and service of fabrication machinery. MSD serves customers in a
variety of industries, including metal fabrication, aerospace,
electronics, building materials, automotive and food processing.
Further information on SPG is located at www.sti.com and
www.stiscanners.com. STI's Automation Products Group ("APG") serves
the factory automation, semiconductor, transportation, oil and gas,
consumer and food processing industries with a diversified offering
of sensing technologies. Products include level, flow, pressure
sensing, positioning transducers, and ultrasonic sensors and
controls. Further information is available at APG's web site
located at www.automationsensors.com. STI is controlled by a parent
company, Scientific Technology Inc., that owns approximately 86% of
its common stock. Scientific Technology Inc. is controlled by
members of the Lazzara family. Additional Information and Where to
Find It STI intends to file a proxy statement in connection with
the proposed transactions, a copy of which will be mailed to the
shareholders of STI. STI'S shareholders are urged to read the proxy
statement and other relevant materials when they become available
because they will contain important information about the proposed
transactions. Investors and security holders may obtain free copies
of these documents (when they are available) and other documents
filed with the Securities and Exchange Commission (the "SEC") at
the SEC's web site at www.sec.gov. In addition, investors and
security holders may obtain free copies of the documents filed with
the SEC by STI by going to STI's Investor Relations page on its
corporate website at www.sti.com/financial/index.htm, by contacting
STI in writing at 6550 Dumbarton Circle, Fremont, California 94555
or by calling STI at (510) 608-3400. In addition to the proxy
statement, STI files annual, quarterly and current reports, proxy
statements and other information with the SEC. A copy any such
reports, statements or other information filed by the Company are
available at the SEC public reference rooms. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
rooms. The Company's SEC filings are also available to the public
from commercial document-retrieval services and at the website
maintained by the SEC at http://www.sec.gov. In addition, STI and
its officers and directors may be deemed to be participants in the
solicitation of proxies from STI's shareholders with respect to the
proposed transactions. A description of any interests that STI's
officers and directors have in the acquisition will be available in
the proxy statement. Information concerning STI's directors and
executive officers is set forth in STI's definitive proxy statement
for its 2005 Annual Meeting of Shareholders filed with the SEC on
April 25, 2005. Updated information about STI's directors and
executive officers will be included in the proxy statement that STI
intends to file in connection with this transaction. Cautionary
Statement About Forward-Looking Statements Statements in this news
release that are not historical facts are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements include, but
are not limited to, statements regarding the value of the
transactions, conditions to closing, the consideration of superior
offers, if any, relating to the sale of the APG business, expected
timing of the closing, expected benefits of the merger, structure
post-closing, combined market and product offerings, and
anticipated shareholder premiums. Readers are cautioned that these
forward looking statements involve certain risks and uncertainties.
These risks and uncertainties, which could cause STI's results to
differ materially from the forward looking statements include:
economic and political conditions in domestic and international
markets; declining market demand for industrial safety and security
products generally; introduction or increased demand for
alternative products; potential errors, defects, design flaws or
other problems with STI's products; changes in regulations
regarding industrial safety and security products; and other risks
detailed from time to time in STI's Security and Exchange
Commission filings and reports, including STI's annual report filed
on Form 10-K and quarterly reports filed on Form 10-Q. STI
disclaims any obligation to update any information contained in any
forward looking statement.
Scientific Technologies (NASDAQ:STIZ)
Historical Stock Chart
From May 2024 to Jun 2024
Scientific Technologies (NASDAQ:STIZ)
Historical Stock Chart
From Jun 2023 to Jun 2024