MONTREAL, May 3 /CNW/ -- MONTREAL, May 3 /CNW Telbec/ - Following
the execution of a non-binding proposal on March 4, 2011, iWeb
Group Inc. (TSXV: IWB) ("iWeb"), a global provider of Internet
hosting services and IT infrastructure, announces today that it has
entered into a merger agreement (the "Merger Agreement") with
7807201 Canada Inc. (the "Purchaser") and 7807210 Canada Inc.
("Newco"), two corporations controlled directly or indirectly by
Novacap Technologies III, L.P., Caisse de dépôt et placement du
Québec and an investment vehicle affiliated with Bank Street
Capital Partners and certain of their affiliates, in order to
effect an amalgamation of iWeb with Newco
(the "Amalgamation"). Pursuant to the Amalgamation, each
holder (the "Shareholders") of common shares of iWeb, except
for part of or all of the common shares held by the Principal
Shareholders (as defined below) and FONDACTION (as defined below),
will receive one redeemable preferred share (an "Amalco Redeemable
Share") of the amalgamated company ("Amalco") for each common share
held immediately prior to the Amalgamation. Each Amalco Redeemable
Share will be redeemed immediately upon the Amalgamation for a cash
consideration of $1.50 (the "Redemption Price"). The
Redemption Price to be received by the Shareholders under the
Amalgamation represents a premium of 45.6% and of 31.5% to the
volume weighted average trading price of the common shares on the
TSX Venture Exchange (the "TSXV") for the respective 60
and 20 days ending on March 3, 2011, being the trading
day prior to the announcement of the non-binding proposal review
process. The transaction, which values iWeb's equity at
approximately $47 million, will be implemented by way of an
amalgamation under the Canada Business Corporations Act and is
subject to customary conditions precedent, including approval of
the Amalgamation by the Shareholders. Under the Merger Agreement,
iWeb has agreed not to solicit competing acquisition proposals but
has retained the ability to consider unsolicited acquisition
proposals which the board of directors of iWeb (the "Board")
believes, in the exercise of its fiduciary duties, constitute or
could reasonably be expected to lead to a superior proposal and to
make a change of recommendation in the event of a superior
proposal, subject to the Purchaser's right to match, and payment of
a break-fee of $3 million. Expenses of the Purchaser incurred in
connection with the Amalgamation (not to exceed $700,000) shall be
paid by iWeb should, among others, the required number of votes of
the Shareholders (as more fully described below) not be obtained.
Éric Chouinard, Martin Leclair and Robert Brouillette
(the "Principal Shareholders") holding, in the aggregate,
18,321,349 common shares, representing approximately 63.48% of
the currently outstanding common shares of iWeb, have agreed,
pursuant to support and voting agreements with the Purchaser, to
irrevocably support and vote in favour of the Amalgamation.
Pursuant to their support and voting agreements, the Principal
Shareholders cannot agree to or contemplate any competing
transaction until 120 days from the date of the Merger Agreement in
accordance with its terms. Various other Shareholders of the public
holding, in the aggregate, 2,311,161 common shares, representing
approximately 8,01% of the currently outstanding common shares,
have also agreed, pursuant to support and voting agreements with
the Purchaser, to irrevocably support and vote in favour of the
Amalgamation. Pursuant to their support and voting agreements, such
shareholders cannot agree to or contemplate any competing
transaction until 120 days from the date of the Merger Agreement in
accordance with its terms. Finally, Messrs. Martin Cauchon and
Daniel Leclair, members of the Board's special committee (the
"Special Committee") holding, in the aggregate 133,000 common
shares of iWeb, have agreed, pursuant to support and voting
agreements with the Purchaser, to support and vote in favour of the
Amalgamation. Pursuant to their support and voting agreements, such
shareholders cannot agree to or contemplate any competing
transaction unless the Merger Agreement is terminated or if the
Board approves or recommends or publicly proposes to or publicly
states that it intends to approve or recommend another acquisition
proposal. As part of the transactions contemplated in the Merger
Agreement, the Principal Shareholders and Fondaction, le Fonds de
développement de la Confédération des syndicats nationaux pour la
coopération et l'emploi ("Fondaction") will exchange, immediately
prior to the Amalgamation, part or all, as the case may be, of
their common shares of iWeb for shares of the Purchaser. The
Amalgamation was considered at length by the Board and was approved
unanimously thereby (with Messrs. Chouinard, Leclair and
Brouillette abstaining) following the report and a favourable
unanimous recommendation of the Special Committee comprised of
three independent members of the Board, namely René Bousquet
(Chair), Martin Cauchon and Daniel Leclair. In doing so, the Board
determined that, without consideration as to the interests of the
Principal Shareholders and Fondaction, the Amalgamation is fair to
the remaining Shareholders (the "Public Shareholders"), and in
the best interests of iWeb, and authorized the submission of the
Amalgamation to the Shareholders for their approval. The Board has
also determined unanimously (with interested directors abstaining)
to recommend to the Public Shareholders that they vote in favour of
the Amalgamation. In making their respective determinations, the
Board and the Special Committee considered, among other things, a
fairness opinion from ModelCom Inc. ("ModelCom") to the effect
that, as of May 3, 2011, and based upon and subject to the
limitations, assumptions and qualifications contained therein, the
Redemption Price is fair, from a financial point of view, to the
Public Shareholders. A copy of the fairness opinion will be
included in the management information circular that will be sent
to the Shareholders in connection with the special meeting of
Shareholders to consider the Amalgamation which is expected to take
place in Montréal on June 13, 2011. Copies of the management
information circular, the Merger Agreement, the amalgamation
agreement, the support and voting agreements and certain related
documents will be filed with Canadian securities regulators and
will be available on SEDAR at www.sedar.com as part of iWeb public
filings. The management information circular in connection with the
special meeting of Shareholders to consider the Amalgamation is
expected to be mailed to Shareholders in the coming days.
Furthermore, the Board considered the following reasons for its
recommendation: Significant Premium The Redemption Price to be
received by the Shareholders under the Amalgamation represents a
premium of 25% over the closing price of $1.20 per share on March
3, 2011, and a premium of 45.6% and 31.5% respectively, over the
60-day and 20-day volume weighted average trading price on the TSXV
for the periods ended on March 3, 2011, being the last trading
day prior to iWeb's announcement of its receipt of a non-binding
offer from Novacap. Extensive Review Process In the course of the
last months, the Board and iWeb's management initiated a number of
actions to identify and assess strategic and financial options
available to iWeb for delivering its business plan and maximizing
shareholder value. To assist iWeb in this process, the Board
retained the services of DH Capital Partners Inc. During its
mandate, the Special Committee reviewed each of these options in
light of the proposed Amalgamation. Realize Immediate Value and
Liquidity and All-Cash Consideration The all-cash consideration
offered in the Amalgamation permits the Shareholders to immediately
realize fair value without incurring the inherent risks of iWeb's
business plan or the risks of the market volatility inherent in
technology stocks generally. iWeb's shares are thinly traded and
the Amalgamation provides immediate liquidity to all Shareholders.
Fairness Opinion ModelCom provided the Board and the Special
Committee with a written opinion to the effect that, as of
May 3, 2011, and based upon and subject to the limitations,
assumptions and qualifications contained therein, the consideration
to be received by the Shareholders under the Merger Agreement is
fair, from a financial point of view, to the Public Shareholders.
Strong Support from Shareholders Shareholders which beneficially
own, directly or indirectly, or exercise control or direction over,
in the aggregate, 20,826,310 common shares of iWeb as at
May 3, 2011, which represent approximately 72.16% of the
outstanding common shares of iWeb, have expressed their intention,
under the support and voting agreements, to vote in favour of the
Amalgamation. These Shareholders include members of iWeb's
management, its founders, members of the Special Committee and
various Public Shareholders. Reasonableness of the Merger Agreement
The terms and conditions of the Merger Agreement were reviewed by
the members of the Special Committee in consultation with its legal
advisors and were determined to be fair and reasonable in the
particular circumstances of the Amalgamation. Such terms and
conditions are the result of arm's length negotiations between iWeb
and the Purchaser. The Special Committee has been kept informed of
the negotiations at all times and had the opportunity to provide
its comments to the parties. Low Execution Risk There are no
regulatory issues which are expected to arise in connection with
the Amalgamation and prevent its completion. The Amalgamation is
not subject to further due diligence on the part of the Purchaser.
Ability to Respond to Superior Proposals Under the Merger
Agreement, the Board maintains the ability to consider and respond,
in certain circumstances and in accordance with its fiduciary
duties, to unsolicited proposals that would be more favourable to
Shareholders from a financial point of view than the Amalgamation.
The termination fee payable to the Purchaser in certain
circumstances involving superior proposals is, in the Board's
judgment, reasonable in the context of break-up fees negotiated in
other transactions and the particular circumstances of the
Amalgamation. BCF LLP is acting as legal counsel to iWeb and Jarry
Bazinet is acting as legal counsel to the Special Committee. Fasken
Martineau DuMoulin LLP is acting as legal counsel to the Purchaser.
Gowling, Lafleur, Henderson LLP is also acting as legal counsel to
Caisse de dépôt et placement du Québec and Goodwin Procter LLP is
acting as legal counsel to BSCP IW Holdings, LLC. ModelCom is
acting as financial advisor to the Special Committee. Subject to
receiving the required Shareholder approval and the satisfaction of
the other customary conditions, it is anticipated that the
Amalgamation, if approved by the Shareholders, will be completed
shortly after the special meeting of Shareholders and that full
payment of $1.50 per share will be effected at that time. About
iWeb iWeb provides Internet hosting services and IT infrastructure
to more than 24,000 customers in 150 countries. With its four
data centers, iWeb's total capacity has reached 34,000 dedicated
servers, over 1,100 co-location cabinets and 77 Gigabits per
second (Gbps) of Internet connectivity, from 9 separate providers.
One of Canada's 100 fastest growing companies according to PROFIT
Magazine, iWeb now generates more than 60% of its revenues, which
reached US$29 millions in 2010, from abroad. Founded in 1996
in Montreal, iWeb shares are traded on the TSXV under the symbol
"IWB". About Novacap With over $750 million in assets under
management, Novacap is one of Canada's leading private equity and
venture capital firms. Since 1981, its partnership strategy has
helped over 50 companies accelerate growth and maximize value.
Novacap is one of North America's top private equity firms, with
first-quartile returns in North America. About Caisse de dépôt et
placement du Québec The Caisse de dépôt et placement du Québec is a
financial institution that manages funds primarily for public and
private pension and insurance plans. As at December 31, 2010, it
held $151.7 billion in net assets. As one of Canada's leading
institutional fund managers, the Caisse invests in major financial
markets, private equity and real estate. About Bank Street Capital
Partners Bank Street Capital Partners is a private equity fund
focused on growth equity, acquisition finance, and special
situations for small and mid-size growth companies in the
Communications, Media and Technology sectors. Bank Street Capital
Partners is led by a senior investment team that has originated,
structured, and executed more than 1,000 financial and strategic
transactions during the course of their careers. Bank Street
Capital Partners leverages the extensive resources of The Bank
Street Group. Forward-Looking Statements Except for historical
information provided herein, this press release contains
"forward-looking statements" within the meaning of the applicable
securities legislation regarding the proposal to privatize iWeb,
including the statement regarding the terms of the proposed
transaction. Therefore, readers are cautioned not to place undue
reliance on forward-looking statements. Forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
iWeb to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements in this press release. These risks and
uncertainties include, but are not limited to, the satisfaction of
the conditions to consummate the Amalgamation, including the
approval of the Amalgamation Resolution by the Shareholders, the
occurrence of any event, change or other circumstances that could
give rise to termination of the Merger Agreement, a delay in the
consummation of the Amalgamation or failure to complete the
Amalgamation for any other reason, the amount of the costs, fees,
expenses and charges related to the Amalgamation, and the risks
associated with general economic conditions. The forward-looking
statements in this press release are made as of the date of this
press release and, except as required by law, iWeb disclaims any
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information or future
events. To view this news release in HTML formatting, please use
the following URL:
http://www.cnw.ca/en/releases/archive/May2011/03/c9146.html p
Philip Tousignantbr/ Chief Financial Officerbr/ iWeb Group Inc.br/
(514) 286-4242 ext. 2149br/ a href="mailto:ptousignant@iweb.com"
cr="true"ptousignant@iweb.com/a /p p align="justify" Stéphane
Josebr/ Communications officerbr/ (514) 286-4242 ext. 2114br/ a
href="mailto:sjose@iweb.com" cr="true"sjose@iweb.com/a /p
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