North American Design Firms Stantec and The Keith Companies to Combine
April 14 2005 - 6:15PM
PR Newswire (US)
North American Design Firms Stantec and The Keith Companies to
Combine Stantec to Obtain US Listing EDMONTON, Alberta and IRVINE,
Calif., April 14 /PRNewswire-FirstCall/ -- Stantec (TSX: STN) and
The Keith Companies (NASDAQ:TKCI) announced today that they have
entered into an agreement to combine the two firms. The agreement,
which has been approved by the boards of directors of Stantec and
The Keith Companies (TKC), will help both companies realize
strategic business goals benefiting employees, clients, and
shareholders. TKC shareholders will receive approximately US$22.00
per share in cash, Stantec common shares, or a combination of cash
and Stantec common shares. The transaction is expected to be
accretive to Stantec's earnings while significantly strengthening
the firm's presence in the US by adding 10 locations throughout
southern California and approximately 850 employees. TKC also has
offices in Portland, Oregon; Las Vegas, Nevada; Phoenix, Arizona;
Houston, Texas; Salt Lake City, Utah; and Ann Arbor, Michigan.
Stantec provides professional design and consulting services in
planning, engineering, architecture, surveying, and project
management and has over 4,200 employees in 50 locations throughout
North America. Summary of the Transaction * Stantec will acquire
TKC through a merger of TKC into a wholly owned US subsidiary of
Stantec. * Pursuant to the merger agreement, each share of TKC
common stock will be exchanged for the following: - US$11.00 in
cash - 0.23 Stantec shares (which was worth US$5.33 based on
Stantec's closing price on April 14, 2005), and - US$5.50 worth of
Stantec shares to be calculated by dividing US$5.50 by the simple
average of the weighted average sales price of the Stantec common
shares on the Toronto Stock Exchange (TSX) for each of the 20
trading days ending on the second trading day prior to the closing
of the merger, converted into US dollars for each trading day at
the noon buying rate quoted by the Federal Reserve Bank of New York
on such trading day. * TKC shareholders will have the option to
elect to receive their merger consideration in cash, Stantec common
shares, or a combination of cash and Stantec common shares, in each
case subject to proration. * In connection with the merger
agreement Stantec will become a US Securities and Exchange
Commission (SEC) registrant and on completion of the transaction,
Stantec's common shares will be listed on both the Toronto Stock
Exchange (TSX) and a major US stock exchange. * The transaction is
subject to customary conditions, including approval of the
transaction by TKC's shareholders and expiration of the waiting
period under the Hart Scott Rodino Act. Stantec's shareholders will
not be required to vote on the transaction. * Stantec has entered
into a shareholder support agreement with TKC's Chairman &
Chief Executive Officer whereby he has agreed to vote his shares of
TKC common stock in favor of the merger. * The merger agreement
contemplates that Aram Keith, TKC Chairman & CEO will become a
director of Stantec following completion of the transaction. * In
certain circumstances, TKC will pay Stantec a breakup fee in the
amount of US$3 million plus expenses if TKC terminates the merger
agreement. * The transaction is expected to close in the third
quarter of 2005. "The addition of TKC will increase the revenue of
our operations in the United States by approximately seventy per
cent -- based on 2004 numbers," says Tony Franceschini, Stantec
President & CEO. "The combination of Stantec and TKC will make
up one of the most diversified design firms in North America and a
leading urban land development services group." In 2004 TKC's gross
revenues were US$105.3 million (C$137.7 million) and Stantec's
gross revenues were C$520.9 million (US$398.4 million). "With TKC,
Stantec will gain a strong presence in California -- a key market
in North America -- and an opportunity to lever this local base to
cross sell our public sector services in Transportation and
Environment," adds Franceschini. "This is a key strategic move in
our plan to become a top 10 global design firm." Stantec provides
professional design and consulting services in planning,
engineering, architecture, surveying, and project management and
supports public and private sector clients in a diverse range of
markets, at every stage, from initial concept and financial
feasibility to project completion and beyond. Stantec's services
are offered through more than 4,200 employees operating out of
approximately 50 locations in North America and the Caribbean.
"This is an exciting transaction for The Keith Companies'
employees, clients, and shareholders," says Aram Keith, TKC
Chairman and CEO. "Joining Stantec will substantially accelerate
our growth plans and make TKC a part of a North American firm with
a widely diversified service offering. Our employees will have
access to more service specialists, experts, and greater
technological resources while our clients will gain access to a
wider range of services." "Our shareholders will receive an
immediate premium upon the close -- Stantec's offer represents an
approximate 30% premium to TKC's closing price on April 14 -- and
they will have the opportunity to reinvest in the combined company
and take advantage of the revenue and cost synergies that should
result from the combination," adds Keith. TKC, headquartered in
Irvine, California is a multi-disciplined engineering and
consulting services company. With approximately 850 staff, TKC
provides a wide spectrum of skilled resources including land
planning, engineering, surveying, mapping, environmental studies,
and water and cultural resources. Additionally, TKC provides
mechanical, electrical, chemical, power/energy engineering, and
other industrial engineering services to design and improve the
efficiency and reliability of automated and manufacturing
processes, production lines, and fire protection systems. TKC
benefits from a diverse public and private client base varying from
residential and commercial real estate projects to institutional,
manufacturing, and processing facilities. In connection with the
transaction, Stantec plans to list its shares on a major US stock
exchange, while maintaining its listing on the Toronto Stock
Exchange. The issuance of Stantec shares in connection with the
transaction is also subject to the approval of the TSX. The TSX has
neither approved nor disapproved the contents of this release.
Conference Call for Analysts and Investors The management teams
from Stantec and TKC will be holding a conference call for analysts
and investors to discuss the proposed acquisition. The call will be
held tomorrow morning (Friday, April 15) at 8:00 AM EDT (6:00 AM
MDT - 5:00 AM PDT). The live discussion can be accessed by dialing
(800) 374-1207. A webcast of the analyst and investor conference
call will also be available on the Internet at
http://www.stantec.com/keithco, http://www.keithco.com/, and
http://www.stantec.com/. There will be a replay of the webcast
available on the websites for those shareholders and analysts who
are unable to listen to the live call. Additional Information and
Where to Find It In connection with the proposed transaction,
Stantec and TKC will file a Registration Statement on Form F-4, a
joint proxy statement/prospectus and other related documents with
the Securities and Exchange Commission (the "SEC"). Stockholders of
Stantec and TKC are advised to read these documents when they
become available because they will contain important information.
Stockholders of the companies may obtain copies of these documents
for free, when available, at the SEC's website at
http://www.sec.gov/. These and such other documents may also be
obtained for free from: Stantec 10160-112 Street Edmonton, Alberta,
Canada, T5K 2L6 Phone: (780) 917-7000 Fax: (780) 917-7330 And from:
The Keith Companies 19 Technology Drive Irvine, California, USA
92618-2334 Phone: (949) 923-6000 Fax: (949) 923-6121 Stantec and
TKC and their respective directors, executive officers and other
members of their management and employees may be deemed to be
participants in the solicitation of proxies in connection with
Stantec's proposed acquisition of TKC. Information regarding the
special interests of these directors and executive officers in the
transaction described herein will be included in the joint proxy
statement/prospectus described above. Additional information
regarding Stantec's directors and executive officers is also
included in its management information circular for its 2005 Annual
Meeting of Shareholders, which was filed with the applicable
securities commissions in Canada on or about March 31, 2005 and is
available free of charge at the Canadian Securities Administrators'
web site at http://www.sedar.com/ or by contacting Stantec at the
address or telephone number set forth above. Additional information
regarding TKC's directors and executive officers is also included
its proxy statement for its 2005 Annual Meeting of Stockholders,
which was filed with the SEC on or about April 12, 2005 and is
available free of charge at the SEC's web site at
http://www.sec.gov/ or by contacting TKC at the address or
telephone number set forth above. Cautionary Note Regarding Forward
Looking Statements This press release contains forward-looking
statements. In some cases, forward-looking statements can be
identified by words such as "believe," "expect," "anticipate,"
"plan," "potential," "continue" or similar expressions. Such
forward-looking statements are based upon current expectations and
beliefs and are subject to a number of factors and uncertainties
that could cause actual results to differ materially from those
described in the forward-looking statements. Some of the
forward-looking statements contained in this press release include
statements about the proposed Stantec and TKC merger; including
statements that: (i) the merger will allow the combined company to
realize strategic goals; (ii) the merger is expected to be
accretive to earnings of the combined company; (iii) the merger
will allow Stantec to increase its revenues from its United States
operations by approximately 70%; (iv) the combination with TKC will
allow Stantec opportunities to cross sell services to TKC's client
base; and (v) the TKC shareholders will realize a premium of
approximately 30%. These statements are not guarantees of future
performance, involve certain risks, uncertainties and assumptions
that are difficult to predict, and are based upon assumptions as to
future events that may not prove accurate. Therefore, actual
outcomes and results may differ materially from what is expressed
herein. For example, if TKC does not receive required shareholder
approvals, if Stantec is unable to list its stock on a major US
exchange or either party fails to satisfy other conditions to
closing, the merger will not be consummated. In addition, the
combined companies may not realize all or any of the expected
benefits of the merger. The following factors, among others, could
cause actual results to differ materially from those described in
the forward-looking statements: global capital market activities,
fluctuations in interest rates and currency values, the effects of
war or terrorist activities, the effects of disease or illness on
local, national, or international economies, the effects of
disruptions to public infrastructure, such as transportation or
communications, disruptions in power or water supply, industry and
worldwide economic and political conditions, regulatory and
statutory developments, the effects of competition in the
geographic and business areas in which the companies operate, the
actions of management, and technological changes. Actual results
may differ materially from those contained in the forward- looking
statements in this press release. Stantec Contacts The Keith
Companies Contacts Media Aram Keith Jay Averill TKC Chairman &
CEO Tel: (780) 917-7441 Tel: (949) 923-6001 Investor Financial
Relations Board Simon Stelfox Tricia Ross Tel : (780) 917-7288 Tel:
(617) 520-7064 Visit http://www.stantec.com/keithco (will be posted
live at 6:00 PM Eastern Time) DATASOURCE: The Keith Companies
CONTACT: Media, Jay Averill, +1-780-917-7441, , or Investors, Simon
Stelfox, +1-780-917-7288, , both of Stantec; or Aram Keith, TKC
Chairman & CEO, +1-949-923-6001, or Tricia Ross of Financial
Relations Board, +1-617-520-7064, for The Keith Companies Web site:
http://www.keithco.com/ http://www.stantec.com/
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