Belden’s been chasing RuggedCom for 18 months: CEO

A Missouri company says it made several tries at a friendly takeover of Canada’s RuggedCom before making an unsolicited $280 million offer this week for the industrial networking equipment manufacturer.

“Belden’s preference was to work towards a friendly transaction thorough constructive dialogue with RuggedCom’s management and board,” Belden CEO John Stroup told financial analysts Tuesday.

“Over the past 18 months Belden has made several attempts to engage RuggedCom’s management to discuss a potential combination,” he said.

But “given our inability to reach a mutually acceptable agreement” Belden is making what it calls a “compelling” offer of $22 a share to RuggedCom shareholders. That represents a 62 per cent premium over the $13.61 a share the stock was trading at last Friday, he said.

Stroup didn’t detail what price he offered RuggedCom’s board earlier or any reasons the Concord, Ont.-based company gave for not agreeing to a deal.

Both Belden [NYSE: BDC] and RuggedCom [TSX: RCM] are publicly-traded companies.

RuggedCom CEO Pozzuoli couldn’t be reached Tuesday for comment on Stroup’s remarks. The company referred all questions to a public relations firm, which said there would be no comment from RuggedCom beyond what was made in a Monday press release. That statement it said a special committee of its board had been formed to ponder the offer. The committee has also made a preliminary finding that Belden’s offer “clearly undervalues” the Canadian company.

Belden, a significantly larger company, makes Ethernet industrial networking equipment for industry and transportation systems as well as networking cables and connectors. RuggedCom makes Ethernet networking switches and routers for harsh environments such as outdoor electrical grids, factories and transportation systems.

“The combination of Belden and RuggedCom is a unique opportunity,” Stroup said, that would give RuggedCom access to foreign markets it doesn’t have now. Almost half of RuggedCom’s business is based in North America, he said, and only 24 per cent comes from Europe. By contrast about half of Belden’s business is in Europe.
In the conference call Stroup praised RuggedCom, saying his company has “significant respect and admiration for RuggedCom, it’s product portfolio and its impressive growth.”
Noting that Belden has three offices here, he said that “we have increasingly viewed Canada as a location for excellence in technology that can be leveraged globally.”
“The opportunity to achieve global leadership in global networking alone is a good reason to combine Belden and RuggedCom,” Stroup said. But in addition merger of the companies will accelerate their ability to sell advanced solutions to customers, he said, and support Belden’s transformation to a company with a richer mix of products and markets.

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