The fight for a Canadian maker of outdoor networking equipment moved up a notch this morning when RuggedCom Inc. announced it has struck a deal to be bought by Siemens Canada rather than take an hostile offer from long-time suitor Belden Inc.
In a news release issued Monday morning, RuggedCom said Siemens is offering $33 a share compared to Belden’s $22 a share offer. That bid was rejected by the RuggedCom board, which has been searching for a white knight.
UPDATE: On Monday afternoon Belden said it won’t counter Siemens Canada’s $440 million bid. Unless RuggedCom gets a better offer, RuggedCom’s determination to find a better suitor apparently paid off.
The Siemens bid was recommended by a special committee of RuggedCom’s board.
The board and RuggedCom’s chief executive and chief financial officers, who are recommending the new offer to shareholders, together hold 13 per cent of the company’s shares and entered into a lock-up agreement for their shares with Siemens Canada.
“The Siemens offer is the culmination of a thorough and vigorous process run by the special committee to identify superior alternatives to the Belden Offer,” RuggedCom board chair Peter Crombie said in the news release. “Given the level of interest from qualified potential parties, the special committee facilitated a process to maximize the value on offer for RuggedCom. We believe the Siemens offer, which has the unanimous support of the RuggedCom Board, provides fair value to our shareholders.”
Siemens Canada, which specializes in electronics and electrical engineering, has some 4,400 employees in Canada. It’s a division of German-based Siemens AG, which makes industrial, engineering and healthcare solutions ranging from wind turbines to passenger trains. Last month Siemens reported world-wide first quarter net income of 1.4 billion euros on revenues of 17.9 billion euros.
Siemens Canada makes industrial Ethernet components, but most of its customers for them are in Europe. “RuggedCom’s portfolio would be an ideal addition to our range of industrial Ethernet communication products, improving our industrial-quality router and switch offering,” Anton Huber, CEO of Siemens’ industry automation division, said in a news release. “In addition, the acquisition would improve our footprint in the North America and the Asia-Pacific region.”
“The acquisition of RuggedCom further demonstrates Siemens’ commitment to Canada,” said Robert Hardt, president and CEO of Siemens Canada. “We are preparing to join forces and work closely with RuggedCom to ensure a smooth transition for employees, customers and all stakeholders. We have been operating in Canada for over 100 years and our goal is to continue expanding this strong presence for the next 100 years and beyond.”
The company expects to mail its offer to RuggedCom shareholders shortly.
Under a deal with the board, RuggedCom [TSX: RCM] can’t search for another bidder to get into a bidding war. However, it is entitled to consider unsolicited bids. Siemens Canada is entitled to a $15 million termination fee if the deal isn’t completed under certain specified circumstances.