StockerYale Talks Takeover
SALEM, N.H., June 16, 2008 -- Despite Virtek Vision International Inc.'s rejection of its $22 million buyout offer, StockerYale said today it still hopes to reach an agreement with the company but will also seek to acquire it via a takeover, if necessary.
StockerYale, a maker of structured light lasers, LED modules and specialty optical fibers for industrial, medical and defense markets, first made a cash and stock offer to Virtek's board of directors May 13. The Waterloo, Ontario-based company provides laser-based marking and engraving, precision laser templating and laser inspection products for industrial material processing (See also StockerYale Pursues Virtek).
At that time, StockerYale offered Virtek stockholders approximately 7.8 million shares of its stock -- about 20 percent of its outstanding shares -- with the rest in cash. The proposed purchase price of 65 cents per share, Canadian, represented a 48 percent premium over Virtek's trading price on May 13 and a 59 percent premium over the stock's 30-day average.
Virtek issued a press release June 6 saying it decided not to pursue StockerYale's offer, citing the proposed financing arrangements, the stock price history and financial condition of StockerYale among its reasons why the deal wouldn't be in the best interests of its shareholders.
StockerYale posted a $2.2 million loss for the first quarter of 2008. In April, the company announced it was moving its stock listing from the Nasdaq Global Market to the Nasdaq Capital Market after receiving warnings that its stock price had fallen below the global market's $1 minimum and the stockholders' equity had also fallen below the minimum.
"StockerYale would strongly prefer to proceed with the acquisition on a negotiated basis and believes that Virtek’s shareholders would benefit from the opportunity to have a continued stake in the combined entity. However, StockerYale is prepared to proceed with making an offer on an unsolicited basis, if necessary," the company said in a statement today.
StockerYale now says it will increase its offer to 70 cents a share to reach agreement with Virtek's board, and that several of Virtek's largest institutional shareholders are backing the acquisition. The company must tender at least 66.7 percent of Virtek shares for its takeover bid to be successful.
“Given the significant benefits and the opportunities created by a combination of StockerYale and Virtek, we are confident that Virtek’s shareholders will find our proposal compelling and will enthusiastically support an acquisition,” said StockerYale Chairman and CEO Mark W. Blodgett. “StockerYale has proposed a higher purchase price to Virtek’s shareholders if Virtek’s board of directors and management team engage in discussions with StockerYale to reach a mutually acceptable agreement.”
Without an agreement from the Virtek, StockerYale said it will pursue an all-cash takeover bid for 100 percent of the company's stock by buying it at its original offer price of 65 cents a share through its newly formed subsidiary, StockerYale Waterloo Acquisition Inc.
"We believe the combination of StockerYale and Virtek would deliver better choices and innovation to customers and industry partners and superior value to our respective shareholders," Blodgett said. "The combined company will have a larger footprint and greater visibility within both the photonics industry and financial community. We also expect to quickly realize synergies by eliminating certain redundant public company costs and by cross-selling the product offerings of the two businesses to each other's customers. Longer-term, it enables us to achieve the R&D critical mass necessary to deliver new product innovations."
StockerYale's board is supporting the acquisition, which is also subject to regulatory approval. The company said it expects that the deal could be completed "early in the second half" of 2008.
For more information, visit: www.stockeryale.com