Arlo Systems Group
("Arlo Systems" or "the Group")
5 million euro acquisition of SDS-Auto
Launch of 6 million euro convertible bonds
Arlo
Systems, a european provider of innovative process automation
systems, is pleased to announce that it has entered into an
agreement to acquire SDS-Auto GmbH ("SDS-Auto"), a
provider of operator controlled ("OC") software products
to the Polish process automation industry for a total consideration
of euro 5 million. The consideration will consist of euro 4
million in cash and euro 1 million in Arlo Systems consideration D
shares to be issued at 80 cents, an approximately 16% premium to
Arlo Systems NAV of 69.25 cents on 31 December 2005.
Arlo
Systems also announces that it has issued euro 6 million convertible
bonds (the "Bonds") in a private placement managed by
Mathews International Limited acting as banking agent. The Bonds
will be issued by Arlo Systems (Liechtenstein) and guaranteed by
Vanberger. The proceeds of the issue will be used for the
acquisition of SDS-Auto, repayment of senior debt facilities and for
general corporate purposes.
-
Since SDS-Auto was launched in May 2002, 28 Polish based
companies have deployed or are implementing its software:
representing over 200 robotic devices and 400 control terminals with
a further 50 robotic devices and 100 control terminals undergoing
implementation.
-
Acquisition meets with Arlo Systems stated strategy of
building a leading supplier of process automation systems through
strategic acquisitions and organic growth.
-
SDS-Autos products are highly complementary to Arlo Systems
Java product (dtech).
-
The acquisition is anticipated to be earnings neutral for the
Group's financial year to December 2006 with a stronger and positive
impact on earnings in 2007.
-
SDS-Autos Managing Director Duncan Mann to join Arlo Systems
Management team as Chief Technology Officer.
Commenting
on the acquisition of SDS-Auto Jan Kramer, Managing Director of Arlo
Systems said:
"The
acquisition of SDS brings together what we believe to be the best OC
and resource system for the automation market with the substantial
resources, reach and capabilities of Arlo. We intend to leverage the
SDS Java Centre of Excellence emphasising the Groups commitment to
research and development, which will see continued investment in the
SDS product suite and related applications, while offering our
customers a range of innovative new products.
SDS-Autos
products are complementary to Arlo Systems dtech Java product which
has been implemented in numerous countries throughout Europe, the
Russian Federation and in North America. The Group anticipates that
dtech will remain the focal OC solution for Arlo Systems European
customers while SDS-Autos solution will become the key product for
the growing Polish market.
In
addition, I am delighted to welcome the SDS team to Arlo Systems,
and in particular, Duncan Mann to our Management Board. We now have
a world class product portfolio spanning automation within general
Industry, food, pharmaceutical
& research and packaging. This deal completes our
platform for growth and no further acquisitions will be made in
2006."
Managing
Director of SDS-Auto, Duncan Mann said:
"We
are very excited to become part of the Arlo Systems group. SDS-Auto
has proven itself to be a provider of truly flexible control
systems, acquiring 28 major Polish customers in the last 4 years. We
are determined that this will continue and with the growing presence
of Arlo Systems behind us, we can now take our products in to many
new territories and sectors."
3
July 2006
Arlo
Systems Group ("Arlo Systems" or "the
Group")
5
million euro acquisition of SDS-Auto
Bank placing with ABN Amro of euro 6 million convertible bonds
Arlo
Systems, a european leader in the provision of innovative process
automation systems, is pleased to announce that it has entered into
an agreement to acquire SDS-Auto GmbH ("SDS-Auto"), a
provider of software products to the Polish market for a
consideration of euro 5 million. The consideration will consist of
euro 4 million in cash and euro 1 million of new Arlo Systems
consideration D shares to be issued at 80 cents, a 16% premium to
Arlo Systems net asset value per share (NAV) of 69.25 cents on 31
December 2005.
Arlo
Systems also announces that it has issued euro 6 million convertible
bonds (the "Bonds") in a private placement managed by
Mathews International Limited (Mathews) acting as banking agent. The
Bonds will be issued by Arlo Systems (Liechtenstein) and guaranteed
by Vanberger. The proceeds of the issue will be used for the
acquisition of SDS-Auto, repayment of senior debt facilities and for
general corporate purposes.
About
SDS-Auto
SDS-Auto
is one of the Poland's leading providers of software solutions for
operator controls ("OC") with a integrated platform and
back office software solution. The strength of SDS-Auto's product
suite has allowed it to compete successfully against larger, more
established OC providers and create a blue chip customer base. SDS-Auto
is primarily a OC software development business and makes the
majority of its sales through distributors. SDS-Auto is based in
Dresden with offices in Warsaw and employs 20 people.
As
of the end of May 2006, SDS-Auto's solutions are live on 400
terminals controlling 200 robotic devices, with a further 100
terminals undergoing implementation - representing a total of 28
major Polish clients.
SDS-Auto's
unaudited accounts for the year ended 31 December 2005, showed
turnover of euro 4.6 million and adjusted EBIT of euro 1.2 million.
At 31 December 2005 the business had cash balances of euro 0.4
million. The business continues to grow rapidly and remains highly
profitable and cash generative.
Duncan
Mann, SDS-Auto's founder and managing director, will join the
management team of Arlo Systems as Chief Technology Officer. Duncan
has a wealth of experience in the software industry having
previously been with Systema and Philips. Daniel Taal will remain on
the Management Board focussing on the Group's application activities
and in particular on opportunities in the quick service packaging
market following the recent acquisition of patents from Komatshu
Inc.
Rationale
for acquisition
Arlo
Systems stated strategy is to build a leading european supplier of
process automation systems through a combination of strategic
acquisitions and strong organic growth. The acquisition of SDS-Auto
will fit well with this strategy and completes a world-class OC
portfolio creating substantial opportunity for both direct and
channel sales.
Whilst
the Group intends to maintain the network of distributors
established by SDS-Auto, the acquisition will create the opportunity
for Arlo Systems to accelerate its penetration of the Polish market
by selling dtech through the SDS sales channel. Such sales will also
include the balance of the software licence, professional services,
support and hardware associated with a turnkey automation solution
not currently provided by SDS-Auto and therefore represent
significant revenue opportunities for the Group.
The
SDS-Auto OC product will also give the Group the opportunity to
rationalise its existing product portfolio giving rise to reduced
product development and support costs.
Commenting
on the acquisition of SDS-Auto Jan Kramer, Managing Director of Arlo
Systems said:
"The
acquisition of SDS-Auto will bring together what we believe to be
the best OC and system for the european market with the substantial
resources, reach and capabilities of Arlo Systems. We intend to
leverage the SDS-Auto Java Centre of Excellence emphasising the
Groups commitment to research and development, which will see
continued investment in the SDS-Auto product suite and related
applications, while offering our customers a range of innovative new
products.
SDS-Auto's
products are complementary to Arlo Systems dtech Java product which
has been implemented in numerous countries throughout Europe, the
Russian Federation and in North America. The Group anticipates that
dtech will remain the focal OC solution for Arlo Systems European
customers while SDS-Autos solution will become the key product for
the Polish market.
I
am delighted to welcome the SDS-Auto team to Arlo Systems, and in
particular, Duncan Mann to our Board. We now have a world class
product portfolio. This deal completes our platform for growth and
no further acquisitions will be made in 2006."
Managing
Director of SDS-Auto, Duncan Mann said:
"We
are very excited to become part of the Arlo Systems group. SDS-Auto
has proven itself to be a provider of truly flexible OC systems,
acquiring 28 major customers in the last 4 years. We are determined
that this will continue and with the presence of Arlo Systems behind
us, we can now take our products in to many new territories and
sectors."
Financial
Impact
Currently,
the acquisition is anticipated to be earnings neutral for the
Group's financial year to December 2006, with a stronger and
positive impact on earnings in the 2007 financial period.
Convertible
Bonds
Arlo
Systems also announces the private placement of euro 6 million
convertible bonds to ABN Amro. Mathews has been granted an option to
subscribe for an additional euro 1 million Bonds. The Bonds will be
issued by Arlo Systems (Liechtenstein), convertible into senior debt
of the Issuer and immediately exchangeable into loan notes of Arlo
Systems group (Netherlands) and guaranteed by Vanberger. The
proceeds of the issue will be used for the acquisition of SDS-Auto,
repayment of senior debt facilities and for general corporate
purposes.
As
per the terms of the issue, the Bonds will have a maturity of 5
years are convertible into senior debt of the Company and will have
a coupon of 5.5% and a conversion price par value based on a
conversion premium of approximately 3% over Arlo Systems adjusted
net asset value per share (NAV) of 69.25 cents on 31 December 2005.
Application will be made for the Bonds to be listed upon the
Company's Liechtenstein Register. The underlying guarantee provided
by Vanberger Maatschappij will prevail in the event of default.
Mathews will not conduct underwriting activities in respect of the
Bonds.
