Sirit Inc., a leading provider of radio frequency identification (RFID) technology and Federal Signal Corporation, a leader in environmental, safety and transportation solutions, on January 14 announced that they have signed a definitive agreement whereby Federal Signal will acquire all of the issued and outstanding common shares of Sirit (the "Common Shares") for cash consideration of CDN$0.30 per share by way of a court approved plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement"). The transaction has a total equity value of approximately CDN$49.5 million (US$48.0 million).
The CDN$0.30 per share cash purchase price represents a premium of 37 percent over Sirit's 30-day average closing stock price and a premium of 60 percent over Sirit's 60-day average closing stock price.
Sirit is a leading designer, developer and manufacturer of RFID technology for applications such as Tolling, Electronic Vehicle Registration, Parking and Access Control, Asset Management, Cashless Payments and Supply Chain Systems. The combination of Sirit's RFID technology with Federal Signal's detection and classification technology (acquired in the December 2009 purchase of Diamond Consulting Services) and existing PIPS automated license plate recognition technology, immediately transforms Federal Signal into a leader in Intelligent Transport Systems.
"We are excited about this transaction with Sirit, as it further strengthens Federal Signal's best-in-class product portfolio and advances our stated strategy of driving growth through our Public Safety Systems platform," said William Osborne, Federal Signal's president and chief executive officer. "Sirit, Diamond Consulting Services and PIPS have a proven record of success in jointly delivering superior technology-based client solutions. We are committed to investment in research and development to maintain Sirit's reputation for technical excellence and with the addition of Sirit's talented employees, we look forward to further differentiating Federal Signal's Public Safety Systems offering."
"Global market trends for Intelligent Transport Systems are robust and we believe the addition of Sirit will enhance long-term earnings and provide greater revenue visibility through recurring revenues," Osborne continued. "We are confident Federal Signal will be better positioned to help customers capitalize on road-user charging technologies and deliver enhanced value to our stockholders."
"We are thrilled to be joining Federal Signal and are excited by the opportunities we will have as part of a larger organization with greater financial resources and access to a wider customer base. The combination of Sirit and Federal Signal creates a superior technology platform and service offering, while providing customers with more complete and fully integrated solutions," said Norbert Dawalibi, president and chief executive officer of Sirit. "We look forward to working closely with the Federal Signal team to ensure a smooth transition and complete the transaction as expeditiously as possible."
Sirit's board of directors unanimously approved the transaction and determined that it is in the best interests of Sirit and its shareholders (the "Shareholders"). The board made its decision following the report and favorable recommendation of an independent committee of Sirit's board of directors. In reaching its recommendation, Sirit's independent committee considered a fairness opinion from its financial advisor, GMP Securities L.P. A copy of the fairness opinion, the factors considered by the independent committee and the board and other relevant information will be included in the management information circular that will be sent to the Shareholders of Sirit in connection with the special meeting anticipated to be held on or about February 26, 2010 to consider the Arrangement. The record date for purposes of determining Shareholders entitled to vote at the special meeting has been set as of the close of business on January 25, 2010.
Certain executive officers, directors and Shareholders of Sirit owning approximately 28 percent of the outstanding Common Shares have entered into a voting and lock-up agreement with Federal Signal under which they have agreed to vote their shares in favor of the Arrangement. The arrangement agreement contains customary terms and conditions for a transaction of this nature, including a prohibition upon Sirit from soliciting or initiating any discussion concerning any other business combination or similar transaction, and the requirement that in certain circumstances Sirit must pay to Federal Signal a termination fee of CDN$1.5 million.
The closing of the Arrangement is subject to the satisfaction of certain closing conditions, including, among others, obtaining certain court approvals as well as the approval of Sirit's Shareholders. For the Arrangement to proceed, a special resolution approving the Arrangement must be approved by not less than two-thirds of the votes cast by Sirit's Shareholders. The transaction is not subject to financing. Federal Signal intends to finance the transaction through cash on hand and existing bank lines of credit.
Upon completion of the transaction, Sirit will operate as part of Federal Signal's Safety and Security Systems Group.
