NORDBORG, Denmark, and AMES, Iowa (March 1, 2013) – Danfoss A/S and Sauer-Danfoss Inc. today announced a definitive merger agreement for Danfoss to acquire the 24.4 percent of Sauer-Danfoss common shares not already owned by Danfoss and its affiliates for $58.50 per share in cash. The $58.50 per share price represents a 48.6 percent premium to the closing price of Sauer-Danfoss shares on Nov. 27, 2012, the day prior to the announcement of the Danfoss proposal, a 19.4 percent increase from the $49 per share proposal made by Danfoss on Nov. 28, 2012 and a 5.3 percent premium to the highest trading price of Sauer-Danfoss shares for the 52-week period prior to the announcement of the Danfoss proposal. In addition, the Board of Sauer-Danfoss has declared a dividend for the first quarter of 2013 in which stockholders of record as of March 15, 2013 will receive a cash dividend of $0.35 per share payable on March 29, 2013.
The Sauer-Danfoss Board approved the transaction based on the unanimous recommendation of a Special Committee of the Board made up solely of independent directors. The Special Committee undertook a deliberate and comprehensive negotiation with Danfoss to achieve a highly attractive cash offer for stockholders that factored in Sauer-Danfoss’ prospects as well as the current economic environment. The Special Committee, advised by its independent financial advisor, Lazard, and its independent legal advisor, Kirkland & Ellis LLP, concluded the offer is fair to, and in the best interests of, the public minority stockholders of Sauer-Danfoss.
Jorgen M. Clausen, Chairman of Danfoss A/S, said, “We are pleased to have reached an agreement with the Special Committee on the terms of this transaction. We believe this transaction represents a very attractive premium to the Sauer-Danfoss stockholders and full and fair value for the company. This transaction reflects our confidence in Sauer-Danfoss and its management team as well as our commitment to the business and its long-term success.”
Steven H. Wood, Chairman of the Special Committee of the Sauer-Danfoss Board, said, “Following a thorough review process, assisted by our independent financial and legal advisors, the Special Committee has concluded that the Danfoss offer is fair to, and in the best interests of, the minority stockholders and we recommend they tender their shares into the offer.”
Under the terms of the agreement, Danfoss will commence a tender offer at $58.50 per Sauer-Danfoss share within 10 business days. The tender offer will be conditioned upon, among other things, the tender of a majority of the 24.4 percent of Sauer-Danfoss shares owned by the public minority stockholders. If, following the tender offer, Danfoss owns at least 90 percent of the outstanding shares as a result of its current shareholdings, shares tendered in the tender offer and the issuance of new shares by Sauer-Danfoss pursuant to a “top up” provision in the merger agreement between the parties that would go into effect only following a successful tender offer, Danfoss intends to cause Sauer-Danfoss to enter into a short-form merger as soon as reasonably practicable thereafter in which shares not tendered in the tender offer would be converted into the right to receive $58.50 per share in cash without interest.
The transaction does not require antitrust approval and is expected to close in the second quarter of 2013 subject to satisfaction of the tender offer conditions and customary closing conditions.
Citi is serving as financial advisor to Danfoss and Cleary Gottlieb Steen & Hamilton LLP is serving as its legal counsel. Lazard is serving as financial advisor to the Special Committee of the Board of Directors of Sauer-Danfoss and Kirkland & Ellis LLP is serving as its legal counsel.
Danfoss researches, develops, produces, sells and services mechanical and electronic components for several industries. Danfoss seeks to obtain its goals with a minimal consumption of raw materials and energy, the least possible impact on its surroundings and the most efficient use of resources. Danfoss has a long tradition for a social responsibility toward both employees and the surrounding environment.
Sauer-Danfoss designs, manufactures and sells engineered hydraulic and electronic systems and components for use primarily in applications of mobile equipment. Sauer-Danfoss, with 2012 revenues of approximately $1.9 billion, has sales, manufacturing, and engineering capabilities in Europe, the Americas, and the Asia-Pacific region.