RuggedCom Inc. (TSX:RCM) is pursuing a number of alternatives to a $272.4-million hostile takeover bid by Belden Inc. (NYSE:BDC) and recommends that its shareholders wait for a better deal, the industrial network equipment maker says.
Ian Giffen, chairman of board’s special committee of directors, said several companies have signed agreements allowing them to review RuggedCom’s financial details.
“They’ve already started their due diligence through our data room and we believe that we have a good and active process underway,” Giffen said Wednesday.
The decision to reject Belden’s offer was based on the recommendation of RuggedCom’s special committee of independent directors and with input from its financial and legal advisers.
RuggedCom chairman Peter Crombie said the $22-per-share offer from Belden was “highly opportunistic and conditional” in the directors’ circular filed with securities regulators.
“The RuggedCom board believes the Belden offer fails to compensate shareholders for RuggedCom’s strong prospects for continued growth, profitability and shareholder value creation,” Crombie said in a letter to shareholders.
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RuggedCom’s stock has traded for more than Belden offer since it was announced late last month. The shares were at $24.70 on the Toronto Stock Exchange on Wednesday, down five cents from the previous close.
The company’s board and senior executives hold a 16.1 per cent stake in RuggedCom on a fully diluted basis and plan to vote to reject the offer. Belden is seeking at least two-thirds of RuggedCom’s shares.
Belden said Wednesday it plans to ask securities regulators to block RuggedCom’s recently adopted shareholder rights plan.
The rights plan allows the board to double the number of shares outstanding under certain circumstances. The plan would be triggered if a person or company and its affiliates acquire 20 per cent or more of RuggedCom’s outstanding stock. It is scheduled to expire June 23.
Belden also reaffirmed its offer Wednesday.
“While differences of opinion on such matters are to be expected, credible industry watchers and analysts have stated that Belden’s offer is generally in line with, if not in excess of, their long-term valuations and price targets for RuggedCom stock,” Belden president and chief executive John Stroup said.
BMO Capital Markets analyst Brian Piccioni, who has rated RuggedCom “market perform” with a $24 price target, called the board rejection and move by Belden to block the rights plan “neutral” for the stock.
Headquartered in the Concord area of Vaughan, Ont., north of Toronto, RuggedCom designs and makes computers and communications networking technology designed for use in harsh environments such as electrical power substations, industrial facilities and military operations.
St. Louis-based Belden makes cable, connectivity and networking products for use in industrial, transportation, infrastructure and consumer electronics. It employs about 6,800 people.
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