MONTREAL – Montreal’s 20-20 Technologies Inc. (TSX:TWT) says its board backs a $77-million takeover offer from a U.S. private equity firm, a deal it selected after talking to more than 50 interested parties.
The maker of design and manufacturing software for the furniture industry said Monday that it has inked a definitive agreement with an affiliate controlled by Vector Capital Corp., a firm focused on the technology sector, for $4 per share.
That represents a 28 per cent premium over the company’s closing share price of $3.12, the day before it announced a strategic review process.
The company’s board of directors launched the review process to pursue strategic alternatives to “enhance shareholder value.”
Jocelyn Proteau, chairman of a special committee that oversaw the review said the process attracted more than 50 potential purchasers from Canada, the U.S. and Europe.
“The transaction with Vector is the culmination of this extensive public process and provides compelling value to our shareholders,” Proteau said.
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Amish Mehta, a partner at Vector said that 20-20 has all of the characteristics the firm considers when making an investment.
“Using 20-20 as a platform investment, we intend to continue investing in innovative solutions for interior design and furniture customers and expand 20-20’s presence in new markets organically and through acquisitions while maintaining a strong presence in Quebec where the technology was developed,” Mehta said.
The deal has the unanimous support of 20-20’s board of directors, which recommends shareholders vote in its favour.
All of the directors, senior officers and major shareholders have made agreements with Vector to vote in favour of its offer.
Jean Mignault, founder and executive chairman of 20-20’s board has agreed to sell his stake in the company to Vector. He will continue on as a board member and as chief of strategic direction.
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“The decision to initiate a strategic review process was a difficult one to make, but this outcome is the right one for all the stakeholders of the corporation,” he said.
“Our vision from the outset has always been to build a software platform even more firmly establishing 20-20 Technologies as the worldwide leader in our vertical industry. Vector shares our vision for the future and therefore we strongly support the proposed transaction.”
The deal is subject to approval from two-thirds of votes cast by shareholders at a special meeting expected in September.
The deal provides for a termination fee of $3 million and expense reimbursement of $720,000 to Vector if 20-20 ends the deal and a $4.5 million fee paid to 20-20 if Vector ends the deal.
20-20 Technologies provides computer-aided design, business and manufacturing software for the interior design and furniture industries. It operates in 11 countries with more than 500 employees.
Shares in the company lost eight cents to close at $3.95 Monday on the Toronto Stock Exchange.
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