Viasystems Group, Inc. and Merix Corporation (NASDAQ: MERX)
today announced they have entered into a definitive agreement to
merge their businesses.
When completed, the merger will result in the largest publicly
traded printed circuit board (PCB) manufacturer by revenue in the
United States. Viasystems and Merix have complementary core
competencies that will enable the combined organization to provide
customers with a complete spectrum of services and technology for
both quick-turn prototyping and high volume PCB manufacturing in
Asia and North America.
Major Terms of the Agreement
- Each Merix share will be
converted into approximately 0.11 newly issued shares of
Viasystems, subject to adjustment, which will be publicly traded on
the NASDAQ upon completion of the transaction.
- Approximately 98 percent of
holders of Merix $70 million convertible senior subordinated notes
due 2013 have agreed to enter into an exchange agreement whereby
their notes will be exchanged for approximately 1.4 million newly
issued Viasystems shares plus a total cash payment of approximately
$35 million.
- Following the merger transaction
and note exchange, approximately 20 million newly issued Viasystems
shares will be outstanding.
- Existing Viasystems shareholders
will own approximately 80.5 percent of the combined company,
existing Merix shareholders will own approximately 12.5 percent and
Merix convertible note holders will own approximately 7.0
percent.
Based on the results for the twelve months ended June 30, 2009
for Viasystems and August 29, 2009 for Merix, on a pro forma basis,
the combined operation would have had approximately $840 million of
revenue. Pro forma adjusted EBITDA for that period would have been
approximately $68 million. Adjusted EBITDA is defined as operating
income (loss) adjusted to exclude charges for depreciation,
amortization, stock-based compensation, and restructuring and
impairment costs. The companies expect annual cost synergies of
approximately $20 million can be achieved through steps initiated
within the first 60 days post completion of the transaction.
Following the merger transaction, the combined company will have
approximately 13,000 employees and manufacturing capacity exceeding
4.3 million square feet in China and 375,000 square feet in North
America.
“Through this merger, we’re creating a world-class leader in PCB
and related electro-mechanical solutions with complementary market
segments, customers and manufacturing capabilities,” said
Viasystems Chief Executive Officer David Sindelar. “The net result
will be best-in-class PCB manufacturing on a global basis,
combining Viasystems’ high volume and quick-turn capabilities in
China with Merix’ quick turn and prototyping capabilities in the
US. These assets along with Merix’ Asia factories will
substantially increase our business scale and expand our customer
base.”
“We believe this is an excellent strategic fit and offers
stakeholders tremendous value,” said Merix Chief Executive Officer,
Michael Burger. “Viasystems is an ideal partner that accelerates
and adds scale to the value proposition that Merix has been
building for several years. This compelling opportunity for value
creation makes the combination very attractive to our customers,
employees and stakeholders.”
Benefits of the Transaction
- The merger creates a large and
diversified customer base – among the top ten customers of both
companies, only three overlap.
- Merix’ facilities will offer
Viasystems’ 125 customers complex PCB production in the U.S.,
including quick-turn and prototyping capabilities not offered
today.
- Merix’ facilities and
capabilities in the U.S. will provide Viasystems the opportunity to
access the growing Aerospace and Defense industry.
- Viasystems provides Merix’ 800
customers with expanded scale of Asian-based high-volume,
quick-turn and HDI printed circuit board manufacturing
capabilities, as well as new electro-mechanical solutions.
- The combination will benefit
from complementary technologies, a strong combined management team,
and a shared focus on reliability and quality, resulting in a
stronger company that is more competitive in the marketplace.
“These are two successful, innovative organizations with one
mission: To meet the rapidly changing needs of our customers,”
added Mr. Sindelar. “By leveraging the diversified operations and
employee skill sets of both organizations, this combined company is
well positioned in a recovering industry. We’re confident in our
plan to integrate our businesses and create tremendous value,
providing opportunities for employees, customers and
shareholders.”
Viasystems Equity Registration
Prior to completing the merger, Viasystems intends to register
the shares with the U.S. Securities and Exchange Commission. When
the registration becomes effective and the merger is approved by
Merix shareholders, the new Viasystems shares are expected to
publicly trade on the NASDAQ in place of existing Merix shares.
Significant note and equity holders have agreed to certain lock-up
restrictions after trading of the new shares begins. Completion of
the transaction is expected by the end of calendar year 2009.
Financing and Capital Structure
The cash consideration will be financed by Viasystems’ existing
cash on hand. Concurrent with the closing of the merger
transaction, Wells Wachovia has committed to enter into a new $75
million line of credit with Viasystems. The combined company will
have a strong balance sheet with access to more than $100 million
in credit lines, a cash balance of approximately $40 million after
the transaction is completed, and $215 million of outstanding debt
(a reduction of approximately $80 million).
Following the close of the transaction, Viasystems’ Board of
Directors will consist of 12 total members of which three members
will be designated by Merix and nine members will be designated by
Viasystems. The combined company will be led by Viasystems’ current
Chief Executive Officer, David Sindelar and headquartered in St.
Louis, Missouri.
Goldman, Sachs & Co. is acting as financial advisor to
Viasystems for this transaction and Weil, Gotshal & Manges LLP
as legal counsel. Thomas Weisel Partners LLC is acting as financial
advisor to Merix with Orrick, Herrington & Sutcliffe as legal
counsel.
Investor Call
Viasystems’ and Merix’ senior management will host a joint
conference call for investors on Wednesday, October 7, 2009 at 7:30
a.m. Central Daylight Time (5:30 a.m. Pacific Daylight Time.) To
participate in the call, domestic and international callers dial
(612) 326-1011, conference code 117807. The call will be
simultaneously webcast on Viasystems’ website at www.viasystems.com
and Merix’ website at www.merix.com.
About Viasystems Group, Inc.
Viasystems is a worldwide provider of complex multi-layer, rigid
printed circuit boards (PCBs) and electro-mechanical solutions. Its
PCBs serve as the foundation for almost all electronic equipment,
and its related electro-mechanical solutions include systems
integration, assembly, final product testing and fulfillment. The
company’s 10,000 employees in North America and Asia serve more
than 125 customers in the automotive, telecommunications, computer
and data communications and industrial and
instrumentation/medical/consumer markets. For additional
information about Viasystems, please visit the company’s website at
www.viasystems.com.
About Merix Corporation
Merix is a leading manufacturer of technologically advanced,
multilayer, rigid printed circuit boards for use in sophisticated
electronic equipment. Merix provides high performance materials,
quick-turn prototype, pre-production and volume production services
to its customers. Principal markets served by Merix include
communications and networking, computing and peripherals, test,
industrial and medical, defense and aerospace and automotive end
markets in the electronics industry. Merix has 3,000 employees in
North America and Asia serving approximately 800 customers in the
telecommunications/networking, automotive, computer and data,
industrial/medical and test, and defense and aerospace markets.
Additional corporate information is available on the internet at
www.merix.com.
Forward-Looking Statements:
Certain statements in this communication may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements relate to
a variety of matters, including but not limited to: the operations
of the businesses of Viasystems and Merix separately and as a
combined entity; the timing and consummation of the proposed merger
transaction; the expected benefits of the integration of the two
companies; the combined company’s plans, objectives, expectations
and intentions and other statements that are not historical fact.
These statements are made on the basis of the current beliefs,
expectations and assumptions of the management of Viasystems and
Merix regarding future events and are subject to significant risks
and uncertainty. Investors are cautioned not to place undue
reliance on any such forward-looking statements, which speak only
as of the date they are made. Neither Viasystems nor Merix
undertakes any obligation to update or revise these statements,
whether as a result of new information, future events or
otherwise.
Actual results may differ materially from those expressed or
implied. Such differences may result from a variety of factors,
including but not limited to: legal or regulatory proceedings or
other matters that affect the timing or ability to complete the
transactions as contemplated; the possibility that the expected
synergies from the proposed merger will not be realized, or will
not be realized within the anticipated time period; the risk that
the businesses will not be integrated successfully; the possibility
of disruption from the merger making it more difficult to maintain
business and operational relationships; the possibility that the
merger does not close, including but not limited to, due to the
failure to satisfy the closing conditions; any actions taken by
either of the companies, including but not limited to,
restructuring or strategic initiatives (including capital
investments or asset acquisitions or dispositions), developments
beyond the companies’ control, including but not limited to,
changes in domestic or global economic conditions, competitive
conditions and consumer preferences, adverse weather conditions or
natural disasters, health concerns, international, political or
military developments, and technological developments. Additional
factors that may cause results to differ materially from those
described in the forward-looking statements are set forth in the
Annual Report on Form 10-K of Viasystems, Inc. for the year ended
December 31, 2008, which was filed with the Securities and
Exchange Commission (“SEC”) on March 30, 2009, under the heading
“Item 1A. Risk Factors” and in the Annual Report on Form 10-K of
Merix for the year ended May 30, 2009, which was filed with
the SEC on July 30, 2009, under the heading “Item 1A. Risk
Factors,” and in each company’s other filings made with the SEC
available at the SEC’s website, www.sec.gov.
Important Merger Information and Additional
Information:
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the proposed transaction,
Viasystems and Merix will file relevant materials with the SEC.
Viasystems will file a Registration Statement on Form S-4 that
includes a proxy statement of Merix and which also constitutes a
prospectus of Viasystems. Merix will mail the proxy
statement/prospectus to its shareholders. Investors are urged to
read the proxy statement/prospectus regarding the proposed
transaction when it becomes available, because it will contain
important information. The proxy statement/prospectus and other
documents that will be filed by Viasystems and Merix with the SEC
will be available free of charge at the SEC’s website, www.sec.gov,
or by directing a request when such a filing is made to Merix
Corporation, 15725 SW Greystone Court, Suite 200, Beaverton Oregon
97006, Attention: Investor Relations or by directing a request when
such a filing is made to Viasystems Group, Inc., 101 South Hanley
Road, Suite 400, St. Louis, Missouri 63105, Attention: Investor
Relations.
Viasystems, Merix, their respective directors and certain of
their executive officers may be considered participants in the
solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive
officers of Merix is set forth in Merix’ definitive proxy
statement, which was filed with the SEC on August 26, 2009.
Information about the directors and executive officers of
Viasystems is set forth in the Form 10-K of Viasystems, Inc., which
was filed with the SEC on March 30, 2009. Investors may obtain
additional information regarding the interests of such participants
by reading the proxy statement/prospectus Viasystems and Merix will
file with the SEC when it becomes available.
U.S. Internal Revenue Service
(IRS) Circular 230 Notice: To ensure compliance with
requirements imposed by the IRS, we inform you that any U.S. tax
advice contained in this communication (including any attachments)
is not intended or written to be used, and cannot be used, for the
purpose of (i) avoiding penalties under the U.S. Internal Revenue
Code or (ii) promoting, marketing or recommending to another party
any transaction or matter addressed herein.
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