Haldex's board unanimously decides not to support Knorr-Bremse takeover offer.
M2 PHARMA-August 3, 2017-Haldex's board unanimously decides not to support Knorr-Bremse takeover offer
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Haldex AB (STO:HLDX) announced on Wednesday that its board of directors has unanimously resolved to adhere to its previous decision not to support the takeover offer by Knorr-Bremse, irrespective of which resolution the EGM passes.
According to the company, additional time would not increase the possibilities for Knorr -Bremse to obtain approval from the competition authorities. Instead, additional time would continue to seriously harm Haldex. It would reduce the value of the company and impair the possibility for the shareholders to either receive a new bid for the company or to benefit from the creation of long-term shareholder value on a standalone basis.
The board has also determined that it is prevented from executing a resolution by the EGM in accordance with the proposal by Knorr -Bremse, as it would contravene both the Swedish Companies Act and the obligations of the board pursuant to the takeover rules to act in the best interest of the shareholders.
Reportedly, after extensive criticism by the European Competition Authority (the EU Commission), Haldex's board had announced on 29 June 2017 that it no longer supported the bid by Knorr-Bremse. Subsequently, the board's view has been further reinforced by the feedback received from the US Competition Authority (the DOJ) and the fact that the EU Commission has confirmed its criticism by resolving on a so-called in-depth competition investigation (phase II). Also, the probability of the offer being cleared is very low also after a continued competition investigation.
According to the company, since the launch of the offer by Knorr-Bremse, its business has been materially harmed. Overall, Haldex has identified eight major contracts where Haldex was initially invited to participate in the procurement, but where the customer has expressly stated that any orders may not be placed until the ownership situation of Haldex has been resolved. These contracts represent a potential future yearly value exceeding SEK500m.
In addition, specialists and key employees have left the company. Several engineers in the R&D department, which are difficult to replace, have terminated their employments, which in turn has delayed ongoing development projects. Further, Bo Annvik, former president & CEO, has terminated his employment.
Haldex has incurred material costs in the form of fees to advisors and other
consultants. Only a small portion of the costs incurred by Haldex have been born by Knorr-Bremse. These costs which have to be paid by Haldex currently amount to over SEK45m.
An EGM in Haldex will take place on 17 August 2017 at the request of Knorr-Bremse, which has proposed that the EGM resolve to instruct the board to change its decision and to recommend the Swedish Securities Counsel to approve an extension of the acceptance period until February 2018.
Haldex is a specialist in brake systems and air suspension systems for heavy trucks, trailers and buses.
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