GSI Group Signs Definitive Agreement to Acquire Excel Technology
BEDFORD, Mass., July 10 -- GSI Group Inc., (NASDAQ:GSIG) and Excel Technology Inc. (NASDAQ:XLTC) announced today that they have entered into a definitive agreement for GSI to acquire Excel in an all-cash transaction for $32.00 per share, or approximately $360 million, before fees and transaction costs. The offer price represents a 30.2% premium to the average Excel closing share price over the last 30 trading days.
The acquisition will be effected through a cash tender offer for all outstanding shares of Excel common stock at a price of $32.00 per share, followed by a second-step merger in which any untendered shares will be acquired at the same per share price. The boards of directors of both companies have unanimously approved the transaction. The tender offer is expected to commence on or about July 23, 2008. Subject to customary conditions and regulatory approvals, GSI expects that the transaction will close in the 3rd quarter.
GSI intends to pay the aggregate purchase price through a combination of available cash and external financing. GSI and its wholly owned subsidiary, GSI Group Corporation, have entered into definitive agreements with various investors to provide, subject to customary conditions, financing of $210 million for the transaction through the issuance of senior unsecured notes and warrants. On a non-GAAP cash basis, excluding the impact of any acquisition and purchase accounting related charges, the transaction is expected to be accretive to GSI for the full year 2009.
"This acquisition constitutes a major step in the execution of our strategy to expand our presence in our most attractive markets," said Dr. Sergio Edelstein, President and CEO of GSI. "GSI and Excel have a set of uniquely complementary products, technologies, and distribution channels, which will enable the combined company to provide customers with a significantly broader set of solutions."
Mr. Antoine Dominic, President and Chief Executive Officer of Excel commented; "As the industry evolves, geographical reach and breadth of product offerings become paramount. By joining forces, GSI and Excel will be in a very strong position to accelerate new product introductions and global market penetration. Although Excel has performed quite well independently over the years, this combination rewards our shareholders, creates opportunities for employees and offers more solutions for our customers."
For the twelve months ended December 31, 2007, Excel reported revenues of $160.0 million and net income of $17.7 million. For the same period, GSI Group Inc. reported revenues of $317.8 million and net income of $19.0 million.
GSI reaffirmed that its second quarter results will be slightly above the midpoint of the previously stated range with revenue expected between $64.0 million and $68.0 million and earnings per share of approximately two cents. The company expects to release its full second quarter earnings on Thursday, July 31st, 2008.
UBS Investment Bank acted as exclusive financial advisor and placement agent to GSI Group, Inc. in connection with the transaction. Needham & Company, LLC provided a fairness opinion to Excel's Board of Directors.
GSI Group has scheduled a conference call for July 10th at 8:30 a.m. EDT. Investors can access to the conference call by dialing (706) 634-5123. A replay will be available after the call ends at (706) 645-9291, passcode: 54069322. A live audio webcast of the call will be made available at www.gsig.com and a replay will be available for fourteen days after the call ends.
Non-GAAP differs from GAAP presentation due to the exclusion of the following non-cash expenses: restructuring charges, stock based compensation (123R) expense, amortization of intangibles, amortization of purchase accounting inventory write-up, non-cash interest expense, amortization of financing fees, and the related tax adjustment for these items.
About GSI Group Inc.
GSI Group Inc. supplies precision technology to the global medical, electronics, and industrial markets and semiconductor systems. GSI Group Inc.'s common shares are listed on Nasdaq (GSIG).
About Excel Technology
Founded in 1985, Excel and its wholly owned subsidiaries manufacture and market photonics-based solutions, consisting of laser systems and electro- optical components, primarily for industrial/commercial and scientific applications.
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