Lumenpulse Shareholders to Receive $21.25 Per Share in Cash. Approx 600M CAD ($440M)
MONTRÉAL, QUÉBEC–(Marketwired – April 27, 2017) – Lumenpulse Inc. (TSX:LMP) (“Lumenpulse” or the “Company”), the parent company of Lumenpulse Group, a leading manufacturer of high performance, specification-grade LED lighting solutions, is pleased to announce that it has entered into an arrangement agreement (the “Arrangement Agreement”) pursuant to which a group led by Mr. François-Xavier Souvay, the Founder, President and CEO of Lumenpulse, several other existing shareholders of the Company and Power Energy Corporation, a wholly-owned subsidiary of Power Corporation of Canada (collectively, the “Consortium”), will acquire all of the issued and outstanding common shares of Lumenpulse by way of a plan of arrangement for $21.25 per share in cash.
The consideration offered to Lumenpulse shareholders represents a premium of 85.8% to the April 26, 2017 closing price of Lumenpulse shares on the Toronto Stock Exchange and a premium of 44.8% to the 90-day volume weighted average price of Lumenpulse shares on the Toronto Stock Exchange from December 15, 2016 to April 26, 2017.
The transaction has been approved unanimously by the Lumenpulse Board of Directors (with interested and non-independent directors abstaining) following receipt of the unanimous recommendation by a Special Committee of Lumenpulse composed entirely of independent directors (the “Special Committee”).
“This transaction is another important step for Lumenpulse, its shareholders, employees, agents and valued business partners,” said Mr. Souvay. “As a private company, we will have the resources and flexibility to continue our growth, increase our focus on innovation and the development of new products, and take another giant step towards becoming a true global leader in the high performance architectural specification grade lighting sector.”
“Power Corporation is pleased to be associating itself with François-Xavier Souvay. We have great confidence in his leadership. As the founder and CEO, François-Xavier and his talented entrepreneurial management team have grown this Montreal-based company into an important global player. Their philosophy is truly aligned with our long-term value creation model,” said Mr. Olivier Desmarais, Chairman of Power Energy and Senior Vice-President of Power Corporation of Canada.
Pierre Larochelle, CEO of Power Energy, said, “LED technologies have fundamentally changed the lighting industry, creating new global opportunities for innovators like Lumenpulse. This investment aligns with our strategic focus on sustainable technologies and is a natural fit for Power Energy.”
“Continuity was very important to me. As the founder and CEO of Lumenpulse, I am excited and motivated to continue to lead this great organization. We are still full of energy and ideas and together with our new partner Power Energy, we are ready to take the company to the next level,” said Mr. Souvay. He added, “We are extremely honored to have Power Energy as a partner going forward. They are a knowledgeable, long-term investor that shares our passion for innovation in sustainable lighting technology.”
Independent Valuation Process
The Special Committee is comprised of the following independent directors: Pierre Fitzgibbon, François Côté and Josée Perreault. The Special Committee retained CIBC Capital Markets (“CIBC”) as financial advisor and PricewaterhouseCoopers LLP (“PwC”) as independent valuator. In arriving at its unanimous recommendation in favour of the transaction, the Special Committee considered several factors which will be outlined in public filings to be made in connection therewith. These include a formal valuation report by PwC and fairness opinions by PwC and CIBC. PwC provided the Special Committee with a formal valuation, completed under the Special Committee’s supervision, which reflected the determination that, as at April 26, 2017, subject to the assumptions, limitations and qualifications contained therein, the fair market value of the shares of the Company was between $20.00 and $23.00 per share. Each of PwC and CIBC provided an opinion to the effect that, as at April 26, 2017, subject to the assumptions, limitations and qualifications contained therein, the consideration to be received by the disinterested shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to such shareholders. Copies of the PwC valuation report and the PwC and CIBC fairness opinions and other relevant background information will be included in the management proxy circular that will be mailed to Lumenpulse shareholders for the special meeting of shareholders anticipated to be held in June 2017 to approve the proposed transaction.
Mr. Souvay, Nicolas Bélanger and Michel Ringuet, each of whom are Lumenpulse directors and members of the Consortium, as well as Mr. Larochelle, who also serves as a Lumenpulse director, did not participate in the deliberations of the Lumenpulse Board in relation to the evaluation of the proposed transaction led by the Special Committee. Messrs. Souvay, Bélanger and Ringuet as well as the other existing shareholders who are members of the Consortium (collectively, the “Rollover Shareholders”) collectively hold approximately 40% of the issued and outstanding shares of the Company. Such Rollover Shareholders have indicated that they are only prepared to partner with Power Energy and that they are not prepared to pursue any other transaction. Accordingly, they have entered into irrevocable support and voting agreements and have agreed to vote in favour and support the completion of the proposed transaction for a period of 12 months following today’s date.
Additional Transaction Details
To be implemented, the proposed transaction requires approval of at least 66 2/3% of the votes cast by all holders of Lumenpulse shares. The proposed transaction will also require approval by a simple majority of votes cast by disinterested holders of Lumenpulse shares (excluding for purposes of such vote the Rollover Shareholders). The plan of arrangement is also subject to court approval and the satisfaction of other customary closing conditions, including receipts of regulatory approvals.
The Arrangement Agreement contains a non-solicitation covenant on the part of the Company, subject to the customary “fiduciary out” provisions. A termination fee of $8 million would be payable to the Consortium in certain circumstances, including in the context of a superior proposal supported by the Company. The Company would also be entitled to a reverse termination fee of $8 million if the transaction is not completed in certain circumstances.
Further details regarding the applicable voting requirements and court and regulatory approvals to be obtained will be contained in the management proxy circular to be mailed to shareholders in connection with the proposed transaction. The management proxy circular as well as the Arrangement Agreement will be made available under the profile of the Company at www.sedar.com.
Mr. Souvay will be the President and Chief Executive Officer of the private company and will remain involved in all aspects of the business and operations. The transaction values the Company at approximately $600 million.
Advisors
CIBC Capital Markets acts as financial advisor and Norton Rose Fulbright Canada LLP serves as legal counsel to the Lumenpulse Special Committee. Fasken Martineau DuMoulin LLP serves as legal counsel to the Company. National Bank Financial Inc. is the financial advisor to the Consortium and Stikeman Elliott LLP acts as its legal counsel.
About Lumenpulse Group
Founded in 2006, the Lumenpulse Group designs, develops, manufactures and sells a wide range of high performance and sustainable specification-grade LED lighting solutions for commercial, institutional and urban environments. The Lumenpulse Group is a leading pure-play specification-grade LED lighting solutions provider and has earned many awards and recognitions, including several Product Innovation Awards (PIA), three Next Generation Luminaires Design Awards, two Red Dot Product Design Awards, a Lightfair Innovation Award, and an iF Design Award. The Lumenpulse Group now has 670 employees worldwide, with corporate headquarters in Montreal, Canada, and offices in Vancouver, Québec City, Boston, Paris, Florence, London and Manchester. Lumenpulse Inc., the parent company of the Lumenpulse Group, is listed on the Toronto Stock Exchange under the symbol LMP. For more information, visit www.lumenpulsegroup.com.
About Power Energy
Power Energy Corporation is a wholly-owned subsidiary of Power Corporation of Canada established in 2012, with an objective to invest in the sustainable and renewable energy sector. Power Energy invests in and develops companies that can provide stable and growing long-term recurring cash flows. Power Energy currently holds investments in two companies: Potentia Renewables Inc., a renewable energy power producer active in North America, and Eagle Creek Renewable Energy, a U.S.-based owner and operator of hydropower facilities.