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The acquisition values the entire issued share capital of Sepura at about £74 million (US$92 million), representing a premium of 35.6 percent to the closing price of 14.75 pence per Sepura share 3 November when the companies first announced they were in discussions.
Hytera confirmed to the Sepura board of directors that the offer is solely in cash, and the Sepura board recommended that the offer be accepted.
“The offer and its impact on all Sepura stakeholders will now need to be carefully considered by Sepura shareholders before a final decision is made,” a statement said.
An information pack outlining the terms of the offer will be issued to Sepura shareholders in January, ahead of a general meeting to be held in February.
“This transaction with Hytera recognizes the underlying strengths of Sepura’s technology and customer base,” Alan Lovell, chairman of Sepura, said. “It will provide certainty for our stakeholders and secure the future of the business. There will be additional opportunities and benefits for the business and its employees as part of a larger group.”
“In the meantime, it is business as usual for Sepura, and we will continue to provide our customers and partners with consistent, high-quality service and support,” he said.
Sepura purchased Spanish PMR firm Teltronic in 2015 for US$144.5 million through a partial draw down of a new debt facility of US$136 million. Earlier this year, the company withdrew from the Digital Mobile Radio (DMR) market and announced plans to raise £65 million (US$84.2 million) in new capital to address increased debt following the Teltronic acquisition. In November, Sepura appointed Andy Leeser nonexecutive director to improve stakeholder value.
A statement said Sepura represents a strategic fit with Hytera's existing operations, and the acquisition will broaden the range of products and services Hytera can offer to its customers. Hytera manufactures DMR and TETRA equipment. Sepura is focused on the worldwide TETRA market, particularly naming North America and the global transportation sectors as focus areas earlier this year.
The acquisition will be implemented by a court-sanctioned scheme of arrangement under Part 26 of the Companies Act. The purpose of the scheme is to allow Bidco to become the owner of the whole of the issued and to be issued ordinary share capital of Sepura. The scheme will be put to Sepura shareholders at the court meeting and at the general meeting. The scheme must be approved by a majority of the Sepura shareholders voting at the court meeting, either in person or by proxy, representing at least 75 percent. Sepura shareholders at the general meeting must also approve the implementation of the scheme.
"We are very pleased to reach this agreement with Sepura,” said Chen Qingzhou, chairman and CEO of Hytera. “The industry in which we operate is undergoing significant changes, and Sepura represents an excellent strategic fit for Hytera and will allow us to expand the range of products and services we provide to our clients around the world."
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