Formal report in connection with the Public Offer by Danaher Corporation
Heerbrugg, Switzerland – In its report on the Public Offer by Danaher, it is stated that "the Board believes that the Danaher Offer is overall in the best interests of the Company, its employees, shareholders, suppliers as well as customers." The Board reiterates its unanimous recommendation to its shareholders to accept the Danaher Offer.
According to the Swiss Stock Exchange Act, the Board is legally obliged to set out, in a formal statement, all information relevant for the shareholders to make a decision on the Danaher Offer. The Board published its formal report on the Danaher Offer today, providing the Leica Geosystems shareholders with a detailed statement on the offer and the background to its recommendation to shareholders.
On 13 June 2005, Hexagon made an unsolicited public offer for all the shares of Leica Geosystems. After examining the offer in detail, the Board unanimously recommended that its shareholders reject the offer on the basis that the offer price of CHF 436 per share did not fully reflect the value of the Company and its prospects.
In response to the Hexagon Offer, the Board analysed all the available alternatives including a standalone strategy and a transaction with a ‘white knight’. To this end it also canvassed the views of many of the larger shareholders and also took into account the market reaction to the Hexagon Offer and the midterm financial plan extended until 2009.
Unanimous recommendation in favour of Danaher Offer
Following the publication of the Hexagon Offer, Danaher contacted the Board and informed them that it was interested in making a superior offer. After a limited period of due diligence the two parties entered into a transaction agreement on 25 July 2005 whereby Danaher agreed to launch an offer of CHF 500 on 28 July 2005. On this basis, the Board of Leica Geosystems agreed to recommend that its shareholders accept this offer.
The Board has also taken into consideration that the structure of the Company’s shareholders has substantially changed since the pre-announcement of the Hexagon Offer. Approximately two thirds of the outstanding shares have changed hands since the pre-announcement and the Board believes that approximately half of the share capital is now held by shareholders who have acquired these shares after publication of the Hexagon Offer and who have a short-term investment horizon.
Although the Board remains convinced that Leica Geosystems has a promising future on a stand-alone basis, the risk of the Hexagon Offer being successful at below fair value justified the Board’s view that it was in the best interests of the Company to hold discussions with third parties. Such discussions were undertaken to explore whether a fair value offer might be forthcoming. The result of these discussions culminated in the Danaher Offer.
The Board is of the unanimous opinion that the Danaher Offer of CHF 500 per share represents fair value to shareholders as supported by a fairness opinion of Lombard Odier Darier Hentsch and the advice of investment bank Credit Suisse First Boston and is clearly a superior offer when compared to the Hexagon Offer.
Danaher intends to continue the current strategy and initiatives of Leica Geosystems and not to make any significant changes to the Company’s organisational structure. It plans to accelerate the implementation of the profitable growth strategy that has been started in the US market and where there remains significant scope for expansion by Leica Geosystems.
The Board’s recommendation in favour of the Danaher Offer shall continue in the absence of any financially more attractive offer for the shareholders. Under Swiss law, Hexagon can increase its published offer up until the fifth trading day prior to the expiry of the offer period (expected to be 17 August 2005). A competing offer can be published up until the third trading day prior to the expiry of the offer period (expected to be 19 August 2005).
Potential Conflicts of Interest
This Board report also clarifies that the non-executive members of the Board do not get any kind of severance payments in the event that the Danaher Offer is declared successful. For the Corporate Management Team certain protective provisions are incorporated in the Employment Contracts and the Long Term Incentive Plan 2004, which will be triggered in the event of a termination by the Company of the respective employment relationship or a construed termination within 12 months following a change of control. The same protective provision applies to the employee stock option plans for all option holders. Such option plans will not be affected by the offer and the options shall vest in accordance with their respective terms. Danaher will pay the offer price for each share issued pursuant to the exercise of such options.
Leica Geosystems – a portrait
With close to 200 years of pioneering solutions to measure the world, Leica Geosystems products and services are trusted by professionals worldwide to help them capture, analyse, and present spatial information. Leica Geosystems is best known for its broad array of products that capture accurately, model quickly, analyse easily, and visualise and present spatial information in 3D. Those who use Leica products every day trust them for their dependability, the value they deliver, and the superior customer support. Based in Heerbrugg, Switzerland, Leica Geosystems is a global company with tens of thousands of customers supported by more than 2,400 employees in 23 countries and hundreds of partners located in more than 120 countries around the world. Leica Geosystems is a publicly listed company, registered with the Swiss Stock Exchange (SWX).