(Alliance News) - RWS Holdings PLC and SDL PLC on Thursday unveiled plans for an all-share tie-up with a view of creating "the world's leading language services and technology group".
Under the terms of the deal, SDL shareholders will be entitled to receive 1.2246 new RWS shares for each SDL stock they own.
Based on the exchange ratio and RWS's closing price of 741 pence on Wednesday, the deal values SDL shares at 907p. The duo noted this is a 52% premium to SDL's closing price of 598p per share on Wednesday. The transaction values all of SDL at roughly GBP854 million.
RWS shares were down 5.3% at 702.00p each in London on Thursday morning. SDL surged 41% to 842.82p. At those market prices, RWS has a market capitalisation of GBP1.93 billion and SDL GBP767.9 million.
RWS shareholders will hold just over 70% of the enlarged firm, with SDL shareholders just shy of 30%.
RWS added that the deal has received the support of roughly 34% of SDL shareholders.
"The combination will create the world's leading language services and technology group. The combined group will have broad capabilities across a range of language services, language and content software and IP services, combining the complementary strengths of RWS' specialist technical translation and localisation capabilities with SDL's software, machine translation and AI capabilities," a joint statement said on Thursday.
"The combined group will be the largest language services and software company in the world and will have an expanded geographical footprint across the US, UK, continental Europe, Asia, Canada and South America."
Buckinghamshire-based RWS said it expects the deal with Berkshire-based SDL to result in cost synergies of about GBP15 million by the end of the first full financial year following the tie-up being sealed.
"In addition, the RWS board expects that the combination will, over time, provide the opportunity for further margin improvements and revenue synergies due to increased utilisation of SDL's market leading technology and the exploitation of cross-selling opportunities, particularly in relation to RWS' IP Services and SDL's content technologies. The RWS board expects that the combination will result in double-digit earnings per share accretion in the first full financial year post completion," RWS added.
RWS's Chair Andrew Brode, Chief Executive Officer Richard Thompson and Chief Financial Officer Desmond Glass will hold the same roles at the enlarged firm. The rest of the board will include two RWS non-executives, including one that will not stand for re-election at the first annual general meeting of the combined company, and two current SDL board members. SDL Non-Executive Chair David Clayton will be one of the company's two board members joining the enlarged firm.
By Eric Cunha; ericcunha@alliancenews.com
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