Dialight Regulatory News (DIA)

17 Jun 2005 07:00

Roxboro Group PLC17 June 2005 FOR RELEASE AT 7.00 A.M. ON FRIDAY 17 JUNE 2005 THE ROXBORO GROUP PLC PROPOSED DISPOSAL OF MOBREY The Roxboro Group PLC, the international specialist electronics group, announcesthe proposed disposal of Mobrey, its process measurement and control equipmentbusiness, to Emerson. Highlights: • Disposal of Mobrey to Emerson for £26.0 million payable in cash by Emerson at Completion • Profit after expenses and taxation on the Disposal of approximately £2.4 million on a pro forma basis • Mobrey is active in the design and manufacture of process measurement and control equipment and offers a single-source supply for an extensive range of level, flow, pressure density, viscosity, suspended solid and data acquisition measurement devices • The Board has concluded that Mobrey's technology and market positions would benefit from being part of a larger global group focused on the process instrumentation sector. Consequently, the Board initiated a process which has culminated in the recommended Disposal • The Disposal does not include the trade and assets of the Analytical Product Line which are being retained by Roxboro within the Continuing Solartron Group • The Disposal is conditional, inter alia, on the approval of Roxboro's Ordinary Shareholders which will be sought at an EGM to be held in July 2005 • Following Completion, the Board will continue to review the Continuing Group's capital requirements with a view to proposing a return of cash to Ordinary Shareholders within a reasonable period. The Board will make further announcements with its proposals when appropriate Commenting on the Disposal, Harry Tee, Roxboro's Chief Executive, said: "I am very pleased to be announcing this disposal today as it forms part of theGroup strategy of becoming more focused and of generating shareholder value.Mobrey is a high quality business producing "best-of-breed" products but itsfurther development would be best served as part of a larger global group.Roxboro will now comprise the retained Solartron high-margin businesses, focusedon niche measurement sectors, together with Dialight, our growing electroniclighting division. Dialight has exciting potential and performed well in 2004 with operatingprofits increasing five-fold. Solid state lighting has many clear advantagesover traditional lighting and as such the number of applications and demand foradvanced solid state lighting products is expected to continue to show goodgrowth." Roxboro Harry Tee 01480 447 490 Alf Vaisey 01480 447 490 Close Brothers Andrew Cunningham 020 7655 3100 Shane Lawlor 020 7655 3100 gcg hudson sandler Alistair Mackinnon-Musson 020 7796 4133 Philip Dennis 020 7796 4133 E-mail: Roxboro@hspr.co.uk A circular (the "Circular") containing further details relating to the Disposaland the convening of the EGM will be sent to Shareholders shortly. Close Brothers Corporate Finance Limited, which is regulated in the UnitedKingdom by The Financial Services Authority, is acting exclusively for TheRoxboro Group PLC and for no one else in relation to the Disposal and will notbe responsible to anyone other than The Roxboro Group PLC for providing theprotections afforded to clients of Close Brothers Corporate Finance Limited orfor providing advice in relation to the Disposal or on any matter referred toherein. FOR RELEASE AT 7.00 A.M. ON FRIDAY 17 JUNE 2005 THE ROXBORO GROUP PLC PROPOSED DISPOSAL OF MOBREY Introduction The Board of Roxboro announces that it has entered into a conditional agreementto sell Mobrey, a business unit of Roxboro's Solartron division focused on theprocess instrumentation sector, to Emerson for £26.0 million, subject toAdjustments, payable in cash on Completion. Roxboro will retain SolartronMetrology and Solartron ISA as well as the Analytical Product Line which is notincluded in the Disposal and has been extracted from Mobrey. Due to the size of the transaction, the Disposal is conditional, amongst otherthings, on the approval of Ordinary Shareholders which is to be sought at anExtraordinary General Meeting to be held in July 2005. Background to, and reasons for, the Disposal Following the disposal of Roxboro's aerospace sensors business, WestonAerospace, in 2003, the Board has continued to review how additional shareholdervalue in Roxboro could be generated. As a result Roxboro has continued todevelop a strategy more focused on niche, high growth opportunities and theBoard has concluded that Mobrey's technology and market positions would benefitfrom being part of a larger global group focused on the process instrumentationsector. Consequently, the Board initiated a process which has culminated in theDisposal, the terms of which the Board is recommending to Ordinary Shareholders. Information on the Mobrey Business Mobrey is active in the design and manufacture of process measurement andcontrol equipment. Mobrey offers a single-source supply for an extensive rangeof level, flow, pressure density, viscosity, suspended solid and dataacquisition measurement devices. Mobrey's products provide continuous precision monitoring technology to processindustries world-wide, including applications in nuclear and fossil fuel powergeneration plants, oil and gas production and refining, water and wastetreatment and the chemicals, pharmaceuticals and food industries. Historically, the Mobrey Companies contained both Mobrey and the AnalyticalProduct Line for financial information and operational purposes. Analytical willremain with the Roxboro Group as part of the Continuing Solartron Group and hasbeen transferred out of the Mobrey Companies under the Analytical TransferDocuments. In the financial year ended 31 December 2004, the Mobrey Companiesgenerated gross profit of £16.2 million and operating profit of £3.3 million onturnover of £47.5 million. As at 31 December 2004, the net assets of the MobreyCompanies were £4.9 million. Included within these financial results is turnoverof £8.5 million and gross profit of £3.7 million relating to the AnalyticalProduct Line. As a result of Analytical being a product line within the MobreyCompanies, appropriate financial information to present an analysis of theoperating profit of Analytical is not available; however, overhead costsdirectly attributable to the Analytical Product Line of £1.6 million have beenidentified for the financial year ended 31 December 2004. The net assets ofAnalytical as at 31 December 2004, included within the Mobrey Companies, were£9.6 million. Information on Emerson Emerson is a diversified global technology company which designs and suppliesproduct technology and delivers engineering services to a wide range ofindustrial, commercial and consumer markets around the world. Operations includethe manufacture of electrical, electromechanical, and electronic products, manyof which are used to control gases, liquids, and electricity. Emerson has more than 60 divisions that operate approximately 245 manufacturinglocations worldwide and market products in over 150 countries. Emerson employsapproximately 107,800 people around the world and had revenues of approximatelyUS$15.6 billion in the financial year ended 30 September 2004. Principal terms and conditions of the Disposal Under the terms of the Agreement, the aggregate consideration for the Disposalof £26.0 million is payable in cash, subject to Adjustments. The Agreementcontains certain warranties and indemnities given by Roxboro and RoxboroHoldings Inc. to the Purchaser which the Board considers to be appropriate for atransaction of this type. The Disposal is conditional upon Roxboro obtaining the approval of its OrdinaryShareholders at the Extraordinary General Meeting and a mandatory regulatorycompetition clearance in Germany. Completion is expected to occur on the samedate as (or shortly after) Ordinary Shareholder approval has been obtained. Financial effects of the Disposal and use of proceeds The proceeds of the Disposal before expenses and taxation are expected to be£26.0 million before Adjustments. The net proceeds of the Disposal beforeAdjustments but after expenses and taxation are expected to be £20.5 million.Based on Mobrey's net assets (excluding intra-Group balances) of £9.1 million asat 31 December 2004 and after the charging of goodwill contained in the RoxboroGroup balance sheet of £9.0 million, the Disposal would result in a profit afterexpenses and taxation of approximately £2.4 million on a pro forma basis. Following Completion, the net proceeds of the Disposal will be held on deposit,as an interim measure, whilst the Board reviews the Continuing Group's capitalrequirements with a view to proposing a return of cash to Ordinary Shareholderswithin a reasonable period. The Board will make further announcements with itsproposals when appropriate. On a pro forma basis and after taking account of the Disposal and the AnalyticalTransfer Documents, the Continuing Group's net cash position at 31 December 2004was £27.3 million. Current trading and prospects of the Continuing Group At the Annual General Meeting of Roxboro on 10 May 2005 it was reported therehad been no significant change in the markets serviced by the Group since thepreliminary results announcement in March 2005. This remains the case. Although a number of projects within the oil and gas sector previouslyanticipated for the first half are now expected to be secured in the second halfof the year, the order book for the Continuing Solartron Group has strengthenedsince the beginning of the year. The electronics sector weakened in the second half of last year and althoughsome improvement has been experienced in the first half of the current year,volumes in Dialight's optoelectronic product line have not reached the firsthalf levels of last year; however, the prospects for Dialight remain encouragingas demand for solid state lighting products is expected to continue to show goodgrowth. Overall the Board views the prospects of the Continuing Group with confidence asit pursues its strategy focused on niche high growth opportunities andgenerating shareholder value. Circular to Shareholders The Circular convening the Extraordinary General Meeting will be posted toShareholders shortly. DEFINITIONS The following definitions apply throughout this announcement: "Adjustments" the adjustments to the purchase price of the Mobrey Companies for net cash, tax liabilities in the period to Completion and working capital to be made pursuant to the Agreement; "Agreement" the conditional share sale and purchase agreement relating to the Disposal dated 16 June 2005 between Roxboro, Roxboro Holdings Inc. and the Purchaser; "Analytical" or "Analytical Product a product line formerly contained within the Mobrey Companies, theLine" trade and assets of which were transferred out of the Mobrey Companies in advance of the Disposal under the Analytical Transfer Documents; "Analytical Transfer Documents" the agreements entered into on 6 June 2005 and 16 June 2005 collectively effecting the transfer of the trade and assets of the Analytical Product Line out of the Mobrey Companies; "B Shares" redeemable, non-cumulative preference shares of 75p each in the capital of Roxboro; "Board" or "Directors" the directors of Roxboro; "Close Brothers" Close Brothers Corporate Finance Limited; "Completion" completion of the Disposal; "Continuing Group" Roxboro and its subsidiary undertakings following Completion; "Continuing Solartron Group" the remaining Solartron Group after the Disposal comprising the Solartron Metrology and Solartron ISA businesses as well as the Analytical Product Line; "Dialight" Roxboro's solid state lighting business; "Disposal" the proposed disposal of the Mobrey Companies on the terms set out in the Agreement;"Emerson" Emerson Electric Company, Inc.; "EGM" or "Extraordinary the extraordinary general meeting of the Company to be held in JulyGeneral Meeting" 2005 (or any adjournment thereof); "FSMA" Financial Services and Markets Act 2000 (as amended); "Mobrey" or "Mobrey Business" the business undertaken by the Mobrey Companies following the disposal of the Analytical Product Line pursuant to the Analytical Transfer Documents; "Mobrey Companies" Solartron Group PLC and Solartron Inc. and their respective subsidiaries; "Ordinary Shares" ordinary shares of 1.89p each in the share capital of Roxboro; "Ordinary Shareholders" the holders of Ordinary Shares; "Purchaser" Emerson Holding Company Limited, a wholly owned subsidiary of Emerson;"Resolution" the ordinary resolution to be proposed at the EGM; "Roxboro" or the "Company" The Roxboro Group PLC; "Roxboro Group" or "Group" Roxboro and its subsidiaries; "Shareholders" the holders of Ordinary Shares and the holders of B Shares; "Solartron" or "Solartron Group" the Solartron group of companies before the Disposal comprising the Solartron Metrology and Solartron ISA businesses, the Mobrey Business and the Analytical Product Line; "Solartron ISA" Solartron's business involved in the design and supply of flow-metering products and solutions for the oil and gas market; "Solartron Metrology" Solartron's business involved in the design and supply of gauging and position measurement sensors; "UKLA" the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of FSMA. This information is provided by RNS The company news service from the London Stock Exchange