SIM.L Regulatory News (SIM)

Friday, January 14, 2022

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO ANY JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

SimiGon Ltd

("SimiGon" or the "Company")

Merger Proposal, Delisting and Notice of Special General Meeting of Shareholders

SimiGon (LON:SIM) a global leader in modelling, simulation & training solutions, is excited to announce that following months of negotiations, the Company has today entered into a definitive agreement to merge with Power Breezer Sub Ltd and Maxify Solutions Inc. ("Maxify") (the "Merger" and the "Merger Agreement"). The consideration for the Merger attributes a valuation to the Company of $8.5 million.

Assuming shareholder approval of the resolutions at the Special General Meeting of Shareholders (as further described below) and completion of the Merger, it is proposed that the Company will cancel its admission to trading on AIM of its shares.

Background of the Merger

In the past several years, SimiGon has focused on developing its strategies of growing its market share and enhancing its products and services portfolio. However, the Company's Board of Directors ("Directors") has periodically reviewed a variety of business strategies, including possible business combinations, with the Company's senior management and in certain circumstances also with external advisors. These reviews took account of the Company's financial performance and market, economic, competitive, and other conditions. During these discussions, the Directors and management have also noted the challenges of continuing on the path as an independent public company, operating in both a highly competitive and consolidating market.

SimiGon's management has been working on expanding the Company's offering to domains that are beyond its existing markets. Initial discussions with Breezer Holdings LLC ("Breezer") led to identifying multiple synergies between SimiGon's technology and the needs, the Company believes exists, in the Simulation Based Design of fulfilment and distribution centres. As Breezer already has a foothold in this domain, SimiGon and Breezer started discussions about a potential transaction and have been structuring the transaction and negotiating its terms for several months.

About Maxify

Maxify is a newly-formed Delaware corporation that, prior to the effective time of the Merger, shall acquire all the assets and activities of Breezer. Breezer is a provider of intelligent atomized water-cooling systems in the United States. Breezer's products cool where almost no other solution cost effectively can. Breezer's autonomous and green cooling solutions can help customers reduce the costs associated with keeping their employees cool during the heat of summer; accelerate throughput; increase quality; reduce employee turnover; reduce safety incidents; and comply with Occupational Health and Safety Administration workplace safety standards.

SimiGon Integration with Maxify

SimiGon's integration with Maxify is expected to enhance Breezer's capabilities in the e-commerce logistics space. Following the Merger, Maxify will combine the strengths of both Power Breezer and SimiGon's advanced technology to address the gaps of modern fulfilment centres in their integration of cutting-edge solutions from multiple automation suppliers. A True-to-life simulation is imperative for any mission critical design to come to life on time and on budget. However, with each equipment vendor owning its own proprietary simulation software, a best of breed equipment mix-and-match as well as true-to-life simulation have been beyond reach. SimiGon's product, SIMbox, being a true-to-life simulation design platform utilizing artificial intelligence, high fidelity physics, and augmented reality is uniquely positioned to close this gap. The Power Breezer Sky ("Sky") can benefit from complex software integration of the licensed AI, with the Sky's sensors and the creation of a customer graphical user interface. The Sky's sensor can provide customers with real-time and actionable data assisting its customers with managing their shipping dock related assets.

The Merger

In summary, the Merger is structured as the acquisition of both SimiGon and Breezer by a newly incorporated company, Maxify.

Pursuant to the Merger Agreement and upon completion and subject to customary closing conditions of the Merger Agreement, the Company will merge with Power Breezer Sub Ltd., a wholly-owned subsidiary of Maxify, following which the Company will become a wholly owned subsidiary of Maxify and the shareholders of the Company will receive shares in Maxify.

Merger Consideration:

The shareholders of SimiGon will receive shares of Common Stock of Maxify on the basis of a fully-diluted valuation of the Company of $8,500,000 against a fully-diluted pre-Merger valuation of Maxify of $135,000,000. The Merger Agreement provides that the relative valuation of SimiGon may be upwardly adjusted to $11,000,000 depending on certain circumstances specified in the Merger Agreement

The consideration per share to shareholders of SimiGon ("Merger Consideration") is expected to be $0.165 per share (before any upward adjustment in the relative valuation of SimiGon), that represents a premium of 226.86% to the average closing price on the AIM Market for the last 12 months, a premium of 250.66% to the average closing price on the AIM Market for the last 6 months, a premium of 285.54% to the closing price on the AIM Market on the last full trading day immediately preceding the public announcement of the Merger and a premium of 285.54% to the closing price on the AIM Market on Thursday, 13 January 2022 (being the most recent practicable date prior to the date of this announcement).

SimiGon engaged BDO Ziv Haft Consultation and Management Ltd. ("BDO") to provide the "Directors with a fairness opinion study on Breezer in order to determine its intrinsic value which was to the effect that, as of 15 December 2021 and based upon and subject to the various assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken as set forth therein, the valuation of Breezer exceeds $135 million.

BDO's opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by BDO in rendering its opinion. BDO's opinion was directed to the Directors and addresses only the valuation of Breezer as of the date of the opinion. It does not address any other aspects of the Merger and does not constitute a recommendation as to how any holder of Ordinary Shares should vote on the Merger or any matter related thereto. Further details of the BDO opinion are included in the notice of the Special General Meeting of Shareholders of the Company (as specified below).

The Delisting

The Directors has for some time been reviewing the merits or otherwise of the Ordinary Shares continuing to be admitted to trading on the AIM Market and remaining a public traded company in the UK.

SimiGon's shareholders currently effectively only have very limited liquidity on the AIM Market and the Directors does not perceive that this will change in the foreseeable future.

Following completion of the Merger, SimiGon's shareholders will hold shares in Maxify which will be a private company with no liquidity in its shares (other than the possibility of making a private sale to other stakeholders or prospective purchasers). The Directors believe that it is not feasible for SimiGon to put a formal post-Merger liquidity scheme in place for its shareholders; however, it is Maxify's intention to provide shareholders liquidity by consummating an initial public offering and listing of its shares on NASDAQ (the "IPO") as soon as practicable following the Merger.

The Directors have been informed by Maxify that it is at a fairly advanced stage in its preparation of a registration statement for this purpose. Although there can be no assurance as to the success, valuation or timing of Maxify's IPO, the Directors believe that this has a greater chance of providing liquidity, and if successful, increasing shareholder value for SimiGon's shareholders than remaining on the AIM Market and other readily available alternatives for SimiGon.

The following key factors have been taken into account by the Directors in reaching the conclusion that the cancellation of the admission of the Ordinary Shares to trading on the AIM Market (the "Delisting") is in the best interests of the Company and its shareholders as a whole:

The Delisting will not proceed should the Merger not complete.

Recommendation by the SimiGon Board of Directors

The Directors believe that the Merger, the Merger Agreement, and the other transactions contemplated by the Merger Agreement ("Merger Proposal") is fair to and in the best interests of SimiGon and its shareholders and unanimously recommends that you and the other SimiGon shareholders vote "FOR" the merger proposal and the delisting of the shares from the AIM market subject to the consummation of the merger. See "Our reasons for approving the merger" in the Notice to Shareholders.

Shareholders should not send any certificates representing ordinary shares with their proxy cards. If the Merger Proposal is approved and the Merger is subsequently completed, you will receive instructions for surrendering your certificates or electronic evidence of ownership in exchange for the Merger Consideration.

Shareholders are urged to vote, no matter how large or small your holdings may be.

Notice of Special General Meeting of Shareholders:

Shareholder approval is required to approve the Merger Agreement including all other transactions and arrangements contemplated by the Merger Agreement as well as the proposed Delisting (the "Resolutions").

The Special General Meeting of Shareholders of the Company is to be held at SimiGon's United States offices at 111 S. Maitland Avenue, Suite 210, Maitland, Florida 32751, USA, on Friday, February 18, 2022, commencing at 9.00 a.m. Eastern Standard Time (2.00 p.m. UK time), 4.00 pm Israel Time and thereafter as it may be adjourned from time to time (the "Meeting").

The Notice of the Meeting and related materials is being distributed to shareholders from today and this process is expected to be completed by January 19, 2022. An electronic copy will be made available from today on the Company's website: https://www.simigon.com/gm. The record date for the Meeting shall be Thursday, January 20, 2022.

Shareholders who cannot join the Meeting in person can join via conference call using the dial-in details as detailed on the Company's website: https://www.simigon.com/gm.

The Notice also includes certain other important disclosures, including: (but not limited to): important risk factors with regard to the Merger, that a termination fee of $1.25m may be payable should the Merger be terminated by SimiGon in favour of a competing proposal, and the effect that the Merger will have on share options held by directors, senior officers and executives of the Company including that certain existing share options held by an executive who is not a director will be exercised in accordance with their terms subsequent to the completion of the Merger. Shareholders are urged to read the Notice carefully.

Summary of anticipated timetable of events

Below is a summary of the anticipated timetable (all times in London time) regarding the Meeting, the completion of the Merger and the Delisting[1]:

If any of the above dates change, the revised dates will be notified to Shareholders through a Regulatory Information Service announcement with the dates following the Meeting being dependent on the Shareholders passing the resolutions being proposed at the Meeting.

Voting agreements from Certain Supporting Shareholders

The Company has received voting agreements from certain supporting shareholders to vote in favour of the Resolutions in respect of, in aggregate, 17,908,528 Ordinary Shares representing approximately 34.84% of the Company's issued share capital as at the date of this announcement.

Mr. Ami Vizer, SimiGon's Chief Executive Officer and Executive Chairman, said: "This Merger is an achievement for the Company and its shareholders. The Merger presents a compelling opportunity to achieve superior shareholder value and liquidity than SimiGon currently believes is possible as an independent company listed on AIM.

SimiGon's software technology capabilities are expected to be leveraged to an additional new domain with significant market potential that far exceeds our current target markets. Along with our current primary market of aviation-focused training and simulation, Maxify's adoption of SimiGon technologies will lead to the fully maximized value and capabilities of our software for the benefit of the Company and its shareholders.

SimiGon helped revolutionize the defence training and simulation market and I am immensely proud of all our accomplishments as the market has fully embraced our vision.

I would like to thank everyone who took part in this Merger Agreement for the continued great work through this period. We look forward to completing this Merger that will ultimately make us significantly stronger to better meet the expanded market demands."

Capitalised terms in this announcement, unless otherwise defined, have the same meaning as will be set out in the Notice.

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