Is another New Zealand company about to go offshore? US-based enterprise tech company Emulex has reached out to Endace with a cash bid and secured lock-up agreements with chairman and co-founder Dr Ian Graham and chief executive Mike Riley. The board, including fellow co-founder Selwyn Pellett, has also expressed support for the deal and is recommending shareholders accept it.
Endace is a network monitoring company that provides services to government security agencies, international telecommunication companies, investment banks, and major corporations. Endace trades on London's AIM under the symbol EDA.
Emulex's offer is for £5 per share, a 65 percent premium to the closing price yesterday.
The offer is subject to receiving acceptances for shares that confer 90 percent or more of the voting rights in Endace, approval from the Overseas Investment Office and consent from the Ministry of Business Innovation and Employment in respect of the status of various grants received by Endace adding up to millions of dollars.
The directors have commissioned Grant Samuel in Auckland to provide an independent adviser’s report. An offer document is expected to be sent to shareholders just before Christmas, on December 21.
Endace’s deputy chairman John Scott said: “I believe this is a compelling offer for Endace and its shareholders ... As a relatively small independent technology company competing in a large and growing market, joining forces with Emulex makes excellent sense, and is a very satisfactory outcome to the process of evaluating our strategic options."
Endace had a good working relationship with Emulex, he said, and the offer was "financially and strategically attractive".
"The offer price of £5 per share represents a premium of 209 percent to our share price at flotation."
Emulex said in a statement it plans to retain the existing Endace brand and businesses in New Zealand, but de-list its shares from the AIM.
If it fails in its bid, it plans to seek representation on the Endace board and "participate in decisions relating to Endace and its future".
“This acquisition provides Emulex with a strategic entry point into the network performance management space at a disruptive point in time, as speeds move to 10GB, making network visibility from end-to-end a critical requirement in a converged network environment,” said Jim McCluney, chief executive officer, Emulex. “Acquiring Endace aligns with our software-defined convergence strategy, doubles our total addressable market and places Emulex in another high-margin, high-growth market."