The merger will provide benefits for issuers, members and investors. Examples of benefits include increased liquidity, efficient member access, a broader range of services and lower costs when connecting to the Nordic markets.
The merger will create value for the companies' shareholders through substantial cost savings realized by operational efficiencies and implementation of OM Technology's trading and CSD platforms at HEX. OM HEX had, pro forma, around 2,030 employees in 13 countries as of March 31, 2003. Pro forma revenues for 2002 were SEK 3,487 m/EUR 381 m, net income was SEK 174 m/EUR 19 m, EPS was SEK 1.5/EUR 0.2 and the equity/assets ratio was 51 per cent at March 31, 2003.
OM HEX will invite other Nordic and Baltic marketplaces - exchanges, clearing houses and CSDs - to participate in the integration through mergers or expansion of existing or new co-operations. Furthermore, the parties believe that the merger will strengthen existing business relationships with EDX London, Eurex and the NOREX Alliance.
- OM HEX will be a leading provider of marketplace services and transaction technology through its two divisions, HEX Integrated Markets and OM Technology. HEX Integrated Markets will comprise northern Europe's largest securities market, while OM Technology will strengthen its position as a leading provider of transaction technology to the world's financial and energy markets.
- The parent company of the new group, OM, is proposed to change its name to OM HEX AB (publ). OM HEX's intention is to seek a listing on the Helsinki Exchanges to commence as soon as possible after completion of the offer. The corporate headquarters and domicile of OM HEX will be in Stockholm. The headquarters of HEX Integrated Markets will be in Helsinki
and the headquarters of OM Technology in Stockholm. The company's official corporate language will be English.
- The merger shall be effected through an offer by OM to HEX's shareholders whereby the consideration to HEX's shareholders shall be newly issued shares in OM. OM offers 2.5 newly issued shares in OM for each share in HEX, implying a relative value contribution of about 29 per cent from HEX and 71 per cent from OM. However, OM already holds 15.6 per cent (2,103,717 shares) of HEX as of May 19, 2003. HEX will, conditionally upon the completion of the offer, and subject to a resolution by the shareholder's meeting, distribute an extra dividend of EUR 2.20 per share, amounting to SEK 272 m/EUR 29.6 m, in addition to the dividend of EUR 1.00 per share already distributed for the financial year 2002. Holders of HEX warrants are offered a cash consideration of EUR 5.90 per warrant.
- The intention is that the Board of Directors of OM HEX will have a fair representation of the merged parties' Board of Directors. The Nomination Committee of OM proposes to the shareholders of OM, subject to and with effect as from completion of the offer, the following to be appointed Directors of the Board of OM HEX: Olof Stenhammar (Chairman), Gunnar Brock, Thomas Franzén, Adine Grate Axén, Bengt Halse, Timo Ihamuotila, Tarmo Korpela, Mikael Lilius, and Markku Pohjola.
- It is proposed that the Board of Directors of OM HEX appoints Magnus Böcker as acting President and CEO of OM HEX. Jukka Ruuska is proposed as President of the HEX Integrated Markets division and Deputy to Magnus Böcker. Kerstin Hessius is proposed deputy to Jukka Ruuska. Klas Ståhl is proposed as acting President of OM Technology division.
- The Board of Directors of HEX recommends that the HEX shareholders accept the offer. The Board of Directors will also provide the HEX warrant holders with a recommendation to accept the warrant offer. The Board of Directors of OM recommends that the OM shareholders vote for the necessary resolutions at OM's shareholders' meeting.
- The offer value for outstanding shares in HEX, i.e. excluding HEX shares held by OM but including the offer to HEX warrant holders, amounts to SEK 1,575 m/EUR 171 m, based on the closing share price of OM of SEK 53.00 and a SEK/EUR exchange rate of 9.19 on May 19, 2003. The implicit total value of 100 per cent of HEX, including the offer to HEX warrant holders and the extraordinary dividend to be distributed, is SEK 2,126 m/EUR 231 m.
- Through operational efficiencies and the implementation of OM's technology at HEX, the merger is expected to create annual cost savings in the area of SEK 180 m/EUR 20 m pre-tax with full effect within three years. Transaction and restructuring costs are estimated at around SEK 360 m/EUR 39 m pre-tax, related to, for example, costs for harmonisation of technology, write-downs of certain transaction related systems in HEX and redundancies. No revenue synergies have been quantified, although the merger is expected to have positive dynamic effects on revenues through the introduction of new products and a general increase in the marketplaces attractiveness. The merger will also result in one of OM Technology's largest orders to date.
"The HEX Board is pleased to announce this merger and to recommend the offer to HEX's shareholders. The Board believes that combining HEX's and OM's businesses will create significant value both to HEX shareholders and Finnish and Baltic market participants", comments Tarmo Korpela, Chairman of the HEX Board.
"This merger, which has the full support of the Boards of both companies, is a major step and a break-through towards higher efficiency in the Nordic securities markets, bringing great benefits and added value to customers and shareholders alike", comments Olof Stenhammar, Chairman of the OM Board.
"The core of HEX's strategy is to secure the best possible liquidity for Finnish and Baltic securities. Joining forces with OM and the creation of the new integrated marketplace will boost the liquidity and create many new opportunities for Nordic and Baltic issuers, investors and members. The cutting edge technology provided by OM Technology will further strengthen our combined competitive position", says Jukka Ruuska, President and CEO of HEX.
"Based on our vision, this pioneering step will guarantee that the Nordic region will be a truly integrated market based on a common technology platform. The merger continues to build on OM's strategy, creating competitiveness by combining world leading technology with highly efficient markets", says Magnus Böcker, deputy CEO of OM, acting President and CEO of OM as of June 1, 2003.
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