Viasystems Group, Inc. (NASDAQ: VIAS), and DDi Corp. (NASDAQ:
DDIC) announced today that they have entered into a definitive
merger agreement pursuant to which Viasystems will acquire DDi for
$13.00 per share in cash, which represents a 20% premium to the
volume weighted average price of DDi’s common stock over the last
three months. The total transaction value is approximately $282
million, or $268 million net of DDi’s cash plus debt assumed.
With this acquisition, Viasystems will combine its large,
high volume footprint in China and North America with DDi’s high
mix, low volume footprint in North America to create a clear leader
in the printed circuit board (“PCB”) industry with global
capabilities and scale. The transaction allows Viasystems,
already a leading market player in the automotive segment, to
increase its market share in the technically demanding military and
aerospace market and the growing industrial & instrumentation
market while broadening its customer base. In addition, the
acquisition of DDi expands Viasystems’ quick-turn manufacturing
capability and adds flex and rigid-flex product offerings, which
will provide additional sales opportunities through Viasystems’
existing customer base.
DDi’s customers, meanwhile, will continue to have access to
state of the art, higher technology quick-turn manufacturing
services and gain seamless access to a higher volume, lower cost
complex PCB manufacturing source off shore.
Based on the results for the twelve months ended December 31,
2011 for Viasystems and DDi, on a pro forma basis, the combined
operation would have had approximately $1,320 million of revenue,
and, excluding any cost synergies, pro forma Adjusted EBITDA would
have been approximately $183 million. Viasystems expects the
transaction to be immediately accretive to Adjusted EPS, even
without the impact of anticipated cost synergies, which Viasystems
expects to be at least $10 million annually, before income tax
effects, and realizable within 6 months after closing. Adjusted
EBITDA and Adjusted EPS are defined below.
Following the closing of the transaction, the combined company
will have approximately 15,650 employees and manufacturing floor
space exceeding 4.3 million square feet in China and 1.0 million
square feet in North America.
David Sindelar, Chief Executive Officer of Viasystems, said,
“This transaction combines two market leaders and strengthens
Viasystems’ position as a world-class leader in PCB and related
electro-mechanical solutions by expanding our technology and
manufacturing capabilities, diversifying our end markets and
broadening our customer base and product portfolio. Ultimately,
this transaction creates a larger platform which Viasystems can
better leverage to serve our customers and to generate attractive
returns for our shareholders. Further, the addition of DDi
strengthens Viasystems’ financial model and enables us to achieve
even higher levels of profitability and cash generation.”
Mikel Williams, Chief Executive Officer of DDi, said, “We
believe that this transaction is an excellent opportunity to
realize value for DDi shareholders and creates new opportunities
for our customers and employees. Viasystems provides the
opportunity for our customers to expand with the combined company
into the Asian-based high volume market while also having the
ability to offer our leading quick-turn and prototyping
capabilities to Viasystems’ customers. Like DDi, Viasystems has an
excellent reputation as a trusted provider of PCBs to customers
whose products demand high reliability, and we look forward to
continuing to address the ever-changing needs of the PCB industry
as part of the Viasystems team.”
Transaction Details
The terms of the agreement were unanimously approved by the
boards of directors of both Viasystems and DDi. The acquisition is
subject to customary closing conditions, including the receipt of
regulatory approvals and adoption of the merger agreement by DDi
shareholders, and is expected to be completed late in the second
quarter or early in the third quarter of calendar 2012. All members
of DDi’s board of directors and certain members of management have
agreed to vote a number of common shares representing approximately
23% of the outstanding shares of DDi in favor of the merger.
The transaction is not subject to a financing condition as
Viasystems has received a financing commitment from Goldman Sachs
Bank USA, an affiliate of Wells Fargo Securities, LLC and Stifel
Financial in connection with the acquisition. Stifel Nicolaus
Weisel is acting as exclusive financial advisor and Jones Day is
acting as legal counsel to Viasystems. Jefferies & Company and
Mooreland Partners LLC are acting as financial advisors and Paul
Hastings LLP is acting as legal counsel to DDi. Jefferies &
Company has also provided a Fairness Opinion to the board of
directors of DDi.
Use of Non-GAAP Financial
Measures
In addition to the condensed consolidated financial statements
presented in accordance with U.S. GAAP, management and DDi use
certain non-GAAP financial measures, including “Adjusted EBITDA”
and “Adjusted EPS”.
Adjusted EBITDA is defined as net income adjusted to exclude
charges for depreciation, amortization, net interest expense,
income taxes, restructuring and impairment, non cash stock
compensation, costs related to acquisitions and equity
registrations and other expense, net. For reconciliation of
adjusted EBITDA to net income please see Appendix A to our
presentation filed as Exhibit 99.2 to our Current Report on Form
8-K filed on April 4, 2012.
Adjusted EBITDA is not a recognized financial measure under U.S.
GAAP, and does not purport to be an alternative to operating income
or an indicator of operating performance. Adjusted EBITDA is
presented to enhance an understanding of operating results and is
not intended to represent cash flows or results of operations. The
Board of Directors, lenders and management use Adjusted EBITDA
primarily as an additional measure of operating performance for
matters including executive compensation and competitor
comparisons. The use of this non-GAAP measure provides an
indication of the company’s ability to service debt, and management
considers it an appropriate measure to use because of the company’s
leveraged position. Adjusted EBITDA has certain material
limitations, primarily due to the exclusion of certain amounts that
are material to the company’s consolidated results of operations,
such as interest expense, income tax expense, and depreciation and
amortization. In addition, Adjusted EBITDA may differ from the
Adjusted EBITDA calculations reported by other companies in the
industry, limiting its usefulness as a comparative measure.
Viasystems uses Adjusted EBITDA to provide meaningful
supplemental information regarding operating performance and
profitability by excluding from EBITDA certain items that the
company believes are not indicative of its ongoing operating
results or will not impact future operating cash flows, which
include restructuring and impairment charges, loss on early
extinguishment of debt, stock compensation, costs associated with
acquisitions and equity registrations, and other, net.
Adjusted EPS is defined as net income, adjusted to exclude
restructuring and impairment, amortization, non cash interest, non
cash stock compensation, costs related to acquisitions and equity
registrations, special income tax items and other nonrecurring
items (all of these adjustments net of tax) divided by diluted
weighted shares outstanding.
Adjusted EPS is not a recognized financial measure under U.S.
GAAP, does not purport to be an indicator of the company’s
financial performance, and might not be consistent with measures
used by other companies. Viasystems’ management believes this
supplemental measure is useful in understanding underlying trends
of the business and analyzing the effects of certain events that
are infrequent or unusual for the company.
Adjusted EPS has certain material limitations, primarily due to
the exclusion of certain amounts from earnings that are material to
Viasystems’ consolidated results of operations, such as costs
associated with acquisitions and equity registrations,
restructuring and impairment charges, certain interest and other
expenses, and certain adjustments to net income to arrive at net
income available to common stockholders. As a result, Adjusted EPS
differs materially from the earnings per share calculations
reported by other companies in the industry, limiting its
usefulness as a comparative measure.
Investor Call
Viasystems’ and DDi’s senior management will host a joint
conference call for investors on Wednesday, April 4, 2012 at 7:30
a.m. Central Daylight Time (8:30 a.m. Eastern Daylight Time.) The
live listen-only audio webcast of the conference call will be
available at http://investor.viasystems.com. The live conference
call will be available by telephone for professional investors and
analysts by dialing 877-640-9867 (toll-free) for domestic callers
or 914-495-8546 for international callers. The conference ID number
is 69198331.
A telephonic replay of the conference call will be available for
one week at 855-859-2056 or 404-537-3406. Replay listeners should
enter the conference ID 69198331. The webcast replay will be
available at http://investor.viasystems.com for an indefinite
period.
About Viasystems Group, Inc.
Viasystems is a technology leader and a worldwide provider of
complex multi-layer, printed circuit boards (PCBs) and
electro-mechanical solutions (E-M Solutions). Its PCBs serve as the
“electronic backbone” of almost all electronic equipment, and its
E-M Solutions products and services include integration of PCBs and
other components into finished or semi-finished electronic
equipment, for which it also provides custom and standard metal
enclosures, cabinets, racks and sub-racks, backplanes, cable
assemblies and busbars. Viasystems’ approximately 14,000 employees
around the world serve approximately 800 customers in the
automotive, telecommunications, industrial & instrumentation,
computer and datacommunications, and military and aerospace end
markets. For additional information about Viasystems, please visit
the company’s website at www.viasystems.com.
About DDi Corp.
DDi is a leading provider of time-critical,
technologically-advanced PCB engineering and manufacturing
services. The Company specializes in engineering and fabricating
complex multi-layer PCBs on a quick-turn basis, with lead times as
short as 24 hours. DDi has over 1,000 PCB customers in various
market segments including communications and computing, military
and aerospace, industrial electronics, instrumentation, medical and
high-durability commercial markets. DDi's engineering capabilities
and seven manufacturing facilities located in the United States and
Canada, together with its suppliers in Asia, enable them to respond
to time-critical orders and technology challenges for customers.
DDi operates primarily in North America. For additional information
about DDi, please visit the company’s website at
www.ddiglobal.com.
Forward-Looking Statements:
Certain statements in this communication may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements relate to
a variety of matters, including but not limited to: the operations
of the businesses of Viasystems and DDi separately and as a
combined entity; the timing and consummation of the proposed merger
transaction; the expected benefits of the integration of the two
companies; the combined company’s plans, objectives, expectations
and intentions and other statements that are not historical fact.
These statements are made on the basis of the current beliefs,
expectations and assumptions of the management of Viasystems and
DDi regarding future events and are subject to significant risks
and uncertainty. Investors are cautioned not to place undue
reliance on any such forward-looking statements, which speak only
as of the date they are made. Neither Viasystems nor DDi undertakes
any obligation to update or revise these statements, whether as a
result of new information, future events or otherwise.
Actual results may differ materially from those expressed or
implied. Such differences may result from a variety of factors,
including but not limited to: legal or regulatory proceedings or
other matters that affect the timing or ability to complete the
transactions as contemplated; the possibility that the expected
synergies from the proposed merger will not be realized, or will
not be realized within the anticipated time period; the risk that
the businesses will not be integrated successfully; the possibility
of disruption from the merger making it more difficult to maintain
business and operational relationships; the possibility that the
merger does not close, including but not limited to, due to the
failure to satisfy the closing conditions; any actions taken by
either of the companies, including but not limited to,
restructuring or strategic initiatives (including capital
investments or asset acquisitions or dispositions), developments
beyond the companies’ control, including but not limited to,
changes in domestic or global economic conditions, competitive
conditions and consumer preferences, adverse weather conditions or
natural disasters, health concerns, international, political or
military developments, and technological developments. Additional
factors that may cause results to differ materially from those
described in the forward-looking statements are set forth in the
Annual Report on Form 10-K of Viasystems, Inc. for the year ended
December 31, 2011, which was filed with the Securities and
Exchange Commission (“SEC”) on February 15, 2012, under the heading
“Item 1A. Risk Factors” and in the Annual Report on Form 10-K of
DDi for the year ended December 31, 2011, which was filed with
the SEC on February 17, 2012, under the heading “Item 1A. Risk
Factors,” and in each company’s other filings made with the SEC
available at the SEC’s website, www.sec.gov.
Additional Information and Where to Find It
DDi intends to file with the SEC a proxy statement in connection
with the proposed merger with Viasystems Group, Inc.. The
definitive proxy statement will be sent or given to the
stockholders of DDi and will contain important information about
the proposed merger and related matters. SECURITY HOLDERS ARE URGED
TO READ THE PROXY STATEMENT CAREFULLY WHEN IT BECOMES AVAILABLE.
The proxy statement and other relevant materials (when they become
available), and any other documents filed by DDi with the SEC, may
be obtained free of charge at the SEC’s website, at www.sec.gov. In
addition, security holders will be able to obtain free copies of
the proxy statement by contacting DDi by mail at DDi Corp., 1220 N.
Simon Circle, Anaheim, California 92806, Attn: Corporate Secretary,
or by telephone at (714) 688-7200.
Participants in the Solicitation
DDi and Viasystems and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from DDi stockholders in connection with the proposed
merger. Information about Viasystems’ directors and executive
officers is set forth in Viasystems’ proxy statement for its 2012
Annual Meeting of Stockholders filed with the SEC on March 21, 2012
and in its Annual Report on Form 10-K for the year ended December
31, 2011, filed on February 15, 2012. These documents can be
obtained free of charge by visiting the SEC’s web site at
www.sec.gov, by mailing Viasystems at 101 South Hanley Road, St.
Louis, MO 63105, Attention: Investor Relations Department or by
visiting Viasystems’ corporate web site at www.Viasystems.com.
Information about DDi’s directors and executive officers is set
forth in its proxy statement for its 2011 Annual Meeting of
Stockholders, which was filed with the SEC on April 14, 2011. This
document is available free of charge at the SEC’s web site at
www.sec.gov, and from DDi by telephone at (714) 688-7200, or by
mail at DDi Corp., 1220 N. Simon Circle, Anaheim, California 92806,
Attn: Corporate Secretary, or by going to DDi's annual meeting
website at www.ddiglobal.com/annualmeeting. Additional information
regarding the interests of participants in the solicitation of
proxies in connection with the merger will be included in the proxy
statement that DDi intends to file with the SEC.
U.S. Internal Revenue Service (IRS)
Circular 230 Notice: To ensure compliance with requirements
imposed by the IRS, we inform you that any U.S. tax advice
contained in this communication (including any attachments) is not
intended or written to be used, and cannot be used, for the purpose
of (i) avoiding penalties under the U.S. Internal Revenue Code or
(ii) promoting, marketing or recommending to another party any
transaction or matter addressed herein.
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