TABLE OF CONTENTS
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| Item 1.01. |
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Entry into a Material Definitive Agreement. |
On June 25, 2008, Progress Software Corporation, a Massachusetts corporation (“Progress
Software”), and IONA Technologies PLC, a public limited company incorporated under Irish law
(“IONA”) announced that IONA and Progress Software have reached agreement on the terms of a
recommended acquisition pursuant to a scheme of arrangement under Section 201 of the Irish
Companies Act of 1963 (the “Act”) whereby SPK Acquisitions Limited (“SPK”), a private limited
company incorporated under Irish law and a wholly-owned subsidiary of Progress Software, will
acquire all of the issued and to be issued ordinary share capital of IONA not already owned by
Progress Software or its subsidiaries for cash (the “Scheme”).
In connection with the Scheme, IONA, SPK and Progress Software entered into an Implementation
Agreement on June 25, 2008 (the “Implementation Agreement”), which governs their relationship
during the period until the Scheme becomes effective, lapses or is withdrawn and which contains
certain assurances in relation to the implementation of the Scheme and the conduct of IONA’s
business up to the date on which the Scheme becomes effective in accordance with its terms.
Under the terms of the Scheme, IONA shareholders will be entitled to receive $4.05 in cash per
ordinary share of €0.0025 par value in IONA (each, an “IONA Share”) in return for the cancellation
of their IONA Shares (the “Consideration”), excluding shares held by Progress Software or any of
its wholly-owned subsidiaries. The Consideration values the entire issued and to be issued share
capital of IONA at approximately $161.7 million.
The implementation of the Scheme and the acquisition is conditional, among other things, upon:
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the Scheme becoming effective and unconditional by not later than December 15, 2008 (or
such later date as SPK and IONA may, with (if required) the consent of the Irish Takeover
Panel (the “Panel”), agree and (if required) the High Court of Ireland (the “High Court”)
may allow); |
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the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the regulations thereunder; |
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the approval by a majority in number of IONA shareholders representing three-fourths (75
percent) or more in value of the IONA Shares held by such holders present and voting either
in person or by proxy, at the meeting or meetings of the IONA shareholders (and any
adjournment thereof) convened by order of the High Court pursuant to Section 201 of the Act
to consider and, if thought fit, approve the Scheme (with or without amendment) (the “Court
Meeting”); |
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the passing of such resolutions (the “Resolutions”) as are required to approve or
implement the Scheme at the extraordinary general meeting of the IONA shareholders to be
convened in connection with the Scheme (the “Extraordinary General Meeting”), expected to
be held on the same day as the Court Meeting as soon as it is concluded or adjourned (and
any adjournment thereof); |
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the sanction of the Scheme and confirmation of the reduction of capital involved therein
by the High Court and the delivery of an office copy of the order or orders of the High
Court sanctioning the Scheme under Section 201 of the Act and confirming the reduction of
capital that forms part of it under Sections 72 and 74 of the Act (the “Court Order”) and
the minute required by Section 75 of the Act to the Registrar of Companies in Dublin,
Ireland (the “Registrar of Companies”) and the registration of such Court Order and minute
by the Registrar of Companies; and |
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the conditions, which are not otherwise identified above, being satisfied or waived on
or before the sanction of the Scheme by the High Court pursuant to Section 201 of the Act. |
Pursuant to a Deed of Limited Guaranty and Indemnity (the “Guaranty”) entered into by IONA and
Progress Software on June 25, 2008, Progress Software, as principal obligor, has guaranteed to IONA
the due and punctual payment and performance of all the obligations of SPK (and its successors and
assigns) under the Implementation Agreement, provided that the maximum amount payable by Progress
Software to IONA will not exceed $161.7 million.
In addition, IONA has entered into an Expenses Reimbursement and Non-Solicitation Agreement,
dated June 25, 2008, with SPK (the “ERA”), the terms of which have been approved by the Panel.
Under the ERA, IONA has agreed to pay specific quantifiable third party costs and expenses incurred
by SPK in connection with the acquisition in the circumstances outlined below. The liability of
IONA to pay these amounts is
limited to a maximum amount equal to one percent of the aggregate
value of the number of IONA Shares which are the subject of the acquisition multiplied by the
Consideration. The circumstances in which such payment will be made include:
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if the Board of Directors of IONA, or any one or more members thereof, withdraws or
adversely modifies its/their recommendation of the Scheme or recommends (or indicates or
announces an intention to recommend) a competing offer or scheme; |
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IONA withdraws the Scheme or materially alters any term of the Scheme or takes or omits
to take any action in breach of the Implementation Agreement, the result of which is to
prevent IONA’s shareholders from voting at any meetings to approve the Scheme; or |
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if prior to the Scheme lapsing or being withdrawn, a competing offer or offers or scheme
or schemes are announced and any such offer or scheme becomes effective or unconditional
within 12 months of that announcement. |
The non-solicitation undertaking provides that, until the earlier of December 15, 2008 and the
date on which the Scheme becomes effective (or lapses or is withdrawn), IONA has agreed that,
subject to the fiduciary duties of the Board of Directors of IONA, no member of IONA, its
subsidiaries and associated undertakings; or any of their respective directors, officers, employees
or advisers shall, among other things, solicit interest or initiate discussions or negotiations
with any person with a view to that person acquiring control (as defined in the Irish Takeover
Panel Act, 1997, Takeover Rules 2007 and the Irish Takeover Panel Act, 1997, Substantial
Acquisition Rules 2007 (where applicable) (collectively, the “Takeover Rules”)) of IONA. Except to
the extent required by the Takeover Rules or the Panel, IONA has also agreed to inform and keep
informed SPK of any inquiry with respect to or that would reasonably be expected to lead to a
competing offer, the material terms of such competing offer and the identity of the person making
any such inquiry or proposing a competing offer.
In connection with the Implementation Agreement, members of IONA’s Board of Directors who are
IONA shareholders in respect of the 3,605,193 IONA Shares, in aggregate, they own, representing
approximately 9.8 percent of the issued share capital of IONA, have executed Voting Undertakings
dated prior or concurrent to the execution of the Implementation Agreement, pursuant to which the
directors have agreed, subject to certain exceptions, to vote in favor of the acquisition and the
Scheme. These irrevocable undertakings, once given, will lapse in the event that the acquisition
and the Scheme lapse or are withdrawn, the resolutions are not passed at the Extraordinary General
Meeting and the Court Meeting, the High Court declines or refuses to sanction the Scheme (unless
IONA and SPK agree that the decision of the High Court shall be appealed and, if so appealed, a
final non-appealable order, decree, judgment, or ruling has been issued), the Scheme does not
become effective on or before December 15, 2008, a firm intention to make a higher competing offer
is announced pursuant to Rule 2.5 of the Takeover Rules, the Board of IONA withdraws its
recommendation to IONA shareholders to vote in favor of the Scheme, or SPK announces that it will
not proceed with the acquisition.
Progress
Software Corporation, a Delaware corporation that is a wholly-owned subsidiary of
Progress Software, (“Progress SC”) has irrevocably committed to SPK and IONA, in respect of the
IONA Shares which it owns, not to vote such IONA Shares at the Court Meeting and to vote such IONA
Shares in favor of the Resolutions to be considered at the Extraordinary General Meeting. This
irrevocable undertaking, once given, will lapse in the event that the acquisition and the Scheme
lapse or are withdrawn, the Resolutions are not passed at the Extraordinary General Meeting and the
Court Meeting, the High Court declines or refuses to sanction the Scheme (unless IONA and SPK agree
that the decision of the High Court shall be appealed and, if so appealed, a final non-appealable
order, decree, judgment, or ruling has been issued), the Scheme does not become effective on or
before December 15, 2008, a firm intention to make a higher competing offer is announced pursuant
to Rule 2.5 of the Takeover Rules, the Board of IONA withdraws its recommendation to IONA
shareholders to vote in favor of the Scheme, or SPK announces that it will not proceed with the
acquisition.
The foregoing descriptions of the Implementation Agreement, the Guaranty, the ERA, and the
Voting Undertakings of members of IONA’s Board of Directors and Progress SC are only summaries,
and do not purport to be complete and are qualified in their entirety by reference to the
Implementation Agreement, the Guaranty, the ERA, the Form of Voting Undertaking executed by members
of IONA’s Board of Directors and the Voting Undertaking of Progress SC (collectively, the
“Acquisition Documents”), which are filed hereto as Exhibits 2.1-2.5 to this Current Report on Form
8-K and incorporated by reference into this Item 1.01. Other than the Acquisition Documents, there
is no material relationship between Progress Software or SPK and IONA.
Forward-Looking Statements
Certain items in this Form 8-K may contain forward-looking statements that are based on
current expectations or beliefs, as well as assumptions about future events. Forward-looking
statements are statements that contain predictions or projections of future events or performance,
and often contain words such as “anticipates”, “can”, “estimates”, “believe”, “expects”,
“projects”, “will”, “might”, or other words indicating a statement about the future. These
statements are based on our current expectations and beliefs and are subject to a number of trends
and uncertainties that could cause actual events to differ materially from those described in the
forward-looking statements. Reliance should not be placed on any such statements because of their
very nature, they are subject to known and unknown risks and uncertainties and can be affected by
factors that could cause them to differ materially from those expressed or implied in the
forward-looking statements. We can give no assurance that expectations will be attained. Risks,
uncertainties and other important factors that could cause actual results to differ from those
expressed or implied in the forward looking statements include: uncertainties as to the timing of
the closing of Progress Software’s acquisition of IONA; uncertainties as to whether the
shareholders of IONA will vote in favor of IONA’s acquisition by Progress Software; the risk that
competing offers to acquire IONA will be made; the possibility that various closing conditions for
the transaction may not be satisfied or waived, including that a governmental entity may prohibit,
delay or refuse to grant approval for the consummation of the transaction; the effects of
disruption from the transaction making it more difficult to maintain relationships with employees,
licensees, other business partners or governmental entities; other business effects, including the
effects of industry, economic or political conditions outside of Progress Software’s or IONA’s
control; transaction costs; actual or contingent liabilities; uncertainties as to whether
anticipated synergies will be realized; uncertainties as to whether IONA’s business will be
successfully integrated with Progress Software’s business; and other risks and uncertainties
discussed in documents filed with the U.S. Securities and Exchange Commission by Progress Software
and IONA, including the Annual Report on Form 10-K filed by Progress Software on January 29, 2008,
as well as the Quarterly Report on Form 10-Q filed by Progress Software on April 9, 2008, and the
Annual Report on Form 10-K filed by IONA on March 14, 2008, as well as the Quarterly Report on Form
10-Q filed by IONA on May 12, 2008. Such forward-looking statements speak only as of the date of
this announcement. We expressly disclaim any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to reflect any change in
our expectations with regard thereto or change in events, conditions, or circumstances on which any
such statement is based.
Statement Required by the Takeover Rules
The directors of SPK and the directors of Progress Software accept responsibility for the
information contained in this Form 8-K. To the best of the knowledge and belief of the directors
of SPK and the directors of Progress Software (who have taken all reasonable care to ensure that
such is the case), the information contained in this Form 8-K for which they accept responsibility
is in accordance with the facts and does not omit anything likely to affect the import of such
information.
Important Additional Information and Where to Find It
In connection with the acquisition, IONA intends to file with the Securities and Exchange
Commission and mail to its shareholders a proxy statement (comprising the scheme of arrangement
document). Investors and shareholders of IONA are urged to read the proxy statement (comprising
the scheme of arrangement document) and the other relevant materials when they become available
because they will contain important information about Progress Software, SPK, IONA and the proposed
acquisition and related matters.
The proxy statement (comprising the scheme of arrangement document) and other relevant
materials (when they become available), and any and all documents filed by Progress Software and
IONA with the Securities and Exchange Commission, may be obtained free of charge at the Securities
and Exchange Commission’s web site at www.sec.gov. In addition, investors and shareholders may
obtain free copies of the documents filed with the Securities and Exchange Commission by Progress
Software by directing a written request to Progress Software, 14 Oak Park Drive, Bedford,
Massachusetts 01730, United States of America, Attention: Investor Relations, and by IONA by
directing a written request to IONA, c/o IONA Technologies, Inc., 200 West Street, Waltham,
Massachusetts 02451, United States of America, Attention: Investor Relations.
INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT (COMPRISING THE SCHEME OF
ARRANGEMENT DOCUMENT) AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY
VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED ACQUISITION.
As of the date of this Form 8-K, Progress Software and its affiliates own 362,000 IONA shares
in total, representing approximately 0.99 per cent of the issued share capital of IONA and have an
economic interest, through contracts for difference, in 1,442,873 IONA shares in total,
representing approximately 3.95 per cent of the issued share capital of IONA.
Progress Software, SPK Acquisitions Limited and IONA Technologies plc and their respective
executive officers and directors may be deemed to be participants in the solicitation of proxies
from the shareholders of IONA in connection with the acquisition. Information about those
executive officers and directors of Progress is set forth in Progress Software’s Annual Report on
Form 10-K for the year ended 30 November 2007, which was filed with the Securities and Exchange
Commission on 29 January 2008, the proxy statement for Progress Software’s 2008 Annual Meeting,
which was filed with the Securities and Exchange Commission on 24 March 2008, and is supplemented
by other public filings made, and to be made, with the Securities and Exchange Commission.
Information about those executive officers and directors of IONA and
their ownership of IONA Shares
is set forth in IONA’s Annual Report on Form 10-K for the year ended 31 December 2007, which was
filed with the Securities and Exchange Commission on 14 March 2008, and the proxy statement for
IONA’s 2008 Annual General Meeting, which was filed with the Securities and Exchange Commission on
29 April 2008, and is supplemented by other public filings made, and to be made, with the
Securities and Exchange Commission. Investors and shareholders may obtain additional information
regarding the direct and indirect interests of Progress Software, SPK Acquisitions Limited, IONA
and their respective executive officers and directors in the acquisition by reading the proxy
statement (comprising the scheme of arrangement document) and other filings referred to above.
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| Item 9.01. |
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Financial Statements and Exhibits. |
See Exhibit Index attached hereto.