Rubik announces acquisition proposal from global software leader Temenos

15 FEB 2017

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Rubik today announced that it has entered into a binding Scheme Implementation Deed (“SID”) under which it is proposed global banking and finance software specialist, Temenos (SIX: TEMN) will acquire 100% of Rubik shares via a Scheme of Arrangement (“Scheme”).

If the Scheme is implemented, Temenos will acquire 100% of the issued capital of Rubik for a cash consideration of AUD$0.1667 per share, valuing Rubik’s equity at approximately AUD$68 million (US$50 million) on a fully diluted basis. This represents a 52% premium to Rubik’s closing price of $0.11 on Tuesday, 14 February, 2017.  The consideration also represents a:

  • 65% premium over the 90 day Volume Weighted Average Price (“VWAP”) for Rubik’s shares;
  • 73% premium over the 30 day VWAP for Rubik’s shares; and
  • 67% premium to Rubik’s May 2016 rights issue.

Rubik’s Board of Directors has unanimously recommended that its shareholders vote in favour of the Scheme, in the absence of a superior proposal, and subject to an independent expert concluding that the Scheme is in the best interests of Rubik shareholders. Subject to the same qualifications, each Director of Rubik intends to vote, or cause to be voted, all of the Rubik shares in which they have a relevant interest in favour of the Scheme at the scheme meeting.

Rubik’s three largest shareholders, Viburnum Funds Pty Ltd as manager of Viburnum Funds Pty Ltd ATF VF Strategic Equities Fund (“Viburnum”), LHC Capital Partners Pty Ltd, and Regal Funds Management Pty Ltd, who currently represent approximately 44% of the shares on issue of the company, have informed Rubik that they intend to vote the Rubik shares they hold at the time of the Scheme meeting in favour of the Scheme, in the absence of a superior proposal and subject to the Rubik directors maintaining their unanimous recommendation to shareholders to vote in favour of the Scheme[1].

Rubik CEO, Iain Dunstan said, “Having enjoyed a strong partnership with Temenos for a number of years, today’s announcement represents a positive result for all Rubik stakeholders. It is compelling in that, if approved, the offer delivers a significant premium to Rubik’s recent share price and provides certainty of value for our shareholders. If implemented, we believe the Scheme will have a positive impact for both our existing clients and prospective clients by providing access to the significant resources of Temenos as a market leading wealth, banking and finance software specialist”.

Commenting on the acquisition, Temenos CEO David Arnott said, “We are delighted to announce the proposed acquisition of Rubik, which will create a leader in the fast growing Australian financial software market by combining Rubik’s local knowledge and product set with Temenos’ global expertise and world class solutions. In particular, Rubik’s expertise and offering in the wealth space are highly complementary to our existing products, and a key aspect of the acquisition for Temenos given the size of this opportunity in the domestic market.

We are increasingly seeing banks around the globe addressing the structural pressures they are facing through core renovation with digital at the heart of their strategy. By acquiring Rubik, we will be able to provide a complete vertically integrated solution for the Australian banking market, enabling our clients to realise their digital ambitions. The acquisition will bring us scale and allow us to accelerate our penetration and growth in the Australian market across wealth, core banking and fund administration.”

The SID contains terms which are common to a transaction of this nature, including customary exclusivity provisions including “no shop”, “no talk”, and “notification” obligations (of which the “no talk” and certain “notification” obligations are subject to the Rubik Directors’ fiduciary obligations) as well as “matching” rights. A break fee of $700,000 (1% of the equity value) will be payable to Temenos by Rubik in certain circumstances.

The Scheme is subject to approval by Rubik shareholders and other customary conditions, including no “Material Adverse Change” and no “Prescribed Occurrence” occurring, and court approval.

Full details of all conditions precedent to the Scheme and other agreed terms are set out in the SID, a copy of which is attached to this announcement. The acquisition is expected to close by the end of May 2017.

Rubik has, with the approval of its independent directors, also entered into a $5 million short-term bringing loan, on arms’ length terms, with Viburnum (“Loan”). The purpose of the Loan is to ensure the timely delivery of a number of recently signed customer contracts. The term of the Loan is from 14 February 2017 until the earlier of:

  • 5 business days following the completion by Rubik of a capital raising transaction for at least $5 million;
  • 5 business days following the occurrence of a change of a control event (which includes a court-approved scheme of arrangement); and
  • 31 March 2018.

Indicative timetable and next steps

Rubik has appointed Grant Thornton as the Independent Expert to prepare a report on whether the Scheme is in the best interests of Rubik shareholders. The Independent’s Expert Report will be included in the scheme booklet to be sent to shareholders (“Scheme Booklet”), along with information relating to the Scheme, the reasons for the Directors’ recommendation and details of the Scheme Meeting. The Scheme Booklet is expected to be sent to Rubik shareholders in late March 2017.

It is currently anticipated that Rubik shareholders will be given the opportunity to vote on the Scheme at a Scheme Meeting expected to be held in late April 2017.

An indicative timetable for the Scheme is set out below:

Event

Target

Scheme Booklet to be provided to ASIC

Tuesday, 7 March 2017

First Court Hearing

Thursday, 23 March 2017

Printing and despatch of Scheme Booklet

Friday, 24 March 2017

Scheme Meeting

Wednesday, 26 April 2017

Second Court Hearing

Tuesday, 2 May 2017

Effective Date

Wednesday, 3 May 2017

Record Date

Wednesday, 10 May 2017

Implementation Date

Thursday, 18 May 2017

 



 

[1] None of Viburnum, LHC Capital nor Regal Funds have made any commitment to hold or not dispose of their current holdings in Rubik. Their voting power at the time of the Scheme may be more, or less, than their current holdings.

 

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