14 DAY TRIAL // This week seems to have been quite a tough one for RIM, as a Superior Court Order forced it to withdraw its bid for Certicom. Moreover, the company’s co-CEOs Jim Balsillie and Mike Lazaridis are reported to have to pay up to C$100 million for a back-dating issue, which might also drive the former to step down from the Board of Directors.
And there's even more “bad news” for RIM. Yesterday, Certicom announced that it agreed to a bid of purchase for C$2.10 a share coming from VeriSign. The agreement stipulates that VeriSign, Inc. will buy all of the outstanding common shares of Certicom for a total of about C$92 million (US$73 million at current exchange rates). The announcement proves indeed that RIM’s C$1.50 a share offer came as an underestimating one.
“The Special Committee and the Board conducted a thorough process on behalf of Certicom shareholders resulting in a significant increase in value for the Company and its owners,” said Jeffrey Chisholm, Chairman of the Board of Directors of Certicom. “We believe this transaction also represents a very promising opportunity for our customers and employees. Joining forces with VeriSign creates wider international opportunities for our employees while customers will benefit from the combination of Certicom’s leading cryptography and VeriSign’s infrastructure.”
According to the company, the price agreed for the transaction marks a premium of around 147.1 percent compared to the closing price of the Common Shares on the Toronto Stock Exchange on December 2, 2008, which was the last trading day before RIM announced its bid. At the same time, it represents a premium of almost 25.7 percent over the closing price of the Common Shares on the TSX on January 22, 2009. Compared to RIM's offer, the price represents a premium of 40 percent.
Certicom announced that the transaction should be completed by means of a statutory plan of arrangement under the Canada Business Corporations Act. At the same time, the plan of arrangement needs to be approved by court and by two-thirds of the votes cast by Certicom shareholders. A meeting for the vote is planed for March 2009. Certain customary conditions will also apply to the transaction, but there will be no financing condition.
In terms of the agreement, Certicom's board of directors may terminate the agreement under certain circumstances in case an unsolicited superior proposal is made, “subject to payment of a termination fee of C$4 million and subject to a right by VeriSign to match the superior proposal in question.” The transaction should terminate in March, while the Common Shares will be de-listed from the Toronto Stock Exchange after that.