DDi Corp. Announces Agreement to Acquire Coretec Inc.
Greenwich, CT – Mooreland Partners, a boutique investment banking firm serving the global technology industry, is pleased to announce that it has acted as the exclusive financial advisor to DDi Corp. (NASDAQ:DDIC) in its acquisition of Coretec Inc. (TSX:CYY). DDi, and Coretec, both leading providers of technologically advanced printed circuit board (“PCB”) engineering and manufacturing services, announced today that they have entered into a definitive agreement (the “Agreement”) pursuant to which DDi will acquire Coretec for approximately CDN $25.2 million (US $23.5 million), comprised of approximately CDN $7.4 million in cash for Coretec’s common stock and the assumption of CDN $17.8 million of Coretec debt outstanding as of September 30, 2009.
The Coretec debt assumed includes approximately CDN $12.7 million related to long term facilities secured by property and equipment, and CDN $5.1 million pursuant to the working capital revolver credit facility. The combined company will benefit from DDi’s financial strength, including DDi’s US $25.6 million of cash on hand as of September 30, 2009.
The acquisition will be effected by way of a plan of arrangement under the Business Corporations Act (Ontario) (the “Arrangement”). Under the Arrangement, Coretec shareholders will receive CDN $0.38 per Coretec common share. This price represents a premium of approximately 100% to the 20 day volume weighted average price of Coretec common shares on the Toronto Stock Exchange through November 23, 2009, and represents a 12% increase in the total enterprise value of Coretec when compared to the CDN $0.20 per share proposal that DDi publicly announced on October 26, 2009. Coretec’s revenues over the 12 months ending September 30, 2009 were approximately CDN $77.2 million. The companies will implement a restructuring plan immediately after the transaction closes that is currently estimated to generate US $8 million in annual cost savings.
Mikel H. Williams, DDi’s President and Chief Executive Officer said: “DDi and Coretec are two of the leading PCB manufacturers in the North American market and share a similar vision and strategy. We believe that a combined organization will strengthen our position in the market, extend our capability to support our collective customers and will be beneficial to our shareholders. Our plans include a full integration of our respective Toronto operations to create a world class facility with solid customer demand. The combined company will be well positioned to effect an orderly Toronto integration to ensure minimal, if any, customer disruption. Further we will integrate our sales, general and administrative functions. The addition of Coretec’s two US facilities will extend our presence in the strategic military/aerospace marketplace and deepen our flex and rigid-flex product capabilities. As with the successful acquisition of Sovereign Circuits, we plan to leverage these facilities’ capabilities into the market with our large sales organization and customer base. In addition to the annual operational cost savings resulting from the combination, we see capital expenditure synergies as we drive improved utilization of the combined operating assets.”
Speaking on behalf of Coretec, Paul Langston, President and Chief Executive Officer, stated: “The opportunity to combine Coretec with DDi, given their presence in Toronto and complementary strategy and operational focus, is compelling for our customers, employees and shareholders. The combination allows the company to drive significant operational and market based synergies and is a natural fit. We look forward to working to close the transaction expeditiously and will continue to support our collective customers with market leading technical, engineering and customer service capabilities.”
The boards of directors of each of DDi and Coretec have unanimously approved the Agreement. The Board of Directors of Coretec, after consultation with its financial and legal advisors and based, in part, upon the unanimous recommendation of an independent committee of the Board of Directors of Coretec, has determined unanimously that the arrangement is fair to Coretec’s shareholders and is in the best interest of Coretec. Coretec’s Board unanimously recommends that Coretec shareholders vote in favor of the arrangement.
The proposed Arrangement is subject to customary court approvals as well as approval by the shareholders and option holders of Coretec. Shareholders holding approximately 70.3% of Coretec’s outstanding common shares on a fully diluted basis have signed agreements in support of the Arrangement. It is anticipated that an information circular pertaining to the proposed Arrangement will be mailed by Coretec to its shareholders and option holders in early December 2009. The Arrangement is expected to close on or around December 31, 2009.
The Agreement contains customary terms and conditions for a transaction of this nature, including a prohibition upon Coretec from soliciting or initiating any discussion concerning any other business combination or similar transaction, the right of DDi to match any unsolicited superior proposal received by Coretec and a termination fee of US $1 million payable to DDi by Coretec in certain circumstances.
DDi is a leading provider of time-critical, technologically advanced, electronics manufacturing services. Headquartered in Anaheim, California, DDi and its subsidiaries offer PCB engineering, fabrication and manufacturing services to leading electronics OEMs and contract manufacturers worldwide from its facilities across North America and with manufacturing partners in Asia.
Coretec is one of the leading designers and fabricators of printed circuit boards for the prototype and quick turnaround production segments of the North American and European markets. Coretec distinguishes itself from its competitors by providing an extensive suite of printed circuit board services including field applications engineering support and education; technology roadmap consulting, CAD layout; rapid response manufacturing for prototypes; quick turn production for small-to-middle volume quantity requirements; and facilitation of higher volume requirements via partnerships in lower cost jurisdictions. The Company is also differentiated by its broad range of PCB technologies.