Cegeka Groep nv (“Cegeka”), a leading European IT solutions
company, and Computer Task Group, Incorporated (Nasdaq: CTG)
(“CTG”), a leader in North America and Western Europe helping
companies employ digital IT solutions and services to
drive their productivity and profitability, today announced that
they have entered into a definitive agreement under which Cegeka
agreed to acquire CTG for $10.50 per share of common stock in an
all-cash transaction, representing an implied equity value of
approximately $170 million.
CTG is a leading provider of digital transformation solutions
with a strong client base across high-growth vertical markets,
focused primarily on healthcare, finance, energy, manufacturing,
and government. The Company had $325 million in 2022 revenue and
$306 million in trailing 12-month revenue as of June 30, 2023. CTG
operates in three segments: North America IT Solutions and
Services, Europe IT Solutions and Services, and Non-Strategic
Technology Services. Since 2018, CTG has transformed into a
provider of recurring and higher-margin Solutions work, which has
significantly expanded its gross margin from 19.1% in 2018 to 28.1%
as of June 30, 2023.
This transaction aligns with Cegeka’s long-term strategic vision
for growth and ambition. "This merger is a logical next step in the
continuous growth journey of Cegeka. In CTG, we find a partner that
complements our customer and service portfolio and strengthens our
capabilities and knowledge," said Stijn Bijnens, CEO of Cegeka.
“Together, we can deliver enhanced value to customers across
North America and Europe. As we proceed with the acquisition
process, we look forward to welcoming the employees of CTG across
India, Colombia, Europe, and North America,” said André Knaepen,
Chairman of the Board of Directors of Cegeka.
“We are excited to enter into this transaction with Cegeka,
which is a testament to the significant efforts we have undertaken
to drive our transformation strategy to make CTG a pure-play
digital IT solutions provider,” said Filip Gydé, CTG President and
CEO. “At CTG, our mission is to drive better, faster results for
our customers with high-value digital transformation solutions. In
Cegeka, we are pleased to have found a partner that will enable us
to accelerate this important work. We are confident that joining
with Cegeka is in the best interest of our employees, will continue
to drive the high-value services and solutions our customers have
come to expect, and will deliver immediate value to our
shareholders.”
Financial HighlightsThe acquisition is expected
to bring Cegeka to an annual turnover in 2024 of €1.4 billion,
employing over 9,000 people in 18 countries. This transaction will
move Cegeka from a leading European IT solutions company to a
Global IT integrator.
Transaction DetailsUnder the terms of the
merger agreement, a wholly owned subsidiary of Cegeka will commence
a tender offer to acquire all outstanding shares of CTG for $10.50
per share of common stock in cash, representing an implied equity
value of approximately $170 million. The offer price represents a
44.8% premium to the trailing 90-day volume weighted average stock
price as of August 7, 2023. Both the Cegeka and CTG board of
directors unanimously approved the merger agreement.
In connection with the execution of the merger agreement,
certain CTG’s directors and executive officers, holding
approximately 8.8% in the aggregate of CTG’s outstanding shares,
entered into an agreement in which they agreed to tender all their
shares in the tender offer.
The closing of the transaction will be subject to customary
conditions, including the expiration or termination of certain
regulatory periods and the tender of shares representing at least
two-thirds of CTG’s outstanding common stock in the tender offer,
as required by the merger approval requirements under applicable
New York law. Upon the successful completion of the tender offer,
Cegeka would acquire any shares of CTG’s common stock not tendered
through a second-step merger effected for the same per common share
consideration. The transaction is expected to close later in 2023.
Upon the successful completion of the tender offer, Cegeka’s
acquisition subsidiary will be merged into CTG, and any remaining
shares of common stock of CTG will be canceled and converted into
the right to receive the same $10.50 per share in cash.
After closing, CTG will become a privately held company, and
shares of CTG common stock will no longer be listed on any public
market.
CTG Second Quarter 2023 Financial ResultsCTG
will announce its second quarter 2023 results in a separate release
later today. The press release will be made available on CTG’s
website. Due to the pending acquisition by Cegeka, CTG will not
host its earnings call previously scheduled for today, August 9,
2023, at 11:00 a.m. Eastern Time.
AdvisorsStifel is the exclusive financial
advisor, and DLA Piper LLP is the legal advisor to Cegeka. KPMG
assisted Cegeka in the financial, tax, and HR due diligence.
Raymond James & Associates, Inc. is acting as financial
advisor to CTG. Baker McKenzie LLP serves as the Company’s legal
advisor.
About CegekaCegeka is an ambitious and leading
IT solutions provider. In line with our motto, 'In close
cooperation,' we strive to provide the best possible customer
service and support our more than 2,500 customers in their
digitization journey. Cegeka offers integrated end-to-end solutions
in the fields of Data, Applications, and Infrastructure which are
strongly interconnected.
Cegeka has over 6,000 employees with locations in Belgium,
Luxembourg, the Netherlands, Germany, Austria, Romania, Moldova,
Italy, the Czech Republic, Slovakia, Sweden, the United States, and
Greece, and has a consolidated turnover of €871 million (in 2022).
Cegeka is a European family-owned company. It was founded in 1992
by André Knaepen, who is currently the chairman of the board of
directors. CEO Stijn Bijnens manages the Company from its head
office in Hasselt, Belgium.
About CTGCTG is a leading provider of digital
transformation solutions and services that accelerate clients’
project momentum and achievement of their desired IT and business
outcomes. We have earned a reputation as a faster, more reliable,
results-driven partner focused on integrating digital technology
into all areas of its clients to improve their operations and
increase their value proposition. CTG’s engagement in the digital
transformation process drives improved data-driven decision-making,
meaningful business performance improvements, new and enhanced
customer experiences, and continuous innovation. CTG operates in
North America, South America, Western Europe, and India. CTG
regularly posts news and other important information
at www.ctg.com.
Important Information for Investors and Security
HoldersThe tender offer for all the outstanding common
stock of CTG referred to in this press release has not yet
commenced. The description contained in this press release is
neither an offer to purchase nor a solicitation of an offer to sell
any securities, nor is it a substitute for the tender offer
materials that Cegeka will file with the U.S. Securities and
Exchange Commission (the “SEC”). The solicitation and offer to buy
the common stock of CTG will only be made pursuant to an offer to
purchase and related tender offer materials. At the time the tender
offer is commenced, Cegeka will file a tender offer statement on
Schedule TO, and thereafter CTG will file a
solicitation/recommendation statement on Schedule 14D-9 with the
SEC with respect to the tender offer. THE TENDER OFFER MATERIALS
(INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL,
AND CERTAIN OTHER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WILL
CONTAIN IMPORTANT INFORMATION. ANY HOLDERS OF SHARES ARE URGED TO
READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION THAT HOLDERS SHOULD
CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR
SHARES. The offer to purchase, the related letter of transmittal,
and the solicitation/recommendation statement will be available for
free at the SEC’s website at www.sec.gov. Free copies of the offer
to purchase, the related letter of transmittal, and certain other
offering documents will be made available by Cegeka and, when
available, may be obtained by directing a request to the
information agent for the tender offer that will be named in the
Schedule TO and related offer documents. Copies of the documents
filed with the SEC by CTG will be available free of charge on CTG’s
internet website at www.ctg.com or by contacting CTG’s Investor
Relations Department at +1 716 887 7368.
In addition to the offer to purchase, the related letter of
transmittal and certain other tender offer documents filed by
Cegeka, as well as the solicitation/recommendation statement filed
by CTG will be filed with the SEC. CTG will also file periodic and
current reports with the SEC. You may read and copy any reports or
other information filed by Cegeka or CTG at the SEC public
reference room at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on
the public reference room. CTG’s filings with the SEC are also
available to the public from commercial document-retrieval services
and at the website maintained by the SEC at http://www.sec.gov.
Forward Looking StatementsThis press release
contains statements that constitute “forward looking statements,”
including statements that express the opinions, expectations,
beliefs, plans, objectives, assumptions, or projections regarding
future events or future results, including statements regarding the
proposed acquisition of CTG by Cegeka (the “Proposed Acquisition”),
in contrast with statements that reflect historical facts. In some
cases, you can identify such forward-looking statements by
terminology such as “anticipate,” “intend,” “believe,” “estimate,”
“plan,” “seek,” “project,” or “expect,” “may,” “will,” “would,”
“could,” “potential,” “intend,” or “should,” the negative of these
terms or similar expressions. Forward-looking statements are based
on management’s current beliefs and assumptions and on information
currently available to Cegeka and CTG. However, these
forward-looking statements are not a guarantee of performance, and
you should not place undue reliance on such statements.
Forward-looking statements are subject to many risks,
uncertainties and other variable circumstances, including, but not
limited to, the ability of the parties to satisfy the closing
conditions for the Proposed Acquisition on a timely basis or at
all, including the possibility that a governmental agency may
prohibit, delay, or refuse to grant approval for the consummation
of the Proposed Acquisition; statements about the expected
timetable for completing the Proposed Acquisition; uncertainties as
to how many of CTG’s shareholders will tender their shares in the
offer; the possibility that competing offers will be made; the
occurrence of events that may give rise to a right of one or both
of Cegeka and CTG to terminate the merger agreement; negative
effects of the announcement of the Proposed Acquisition on the
market price of CTG’s common stock and/or on it business, financial
condition, results of operations, and financial performance
(including the ability of CTG to maintain relationships with its
customers, suppliers, and others with whom it does business); the
effects of the Proposed Acquisition (or the announcement thereof)
on CTG’s ability to retain and hire qualified professional staff
and talent, including technical, sales and management personnel;
competition for clients; the increased bargaining power of CTG’s
large clients; the occurrence of cyber incidents and CTG’s ability
to protect confidential client data; the partial or complete loss
of the revenue CTG generates from its largest client, International
Business Machines Corporation (IBM); the uncertainty of CTG’s
clients’ implementations of cost reduction projects; the mix of
work at CTG between IT Solutions and Services and Non-Strategic
Technology Services, and the risk of disengaging from Non-Strategic
Technology Services; currency exchange risks; risks associated with
CTG’s domestic and foreign operations, including uncertainty and
business interruptions resulting from political changes and actions
in the U.S. and abroad, such as the conflict between Russian and
Ukraine and recent developments in China, and volatility in the
global credit and financial markets and economy; renegotiations,
nullification, or breaches of contracts with clients, vendors,
subcontractors or other parties; the impact of current and future
laws and government regulations, as well as repeal or modification
of such, affecting the IT solutions and services industry, taxes
and CTG’s operations in particular; industry, economic, and
political conditions, including fluctuations in demand for IT
services; and consolidation among CTG’s competitors or clients.
Such risks and uncertainties may cause the statements to be
inaccurate and readers are cautioned not to place undue reliance on
such statements. Many of these risks are outside of the control of
Cegeka and CTG and could cause actual results to differ materially.
The forward-looking statements included in this press release are
made only as of the date hereof. Cegeka and CTG do not undertake,
and specifically decline, any obligation to update any such
statements or to publicly announce the results of any revisions to
any such statements to reflect future events or developments,
except as required by law.
A further description of risks and uncertainties relating to CTG
can be found in CTG’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2022, as filed with the SEC, and in other
documents filed from time to time with the SEC by CTG and available
at www.sec.gov and www.ctg.com.
Investor Relations:
John M. Laubacker, EVP, Chief Financial Officer, and Treasurer
+1 716 887 7368
Media:
Amanda LeBlanc, Chief Marketing Officer and Vice President, Global Marketing
amanda.leblanc@ctg.com
+1 225 772 8865
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