TORONTO, Aug. 29,
2022 /CNW/ - NexJ Systems Inc. ("NexJ" or
the "Company") (TSX: NXJ), delivering intelligent customer
management software to the financial services industry, announced
today that it has entered into an arrangement agreement (the
"Arrangement Agreement") with N. Harris Computer Corporation ("NHC"
or "Harris"), a wholly owned subsidiary of Constellation Software
Inc. (TSX:CSU) ("Constellation"), pursuant to which Harris will
acquire all of the outstanding common shares of NexJ by way of a
statutory plan of arrangement under section 192 of the Canada
Business Corporations Act (the "Transaction").
Constellation is a large public company focused on, through its
operating groups including the Harris operating group, investing
in, and managing, software companies with mission critical products
and a strong industry presence and has been operating in a variety
of vertical markets for over 25 years.
NexJ is joining a financially stable and growing portfolio of
companies which will support our future growth objectives. The
Constellation business philosophy of long-term value realization
and commitment to the companies they acquire will protect our
customers' existing and future investments in NexJ technology.
With strong financial backing, NexJ will continue to focus on
building world-class CRM and Integrated Advisor Desktop (IAD)
solutions for Wealth Management and Private Banking (B2C) and
Corporate and Commercial Banking (B2B).
"Constellation's buy and hold investment strategy and commitment
to providing customers software for life makes Harris a perfect
permanent owner of NexJ," said Paul
O'Donnell, NexJ CEO. "NexJ prides itself in its
'customer-first' mentality. Once NexJ is acquired by Harris, our
customers who rely on our technology to support the day-to-day
operations of their business will continue to receive exceptional
dedicated support and services for all NexJ products."
Under the terms of the Arrangement Agreement, each NexJ
shareholder will receive cash consideration of C$0.55, on a fully diluted basis, for each NexJ
share held (the "Consideration"). The Consideration
represents an approximate 45% premium to the closing price of the
NexJ shares on the Toronto Stock Exchange (the "TSX") on
August 26, 2022, and an approximate
35% premium to the volume weighted average price of the NexJ shares
over the last 20 trading days.
"The acquisition by Harris, a wholly owned subsidiary of
Constellation (TSX:CSU) will provide the financial strength and
operational support required as NexJ continues its transition to a
subscription-based license model and seeks to grow its global
competitiveness and provides a secure future for our customers and
employees." said Scott Beattie,
Chair of NexJ's Board.
Special Committee and Board of
Directors Recommendations
NexJ's Board of Directors (the "Board") established a special
committee of independent directors (the "Special Committee")
comprised of E. Scott Beattie
(Chair), William F. Morris and
David Yach, to consider the
Transaction. INFOR Financial Inc. has provided a fairness opinion
to the Special Committee (the "Fairness Opinion") stating that in
its opinion as of the date thereof, and based upon and subject to
the assumptions, limitations and qualifications set forth therein,
the Consideration to be received by the NexJ Shareholders pursuant
to the Transaction is fair, from a financial point of view, to the
NexJ Shareholders.
The Board, after receiving financial and legal advice, and
following receipt of the Fairness Opinion and the unanimous
recommendation of the Special Committee, has unanimously determined
that the Transaction is in the best interests of NexJ and is
unanimously recommending that NexJ Shareholders vote in favour of
the Transaction.
The Transaction was approved by the Board based on consideration
of the recommendation of the Special Committee, Bill Tatham abstaining as a result of his role
as Executive Chairman of NexJ Health Holdings Inc., which as part
of the Transaction will release the Company from certain
non-competition and customer non-solicitation covenants in exchange
for the release of NexJ Health Holdings Inc. from certain
non-competition and customer non-solicitation covenants, surrender
of certain of its shares and release of certain accounts payable
owing to the Company.
In recommending the Transaction, the Special Committee and the
Board considered and evaluated a number of factors, including those
listed below:
- Review of Strategic Alternatives Process. Prior to
recommending the transaction, the Special Committee considered the
extensive nature of NexJ's strategic alternatives process (the
"Strategic Alternatives Process") to identify a strategic partner
or purchaser for the Company which, over the period of the process,
did not secure a transaction on terms considered to provide greater
value with an appropriate degree of risk than the terms proposed by
NHC, and in particular, (i) the public disclosure of the Company's
intent to undertake the Strategic Alternatives Process in
September 2019, and the period of
time over which interested parties could assess their interest in
considering a potential transaction with the Company; (ii) the
volatility in the capital markets which negatively impacted the
process throughout 2020 and subsequently in early 2022, (iii) the
extent of the efforts made by the Company and its financial
advisors to identify and engage with parties having interest in a
potential transaction with the Company, and, (iv) the assessment of
potential transactions and their associated financial risk
resulting from discussions and negotiations with parties, other
than NHC, that did express interest but did not result in a
transaction.
- No Brokerage Fees or Commissions. The Transaction will
allow each NexJ Shareholder to dispose of their common shares
without incurring brokerage fees or commissions.
- Company Performance and Financial Condition. The Special
Committee recognized that the market dynamics and commercial
challenges facing the company could not be ameliorated without
additional capital to improve its competitiveness. The Special
Committee considered the low likelihood of obtaining any additional
equity financing for the Company, and the uncertainty and cost that
would be associated with obtaining debt financing. The Special
Committee has therefore concluded that without additional capital,
the risk to shareholders would likely increase in the future.
- Fairness Opinion. The Special Committee considered and
relied on the Fairness Opinion and its conclusion that, as of the
date thereof, and subject to the assumptions, limitations and
qualifications contained therein, the consideration to be received
by the NexJ Shareholders pursuant to the Transaction is fair from a
financial point of view to the NexJ Shareholders.
- Shareholder and Court Approval. The Transaction must be
approved by the affirmative vote of at least 66⅔% of the votes cast
by NexJ Shareholders at a special meeting to be held to consider
and approve the Transaction, as well as by the Ontario court.
- Arm's Length Negotiations. The Transaction and the
Arrangement Agreement are the result of a comprehensive negotiation
process that was undertaken at arm's length with the oversight and
participation of the Special Committee and the Board and the
participation of legal counsel, which resulted in an agreement with
terms and conditions that are reasonable in the judgment of the
Special Committee and the Board.
- Ability to Respond to Superior Proposals. The terms and
conditions of the Arrangement Agreement do not prevent a third
party from making an unsolicited Acquisition Proposal (as defined
in the Arrangement Agreement) and, subject to compliance with the
terms of the Arrangement Agreement, the Board is not precluded from
considering and responding to an unsolicited Acquisition Proposal
that constitutes, or could reasonably be expected to constitute, a
Superior Proposal at any time prior to obtaining the approval by
NexJ Shareholders of the Transaction.
- Interim Period Restrictions. The restrictions on the
Company's business until the Transaction is completed or the
Arrangement Agreement is terminated are reasonable and are not
expected to impair or materially affect the Company's business
during such period.
- Deal Certainty. The Special Committee considered the
likelihood that the Transaction would be completed in light of the
customary nature of the conditions to closing under the Arrangement
Agreement, and the fact that the Transaction is not subject to a
financing condition.
In addition, directors, executive officers and other
shareholders of NexJ, who as of the date hereof collectively hold
approximately 43.8% of the NexJ Shares, have entered into voting
support agreements to support the Transaction and vote their NexJ
Shares in favour of the Transaction.
Transaction Details
The Transaction will be implemented by way of a statutory plan
of arrangement under the Canada Business Corporations Act
and will require the approval of 66 2/3% of the votes cast by NexJ
Shareholders at a special meeting of NexJ Shareholders to be called
to approve the Transaction (the "Special Meeting"). Pursuant to the
"minority approval" requirements of Multilateral Instrument 61-101
– Protection of Minority Security Holders in Special
Transactions, the Transaction must also be approved by a simple
majority of the votes validly cast by the NexJ Shareholders present
in person or by proxy at the Meeting, excluding the votes of
Paul O'Donnell, President and CEO of
NexJ, and Richard J. Broley, Chief
Operating Officer of NexJ, each of whom is deemed to receive a
"collateral benefit" pursuant to the Transaction as a result of the
trigger of the change of control payments stipulated in their
respective employment agreements.
The completion of the Transaction will also be subject to
obtaining required court and other approvals and satisfaction of
closing conditions customary for a transaction of this
nature. The Arrangement Agreement includes customary
deal-protection provisions. NexJ is subject to
non-solicitation provisions and in certain circumstances, the Board
may terminate the Arrangement Agreement in favour of an unsolicited
superior proposal, subject to the payment of a termination fee of
C$800,000 and subject to a right of
NHC to match such superior proposal. Such a termination fee
is also payable by NexJ if the Arrangement Agreement is terminated
in certain other specified circumstances, including if the Board
changes its recommendation or NexJ wilfully or intentionally
breaches its non-solicitation covenant.
It is anticipated that the Special Meeting will be held in
October 2022. Following closing of the Transaction, the NexJ
Shares would be delisted from the TSX. The Transaction is expected
to close in the fourth quarter of 2022.
Advisors and Counsel
INFOR Financial Inc. provided the Fairness Opinion in connection
with the Transaction. Blake, Cassels & Graydon LLP is acting as
counsel to NexJ and Cassels Brock
& Blackwell LLP is acting as counsel to NHC.
Additional Information about the
Proposed Transaction
A copy of the written Fairness Opinion, and a description of the
various factors considered by the Board in its determination to
approve the Transaction, as well as other relevant background
information, will be included in the management information
circular to be sent to NexJ's shareholders in advance of the
Special Meeting. The management information circular, the
Arrangement Agreement, including the plan of arrangement, and
certain related documents will be filed with the Canadian
securities regulators and will be available on SEDAR at
www.sedar.com.
About N. Harris Computer
Corporation
Harris acquires vertical market software businesses, manages
them using industry best practices, and builds them for the future.
Through acquisitions, Harris has grown extensively from its roots
in the utilities, local government, education, and healthcare
sectors to operate over 180 businesses globally across more than
twenty industries. Harris is an operating group of Constellation
Software Inc. (TSX: CSU), one of North
America's most active acquirers of software businesses.
About NexJ Systems Inc.
NexJ Systems provides Intelligent Customer Management to the
financial services industry. Our award-winning CRM is designed to
help Wealth Management, Private Banking, Corporate and Commercial
Banking, and Insurance firms revolutionize their business. Powered
by artificial intelligence, our products help drive productivity,
boost client engagement, and increase revenue. With users in over
60 countries, our customers benefit from our deep expertise across
financial services verticals, strategic investment in innovation,
and commitment to their success.
Based in Toronto, NexJ has
clients throughout North America,
Asia Pacific and in Europe. For more information about NexJ
visit www.nexj.com, e-mail info@nexj.com, or
call 416222-5611.
Notice on Forward-looking
Statements
This press release includes forward-looking statements regarding
NexJ. In some cases, the forward-looking statements can be
identified by words or phrases such as "may", "will", "expect",
"anticipate", "aim", "estimate", "intend", "plan", "seek",
"believe", "potential", "continue", "is/are likely to", "could",
"should", "target", "envision", and other similar language. Forward
looking statements in this press release include those related to
the Transaction, the anticipated date of the Special Meeting,
timing for closing of the Transaction, the expected
de-listing of the NexJ common shares on the TSX following
completion of the Transaction, protection of customer investments
in NexJ products and continuing focus by NexJ on its solutions and
support and services for its customers; the delivery of financial
strength and operating support by Constellation to NexJ and the
continued ownership of NexJ by Constellation. These statements are
based on the Company's current expectations, estimates, forecasts
and projections about the operating environment, economies and
markets in which the Company operates. These statements are subject
to important assumptions, risks and uncertainties that are
difficult to predict, and the actual outcome may be materially
different. The Company's assumptions, although considered
reasonable by the Company at the date of this press release, may
provide to be inaccurate and consequently the Company's actual
results could differ materially from the expectations set out
herein.
Actual results or events could differ materially from those
contemplated in forward-looking statements as a result of the
following: (i) the ability to secure the required shareholder or
court approvals; (ii) the occurrence of a "Material Adverse Effect"
(as defined in the Arrangement Agreement) or the failure to satisfy
any other closing condition in favour of NHC provided for in the
Arrangement Agreement, which condition is not waived by NHC; (iii)
general business, economic, competitive, political and social
uncertainties; and (iv) the future performance, financial and
otherwise, of NexJ. Forward-looking statements may also include,
without limitation, any statement relating to future events,
conditions or circumstances.
The risks and uncertainties that may affect forward-looking
statements include, but are not limited to: (i) risks relating to
the receipt of all requisite approvals for the Transaction; (ii)
fluctuation in our quarterly operating results; (iii) our
dependence on key personnel and our compensation structure; (iv)
risks associated with managing large and complex software
implementation projects; (v) uncertainties and assumptions in our
sales forecasts, including the extent to which sales proposals are
converted into sales; (vi) risks associated with our ability to
design, develop, test, market, license and support our software
products on a timely basis; (vii) market acceptance of our products
and services; (viii) commercial success of products resulting from
our investment in research and development; (ix) our success in
expanding sales into new international markets; * competition in
our industry; (xi) failure to protect our intellectual property or
infringement of intellectual property rights of third parties; (xi)
reliance upon a limited number of third-party software products to
develop our products; (xiii) defects or disruptions in our products
and services; (xiv) currency exchange rate fluctuations; (xv)
lengthy sales cycles for our software; (xvi) general economic
conditions; (xvii) failure to manage our growth successfully;
(xviii) breach of our security measures and unauthorized access to
data; and (xix) litigation, including litigation relating to the
proposed Transaction, and commercial, product liability,
employment, class action and other litigation and claims.
For additional information with respect to risks and other
factors which could occur, see the Company's most recently filed
Annual Information Form for the year ended December 31, 2021 dated March 8, 2022 and NexJ's June 30, 2022 MD&A, and other securities
filings with the Canadian securities regulators available
on www.sedar.com. Unless otherwise required by applicable
securities laws, forward-looking statements speak only as of the
date on which they are made and the Company disclaims any intention
or obligations to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.
SOURCE NexJ Systems Inc.