Royal Group announces agreement to be acquired by Georgia Gulf for $13.00 per share in cash
June 09 2006 - 11:00AM
PR Newswire (US)
TORONTO, June 9 /PRNewswire-FirstCall/ -- Royal Group Technologies
Limited (RYG - TSX; NYSE) today announced that its Board of
Directors is recommending that shareholders approve a $C13.00 all
cash transaction to be implemented by way of a plan of arrangement.
The Company has entered into an agreement with Georgia Gulf
Corporation (GGC - NYSE) pursuant to which it will acquire all of
the common shares of Royal Group at a price of C$13.00 per share,
subject to, among other conditions, approval by shareholders of
Royal Group at a special meeting of shareholders. The total value
of the transaction, including debt, is C$1.7 billion (US$1.5
Billion). The all-cash transaction represents a 43.5% premium over
Royal Group's closing share price on the Toronto Stock Exchange of
$9.06 on June 8, 2006. Royal Group has been involved in a sale
process since May 25, 2005, when its board announced that it would
open a data room and solicit bids from a broad group of potential
acquirers. Over 30 potential bidders signed confidentiality
agreements and were allowed access to the data room, with six
potential bidders receiving extensive management presentations. The
Georgia Gulf transaction was the best transaction proposal to
emerge from the process. Royal Group's board of directors, acting
on the unanimous recommendation of the special committee of
independent directors for the previously announced sale process,
unanimously approved the transaction and determined that the
transaction is fair to Royal Group's shareholders and is in the
best interests of the company. The board of directors is
recommending that Royal Group shareholders vote in favor of the
transaction. Royal Group's board of directors has received an
independent opinion from BMO Nesbitt Burns Inc. that the
consideration is fair, from a financial point of view, to Royal
Group's shareholders. Deutsche Bank and Scotia Capital Inc.
provided advisory services to the board in connection with the
transaction. "This transaction creates significant immediate value
for Royal Group's shareholders and strengthens the company's
business through a combination with a strong, technologically
advanced force in the vinyl industry", commented Robert E.
Lamoureux, Royal Group's Chairman of the Board and chair of the
special committee. "Nevertheless, this was not an easy decision for
our board of directors. The company's management team and employees
have been working extremely hard over the last year in refocusing
the company and implementing the previously announced Management
Improvement Plan, while at the same time fully supporting the sale
process. Our board recognizes that the Management Improvement Plan
has the potential to deliver long-term value for shareholders.
However, after considering all the advantages and disadvantages of
this transaction versus pursuing the Management Improvement Plan,
including the risks and uncertainties associated with the Plan, the
board concluded that, this transaction is fair and in the best
interests of our shareholders and the company. It is also a
transaction that will create real benefits for our customers and
employees", added Mr. Lamoureux. Lawrence J. Blanford, Royal
Group's President and C.E.O., added that, "we are pleased to have a
significant premium to the current share price offered to our
shareholders, which is a reflection of the hard work the entire
organization has put into the Management Improvement Plan over the
past year". The transaction is to be carried out by way of a
statutory plan of arrangement and, accordingly, will be subject to
the approval of 66 2/3% of the votes cast by Royal Group's
shareholders at a meeting of shareholders, currently anticipated to
take place in July, as well as court approval. A proxy circular
will be prepared and mailed to shareholders later this month
providing shareholders with important information about the
transaction. Once mailed, the proxy circular will be available at
the Canadian SEDAR website at http://www.sedar.com/. All
shareholders are urged to read the proxy circular once it is
available. The closing is subject to certain other customary
conditions, including regulatory approvals. The proposed
transaction is expected to close in Early September 2006. About
Georgia Gulf Corporation ------------------------------ Georgia
Gulf, headquartered in Atlanta, Georgia, is a major manufacturer
and marketer of two integrated product lines, chlorovinyls and
aromatics. Georgia Gulf's chlorovinyls products include chlorine,
caustic soda, vinyl chloride monomer and vinyl resins and
compounds. Georgia Gulf's primary aromatic products include cumene,
phenol and acetone. Royal Group Technologies Limited
-------------------------------- Royal Group Technologies is a
leading producer of innovative, attractive, durable, and
low-maintenance home improvement and building products, which are
primarily utilized in both the renovation and new construction
sectors of the North American construction industry. Royal Group is
the recipient of several industry awards for product innovation.
The Company has manufacturing operations located throughout North
America in order to provide industry- leading service to its
extensive customer network. Additional investment information is
available on Royal Group's web site at
http://www.royalgrouptech.com/ under the "Investor Relations"
section. The information in this document contains certain
forward-looking statements with respect to Royal Group Technologies
Limited, its subsidiaries, and affiliates. These statements are
often, but not always made through the use of words or phrases such
as "expect", "should ", "continue", "believe", "anticipate",
"suggest", "estimate", "contemplate", "target", "plan", "budget",
"may", "will", "schedule" and "intend" or similar formulations. By
their nature, these forward-looking statements are necessarily
based upon a number of estimates and assumptions that, while
considered reasonable by management, are inherently subject to
significant, known and unknown, business, economic, competitive and
other risks, uncertainties and other factors affecting Royal Group
specifically or its industry generally that could cause the
Company's actual performance, achievements and financial results to
differ materially from past results and from those expressed in any
forward-looking statements made by or on behalf of the Company.
These risks and uncertainties include the ongoing shareholder value
maximization process and its outcome; the ongoing internal review
and investigations by the Audit Committee of the Board of Directors
and its outcome; the outcome of the ongoing investigations by the
United States Department of Justice, RCMP, OSC, and SEC; the
outcome of the discussions with the SEC on the Company's historical
disclosure; the outcome of class action shareholders lawsuits
against the Company filed in the United States and Canada;
fluctuations in the level of renovation, remodelling and
construction activity; changes in product costs and pricing; an
inability to achieve or delays in achieving savings related to cost
reductions or increases in revenues related to sales price
increases; the sufficiency of any restructuring activities,
including the potential for higher actual costs to be incurred in
connection with any restructuring activities compared to the
estimated costs of such actions; the ability to recruit and retain
qualified employees; the level of Royal Group's outstanding debt
and current debt ratings; Royal Group's ability to maintain
adequate liquidity and refinance its debt structure by December 31,
2006, the expiry date of its current bank credit facility; the
Company's ability to complete the required processes and provide
the internal control report that will be required under U.S.
securities law in respect of fiscal 2006; the ability to meet the
financial covenants in Royal Group's credit facilities; changes in
Royal Group's product mix; the growth rate of the markets into
which Royal Group's products are sold; market acceptance and demand
for Royal Group's products; changes in availability or prices for
raw materials; pricing pressures resulting from competition;
difficulty in developing and introducing new products; failure to
penetrate new markets effectively; the effect on foreign operations
of currency fluctuations, tariffs, nationalization, exchange
controls, limitations on foreign investment in local business and
other political, economic and regulatory risks; difficulty in
preserving proprietary technology; adverse resolution of any
litigation, investigations, administrative and regulatory matters,
intellectual property disputes, or similar matters; changes in
securities, environmental or health and safety laws, rules and
regulations; currency risk exposure and other risks described from
time to time in publicly filed disclosure documents and securities
commission reports of Royal Group Technologies Limited and its
subsidiaries and affiliates. In view of these uncertainties we
caution readers not to place undue reliance on these
forward-looking statements. Statements made in this document are
made as of June 9, 2006 and Royal Group disclaims any intention or
obligation to update or revise any statements made herein, whether
as a result of new information, future events or otherwise.
DATASOURCE: Royal Group Technologies Limited CONTACT: Mark Badger,
Vice President of Marketing and Corporate Communications, Royal
Group Technologies Limited, Phone: (905) 264-0701
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