IMAREX ASA (OSE: IMAREX) has undertaken, on certain conditions, to enter into a share purchase agreement whereby IMAREX will become the owner of all the shares in Spectron Group plc for a total consideration of GBP 70.35 million.
The transaction substantially strengthens IMAREX' position as a premier trading and clearing hub for the commodity and energy derivatives markets world wide.
Founded in 1988, Spectron Group operates the largest independent global marketplace for energy from its offices in London, Singapore, Frankfurt and across the USA and has more than 150 employees.
Spectron Group is licensed by the Financial Services Authority of the United Kingdom to operate a multilateral trading facility. Its screen based trading system serves more than 1,500 professional users trading physical and financial products in a number of wholesale markets, including natural gas, electricity, emissions, coal, metals and weather. More than USD 150 billion worth of energy products is transacted via Spectron Group annually.
Spectron Group's consolidated operating revenue for the period from 1 January to 30 November 2007 was GBP 34.2 million with a profit after taxes of GBP 4.4 million. The corresponding figures for the whole of 2006 were GBP 30.5 million and 3.5 million, respectively.
Of Spectron Group's GBP 13.4 million of cash held by 31 January 2008, GBP 6.5 million will be kept in the company (pro forma as at that date). Spectron Group's consolidated balance sheet as at 30 November 2007 showed assets of GBP 20.2 million and liabilities of GBP 8.8 million and an equity of GBP 11.4 million. The corresponding figures as at 31 December 2006 were assets of GBP 15.4 million, liabilities of GBP 8.1 million and an equity of GBP 7.3 million.
"We have spent 20 years building a global brand in energy and are now delighted to be joining forces with IMAREX in a partnership that is good for our customers, employees and shareholders. The merging of the two businesses will create a company with the scale and resource to compete even more effectively in the global commodities marketplace", says Spectron Group's Chief Executive Officer, Andrew Stephens.
Of the total consideration of GBP 70.35 million, GBP 21 million will be paid in IMAREX shares (the "Consideration Shares"). The final number of Consideration Shares will be determined based on the average closing price of the five last trading days ending two days before the completion of the acquisition.
The Consideration Shares will be subject to a lock-up period with certain release clauses. The remaining GBP 49.35 million (NOK 530 million) will be funded by NOK 80 million of cash currently held by IMAREX, up to NOK 350 million from a term loan and the remainder by a share capital increase by issuance of new shares in IMAREX.
The terms and the structure of the share issue will be decided later. NYMEX Holdings, Inc. has agreed to subscribe to a part of this share issue, which will be managed by Pareto Securities AS.
IMAREX is one of the fastest growing commodity derivatives market places, with a particular focus on ocean freight and energy. IMAREX was a pioneer in bringing electronic trading of cleared freight futures contracts to the world markets in 2001. In 2007, contracts worth about USD 37 billion were transacted via IMAREX (including freight, power, fuel oil and emissions). Before the acquisition, IMAREX has more than 135 employees in Norway, UK, Switzerland, Germany, USA, and Singapore.
Spectron Group and IMAREX both use the same electronic trading platform and the combined group will hold leading positions in front-end liquidity in all relevant energy derivatives markets in Europe. The acquisition will also greatly leverage the growth opportunities for NOS Clearing, IMAREX' in-house clearing business.
Herman W. Michelet, who founded IMAREX in 2000, will be the combined group's Chief Executive Officer, based in Oslo, whilst Andrew Stephens will remain Spectron Group's Chief Executive Officer, based in London.
The board of directors of Spectron Group comprises Derek Tullett, Andrew Stephens, John Evans, Brian Tracy, Gordon Bennett, Finn Swarting, Robert Rawe, Ted Kalborg and Simon Davidson. The company's senior management consists of Andrew Stephens, John Evans, Gordon Bennett and Simon Davidson. The four members of the senior management will enter into agreements extending their terms of employment to three years from completion.
"The derivatives market is rapidly being consolidated into fewer and stronger players, and the acquisition of Spectron Group takes our joint business to a new level in terms of client base, geographical footprint, trading volume, product and service offering. Combining IMAREX with the strong market position and also the exceptional team of Spectron Group, we now plan to follow through on our stated ambition to become a leader in the fast growing energy derivatives market", says IMAREX' Chief Executive Officer, Herman W. Michelet.
The completion of the transaction is subject to the approval from the UK's Financial Services Authority of the acquisition of control of Spectron Group's regulated entities, the publication of a prospectus by IMAREX and the passing of resolutions of Spectron Group's shareholders to amend its Articles of Association and approve the giving of financial assistance. This involves transforming the company from a public to a private limited company under UK law. More than 75 % of the shareholders have already undertaken to vote in favour of these resolutions. Spectron Group's Articles of Association enable the owners of 75% of the company's shares to drag along the remaining shareholders to sell their shares.
The share purchase agreement is expected to be signed on 27 February 2008, and the transaction is expected to be completed in March 2008.