TMX Group makes offer to acquire Razor Risk Technologies

TMX Group makes offer to acquire Razor Risk Technologies

29/11/2011

TMX Group Inc. (TMX Group) (TSX:X) and Razor Risk Technologies Limited (Razor) (ASX:RZR) today announced that they have entered into a Takeover Bid Implementation Agreement (Implementation Agreement) under which TMX Group, or its affiliate, will make a takeover bid for all of the issued shares in Razor.

Razor, which is headquartered in Sydney, provides credit risk software to clearing houses, stock exchanges, financial institutions and brokerages around the world. It develops and integrates economic capital, market, credit and liquidity risk management requirements across multiple asset classes.

The consideration payable under the TMX Group offer (Offer) is a cash payment of 3.49 cents per share, equivalent to an enterprise value of AUD $10 million (CA $10.18 million). This equates to a purchase price multiple of approximately 1x annual sales as of 30 June 2011. In addition to the cash payment of 3.49 cents per share, if there is excess working capital in Razor at the earlier of (1) the Offer being declared unconditional and (2) the close of the Offer period (assuming all conditions are satisfied or waived), TMX Group will increase the Offer by such excess working capital at that time. Although it is not possible at this time to precisely estimate the additional consideration payable, this amount, if payable, is likely to be in the order of 0.1-0.2 cents per share. More details will be set out in the Bidder's Statement and Target's Statement, which will be sent to Razor shareholders as soon as practicable.

The Offer will be subject to bid conditions, including a 90% minimum acceptance condition and at least 50.01% of Razor shares accepted into the Offer within one month of the open of the Offer. The conditions of the Offer are set out in full in Schedule 1 to the Implementation Agreement, which is available at www.asx.com.au.

“The acquisition of Razor is exciting because it supports several areas of TMX Group's strategy and it provides a point of entry into the attractive risk management sector,” said Brenda Hoffman, Senior Vice President, Group Head of Information Technology. “We are very pleased to be joining forces with the Razor employee team to offer our customers enhanced risk management services and products.”

The Offer is unanimously recommended by the Razor board, in the absence of a superior proposal. The individual Razor directors, who in total control approximately 25% of the ordinary shares in Razor, have advised that it is their intention to accept the Offer, or procure acceptance of the Offer, for all the Razor shares they own or control, in the absence of a superior proposal. “The Board's responsibility is to act in the best interests of shareholders, and it is our view that this is a compelling and complete proposal which has the attraction of offering shareholders certainty in cash proceeds in an uncertain global economic environment,” said Ellis Bugg, Chairman of Razor.

Razor's major shareholder has entered into a customary shareholder lock-up agreement under which it has agreed to accept into the Offer all of its shares in Razor, which represents approximately 15% of Razor.

The acceptance of the Offer by the Razor directors and the commitment of Razor's major shareholder, together accounts for, in aggregate, approximately 40% of Razor shares.