RuggedCom Inc. has found a white knight that it says will allow it to maintain its identity as a Canadian technology leader in making communications equipment for harsh environments.
Siemens Canada Ltd. trumped an earlier hostile takeover attempt from St. Louis-based cable maker Belden Inc. with a $33 a share bid that has won the endorsement of the RuggedCom board. Belden’s offer, made in December, was for $22 a share.
Merging with Siemens’ s Canadian arm will keep RuggedCom intact while giving it the chance to take advantage of the German company’s massive international operations, said chairman Peter Crombie.
RuggedCom will complement Siemens’s current work on so-called smart-grid technologies for distributing electricity, as well as its communications networks for industrial clients, he said.
The $440-million bid will remain open for 35 days, and close at the end of March.
Belden said Monday will allow its offer to expire, because the higher Siemens bid is “in excess of the amount that Belden believes would have delivered fair and sufficient value for its own shareholders.” Belden CEO John Stroup said his company will now look for other acquisition opportunities.
Robert Hardt, president of Siemens Canada, said his company is already active in the industrial communications market, but RuggedCom will add a new niche in switches and network routers designed for messy places such as power substations, oil refineries, roadside traffic control boxes and military applications.
RuggedCom will keep its own manufacturing, sales and research and development operations, Mr. Hardt said, but will become part of Siemens industrial automation division.
“The most important part is really the innovation,” he said, and Siemens will try to maintain that while helping RuggedCom make use of its new parent’s international reach.
While executives of both companies said they expect this to be the final chapter in the RuggedCom takeover saga, some analysts think another offer could come out of the woodwork. “Stay tuned. I’m not sure the bidding war is over yet,” said Kris Thompson, an analyst at National Bank Financial. He said RuggedCom would be an even better fit for telecom equipment company Cisco Systems Inc., and “it could still surface with a superior bid.”
Analyst Tom Astle of Byron Capital Markets Ltd. has said RuggedCom’s value to a bidder could be well above $35 per share.
Mr. Crombie would not rule out the possibility of a new offer, but he emphasized that RuggedCom negotiated with a number of interested parties before deciding to support the Siemens proposal. “I think the process has maximized the value we have been able to get for [shareholders]”
RuggedCom shares jumped 25 per cent Monday to close just under Siemens’s offering price, at $32.85. That’s almost triple the price it was trading at last September.