Halogen Software to be acquired by Saba Software

• Board supports an all-cash purchase price of CAD$12.50 per share; represents 56% premium to unaffected share price on January 11, 2017.
• Shareholders representing 54% in aggregate, including Michael Slaunwhite, JMI and certain other shareholders, directors and officers entered into voting support agreements.

OTTAWA, Feb. 23, 2017 /CNW/ – Halogen Software Inc. (“Halogen” or the “Corporation”) (TSX: HGN), announced today that it has entered into a definitive agreement to be acquired by Saba Software, Inc. (“Saba”), a leading talent management software company headquartered in California. The agreement contemplates that Saba and Vector Capital, together with their affiliates, (the “Vector Group”) will acquire all of the issued and outstanding shares of Halogen, other than shares re-invested by Halogen’s Executive Chairman Michael Slaunwhite and parties related to him, for CAD$12.50 in cash per share implying an aggregate fully-diluted equity value for Halogen of approximately CAD$293 million.

Key Transaction Highlights

• With the acquisition of Halogen, Saba aims to extend its position as a leading provider of end-to-end SaaS Talent Management Solutions.
• In combination with Saba’s robust learning, social and engagement capabilities, Halogen’s solutions and expertise in performance management will allow Saba to further accelerate talent innovation that aims to transform the employee experience and embrace new workplace dynamics.
• The cash purchase price represents a 56% premium to Halogen’s unaffected share price of $8.00 on January 11, 2017 (the last trading day prior to Halogen’s announcement of the formation of a strategic review committee), and a 21% premium to the 20-day volume weighted average price for the period ending February 22, 2017.
• Slaunwhite and parties related to him collectively own approximately 32% of Halogen’s outstanding shares and will be re-investing up to 6.8 million shares worth of their current ownership into the combined entity.  Mr. Slaunwhite will become Chairman of the combined company and will be one of its largest independent shareholders.
• Halogen’s Board of Directors (the “Board”) (with conflicted directors abstaining) recommends that shareholders vote in favour of the transaction.

“The transaction provides compelling and certain value, an attractive premium, and liquidity to our shareholders, after a comprehensive strategic alternatives review process,” said Rob Ashe, the Chairman of the Special Committee. “Teaming up with Saba also strengthens and accelerates Halogen’s future growth prospects; these are two pioneers in learning and performance, who share a strong vision for the future of talent management.”

“We have built Halogen into a market leader in performance management by investing in the talented and innovative team that began here in Ottawa more than 20 years ago,” said Michael Slaunwhite, Executive Chairman of Halogen Software. “I look forward to joining forces with Vector Capital and Saba. Together, we have the opportunity to scale faster and lead the way in performance, learning and engagement, and expand our global impact.”

Transaction Details

The transaction will be implemented by way of a statutory plan of arrangement under the Ontario Business Corporations Act and is subject to court approval and the approval of at least two-thirds of the votes cast by holders of Halogen’s shares; and by a simple majority of the votes cast by all shareholders other than Michael Slaunwhite and parties related to him.

The Board’s recommendation of the transaction is the result of the Special Committee’s strategic review process that began in the fall of 2016. After significant review of the transaction and alternative proposals, the Special Committee, in consultation with its financial and legal advisors, recommended the transaction to the Board.

In making their respective determinations, the Board and the Special Committee considered, among other factors, a formal valuation from MNP LLP and a fairness opinion from National Bank Financial, to the effect that the cash purchase price of CAD$12.50 per share to be received by the shareholders is fair, from a financial point of view, to the shareholders (other than Michael Slaunwhite).

In connection with the transaction, Michael Slaunwhite (and parties related to him), JMI, and certain other shareholders, directors and officers who together hold in aggregate approximately 12.5 million of the fully-diluted shares or approximately 54% of the fully-diluted shares of the Corporation, have entered into voting support agreements with the Vector Group pursuant to which they have agreed to vote all of their shares in favour of the transaction.

The Corporation has agreed not to solicit competing acquisition proposals, subject to customary “fiduciary out” provisions, which entitle the Corporation to consider and accept a superior proposal. The agreement also provides for the payment of a termination fee of $10.25 million, and the payment of a reverse termination fee of $20.5 million, in certain circumstances.

Copies of MNP LLP’s valuation and National Bank Financial’s fairness opinion, and a description of the various factors considered by the Special Committee and the Board of Directors of the Corporation in their determination to approve the transaction, as well as other relevant background information, will be included in the Information Circular to be sent to the Corporation’s shareholders in advance of the special meeting to vote on the plan of arrangement. Copies of the Information Circular, the arrangement agreement, 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.

Advisors

The Special Committee retained National Bank Financial as its exclusive financial advisor and Bennett Jones LLP as its legal counsel. Osler, Hoskin & Harcourt LLP is acting as legal counsel to the Company. Stikeman Elliott LLP and Paul Hastings LLP are acting as legal counsel to the Vector Group.  Blake, Cassels & Graydon LLP is acting as legal counsel to Mr. Slaunwhite.

About Halogen Software

Halogen Software (TSX: HGN) offers a cloud-based talent management suite that puts ongoing, next-generation performance management principles at the center of all talent programs, including learning and development, succession planning, recruiting, and compensation. With over 2,100 customers worldwide, the company has been recognized as a market leader by major business analysts and has garnered the highest customer satisfaction ratings in the industry. Halogen’s powerful, yet simple-to-use solutions, which also include industry-vertical editions, help organizations win with talent, by aligning their talent and business strategies to deliver exceptional outcomes. For more information, visit: http://www.halogensoftware.com. Subscribe to Halogen Software’s TalentSpace blog: http://www.halogensoftware.com/blog/ or follow Halogen Software on Twitter: http://twitter.com/HalogenSoftware.

About Saba

Saba delivers a cloud-based intelligent talent management and engagement solution used by leading organizations worldwide to hire, develop, engage and inspire their people. With machine learning at its core, Saba Cloud offers proactive, personalized recommendations on candidates, connections and content to help employees and businesses lead and succeed. It is purpose-built on a highly scalable platform that exceeds industry security and reliability standards. Saba has more than 31 million users and 2,200 customers across 195 countries and 37 languages. Learn more about intelligent talent management at www.saba.com.

About Vector Capital

Vector Capital is a leading global private equity firm specializing in transformational investments in established technology businesses. With $3.3 billion of capital under management, Vector identifies and pursues these investments in both the private and public markets. Vector actively partners with management teams to devise and execute new financial and business strategies that materially improve the competitive standing of these businesses and enhance their value for employees, customers, and shareholders. For more information, visit http://www.vectorcapital.com/.

Forward Looking Statements

Certain of the statements made and information contained herein is “forward-looking information” within the meaning of the Ontario Securities Act. Forward-looking statements are subject to a variety of risks and uncertainties that could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, those described under Risk Factors in the Company’s Annual Information Form and in each management discussion and analysis. Forward-looking information is also based on various assumptions. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements.

SOURCE Halogen Software