WaterFurnace Renewable Energy, Inc. (“WaterFurnace”) (TSX: WFI; TSX: WFI.U) and NIBE Industrier AB (publ) of Sweden (“NIBE”) are pleased to announce that they have entered into an arrangement agreement (the “Arrangement Agreement”) pursuant to which NIBE will acquire 100 percent of the outstanding shares of WaterFurnace (the “WaterFurnace Shares”) by way of a plan of arrangement under the Canada Business Corporations Act.

“This transaction is NIBE’s largest to date in North America and further elevates our position as one of the global market leaders in sustainable energy solutions. Following our successful expansion of our Elements Division in the United States, the teaming up with WaterFurnace represents a strategic match and bridgehead into North America also for our largest business area Energy Systems. We are pleased to see that both groups share the same entrepreneurial tradition and technological vision, being one of the first companies to market geothermal heat pump solutions on respective sides of the Atlantic”, says Gerteric Lindquist, CEO of NIBE.

“I believe this is a compelling offer for our shareholders and I am confident that WaterFurnace and its employees have found an excellent strategic partner in NIBE. The combined talents of these two fine companies are aimed at helping people around the globe find sustainable energy solutions. As CEO of WaterFurnace and on behalf of my whole team, I can state that we are excited to be joining one of the market leaders in our industry,” says Tom Huntington, CEO of WaterFurnace.

Founded in 1983, WaterFurnace has a longstanding track-record as a premier brand and manufacturer of geothermal heat pump heating and cooling solutions in North America. The company’s product offering includes a range of geothermal heat pumps, smart control systems, hot water storage tanks and indoor air quality solutions. Products are marketed under the WaterFurnace and GeoStar brands in North America, and the WFI brand via a joint venture in China. In the financial year 2013, WaterFurnace achieved net sales of US$119 million with an EBIT* margin of 17 percent. Approximately seventy percent of net sales account for residential products, both retrofit and new construction, with the remainder representing solutions for commercial use. Headquartered in Fort Wayne, Indiana (USA), WaterFurnace has 267 employees and has been listed on the Toronto Stock Exchange since 1993.

NIBE, with 2013 net sales of SEK 9.8 billion (US$1.5 billion), as well as WaterFurnace have leading positions in their respective European and North American home markets. In view of the high pace of technology development and market consolidation, both companies believe that they together will operationally and strategically be better positioned to take a lead in the industry’s development.

Under the Arrangement Agreement, holders of WaterFurnace Shares (“WaterFurnace Shareholders”) will receive C $30.60 in cash for each WaterFurnace Share held, which represents a premium of 27 percent to the 30-day volume weighted average trading price of the WaterFurnace Shares on the Toronto Stock Exchange (the “TSX”) for the period ended June 20.

The completion of the transaction is subject to the approval of at least two-thirds of the votes cast by WaterFurnace Shareholders at a special meeting of WaterFurnace Shareholders (the “Special Meeting”) to consider the Arrangement, which is expected to be held in August 2014. Completion of the Arrangement is also subject to the approval of the Ontario Superior Court of Justice, the receipt of the required approvals under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, the receipt of all other necessary regulatory and third party approvals, and other customary conditions.

The transaction has been reviewed by an independent committee (the “Independent Committee”) of the board of directors of WaterFurnace (the “WaterFurnace Board”) and has been unanimously approved by the WaterFurnace Board following the unanimous recommendation of the Independent Committee. The WaterFurnace Board unanimously recommends that the WaterFurnace Shareholders vote in favour of the Arrangement at the Special Meeting.

Prior to entering into the Arrangement Agreement, NIBE entered into support and voting agreements with each of the directors and officers of WaterFurnace, as well as with a number of significant shareholders of WaterFurnace, including members of the Shields family (together, the “Supporting Shareholders”), collectively holding approximately 25 percent of the issued and outstanding WaterFurnace Shares, whereby the Supporting Shareholders have agreed to vote their WaterFurnace Shares in favour of the Arrangement at the Special Meeting.

In the event that the Arrangement is not completed under certain circumstances, WaterFurnace has agreed to pay NIBE a termination fee equal to C$15 million. In addition, the Arrangement Agreement includes non-solicitation and superior proposal provisions and WaterFurnace has provided NIBE with certain rights, including a right to match competing offers. Full details of the Arrangement will be included in the management information circular of WaterFurnace which will be filed with the applicable securities regulatory authorities and mailed to WaterFurnace Shareholders in accordance with applicable securities laws.

A copy of the Arrangement Agreement will be filed under WaterFurnace’s issuer profile on SEDAR at www.sedar.com.

Source: Inside INdiana Business