Sandvine Corporation to be acquired by Francisco Partners' affiliate and combined with Procera Networks

WATERLOO, ON and FREMONT, CA, July 17, 2017 /CNW/ - Sandvine Corporation ("Sandvine" or the "Corporation") (TSX: SVC), announced today that it has entered into an arrangement agreement (the "PNI Arrangement Agreement") with PNI Canada Acquireco Corp. ("PNI"), an affiliate of Francisco Partners and Procera Networks, Inc. ("Procera"), pursuant to which PNI will acquire all of the issued and outstanding common shares of Sandvine by way of plan of arrangement (the "PNI Arrangement") for cash consideration of CAD$4.40 per share.  The price per share implies an aggregate fully-diluted equity value for Sandvine of approximately CAD $562 million.

The Corporation's special meeting of shareholders scheduled for July 18, 2017 has been postponed and a meeting to consider the PNI Arrangement will be held at a date to be determined by the Board of Directors of the Corporation (the "Special Meeting").

The combined company will be led by Procera's Chief Executive Officer, Lyndon Cantor, and Procera's Chief Financial Officer, Richard Deggs, and retain the Sandvine name.

"Sandvine has done a tremendous job becoming a leader in its market," said Lyndon Cantor, the Chief Executive Officer of Procera. "Along with the rest of the Procera team, we look forward to bringing the best of both companies together to accelerate our strategy as the preeminent provider in the emerging Network Intelligence market. The combined organization will deliver greater capability to serve our customers, execute on innovation initiatives and expand our addressable market."

"This is a very exciting next step for Sandvine and Procera. As technologies and networks continue to evolve, I firmly believe that the combination of Sandvine and Procera creates the premier provider in our markets—with the scale and innovation needed to address our customers' opportunities to build more intelligent networks," said Dave Caputo, Sandvine's President and Chief Executive Officer, who will join the Board of Directors of the combined company as Non-Executive Chairman.

Founded in 2001 and headquartered in Waterloo, Ontario, Sandvine's network policy control solutions add intelligence to fixed, mobile and converged communication service provider networks, to increase revenue, reduce network costs and improve subscriber quality of experience.  Procera provides network visibility and control across mobile and fixed broadband networks, transforming data into actionable intelligence for operators to make informed business decisions and improve the quality of subscriber experience. Together, the two companies will be the premier provider of Network Intelligence solutions to communication service providers around the world.

"We are excited to bring together two great companies and teams in the combination of Procera and Sandvine," said Andrew Kowal, Partner at Francisco Partners. "The combined company will serve over 400 communications service provider customers, with over 1 billion subscribers in more than 100 countries, as well as over 500 enterprise customers and more than 100 OEM and channel partners. We are confident that the combined capabilities of these two companies will deliver more innovative solutions and greater value to customers."

"The Special Committee and the entire Board of Directors of Sandvine is pleased with the outcome of this process.  We firmly believe that this transaction creates the most value for our shareholders today and for customers and the Sandvine team well into the future," said Ken Taylor, Sandvine Director and Chairman of the Special Committee.

Transaction Highlights

• The cash purchase price represents a 40% premium to Sandvine's closing share price of CAD $3.15 on May 26, 2017 and a 61% premium to the cash-adjusted¹ closing price on May 26, 2017.
• The Corporation's Board of Directors, based on the recommendation of a Special Committee of independent directors, consisting of Kenneth Taylor, Osama Arafat and Roger Maggs, has unanimously approved the PNI Arrangement and recommends that Sandvine shareholders vote in favour of the PNI Arrangement. The Special Committee made its recommendation with the benefit of input from its legal and financial advisors.
• The PNI Arrangement Agreement is backed by a full equity backstop of the entire purchase price with the right of Sandvine to specific performance and is not conditioned on debt financing.
• The PNI Arrangement does not require management of the Corporation to roll their shares into the resulting entity and each holder of common shares will receive the same consideration for such common shares.
• The termination fee payable to PNI, in certain circumstances, is CAD$16.9 million.
• Following closing, Sandvine common shares will be de-listed from the TSX and no longer traded publicly.

Transaction Details
The PNI Arrangement will be implemented by way of a court approved plan of arrangement under the Business Corporations Act (Ontario). The implementation of the PNI Arrangement will be subject to shareholder approval at the Special Meeting, which is expected to be held in August 2017. The PNI Arrangement will constitute a "business combination" for the purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101") and will require the approval of the holders of a majority of the common shares cast at the Special Meeting excluding those shares held by persons described in items (a) through (d) of Section 8.1(2) of MI 61-101, in addition to approval by two-thirds of all votes cast at the Special Meeting. The PNI Arrangement is also subject to the approval of the Ontario Superior Court of Justice (the "Court"), in addition to certain regulatory approvals and closing conditions customary to a transaction of this nature.

In connection with the PNI Arrangement, senior management of Sandvine (including the CEO and CFO) who together hold in aggregate approximately 4.9 million of the fully-diluted shares (representing approximately 3.9% of the fully-diluted shares of the Corporation), have entered into support agreements with PNI pursuant to which they have agreed to vote all their shares in favour of the PNI Arrangement.

The Corporation will be appearing before the Court to seek an amendment to the interim order which was granted on June 16, 2017. Further details regarding the PNI Arrangement and timing will be included in a management information circular in respect of the Special Meeting which will be mailed to shareholders in due course. The PNI Agreement will be filed on SEDAR at www.sedar.com.

Advisors
The Board of Directors retained Canaccord Genuity Corp. as its exclusive financial advisor.  Dentons Canada LLP is acting as Canadian legal counsel and Dentons US LLP is acting as US legal counsel to the Board of Directors and the Special Committee.  Procera is being advised on the transaction by J.P. Morgan Securities, LLC.  Osler, Hoskin & Harcourt LLP is acting as Canadian legal counsel to Procera and Francisco Partners, and Kirkland & Ellis is acting as US legal counsel to Procera and Francisco Partners.

About Procera Networks, Inc.
Since its inception in 2002, Procera has become a leading subscriber and network intelligence provider. The continued development of its award-winning ScoreCard and eVolution technologies, in addition to the benefits its solutions hold for network operators around data insights, traffic management, and policy control, lets Procera meet the ever-changing needs of service providers both today and in the heavily virtualized future.

For more information, visit http://www.proceranetworks.com or follow Procera on Twitter @ProceraNetworks.

About Francisco Partners
Francisco Partners is a leading global private equity firm, which specializes in investments in technology businesses. Since its launch over 17 years ago, Francisco Partners has raised over $10 billion in capital and invested in nearly 200 technology companies, making it one of the most active and longstanding investors in the technology industry. The firm invests in opportunities where its deep knowledge and operational expertise can help companies realize their full potential.

About Sandvine Corporation
Sandvine's network policy control solutions add intelligence to fixed, mobile and converged communications service provider networks, to increase revenue, reduce network costs and improve subscriber quality of experience. Our networking solutions perform end-to-end policy control functions, including traffic classification, policy decision and enforcement. Deployed as virtualized network functions or on Sandvine's purpose built hardware, the products provide actionable business insight, and the ability to deploy new consumer and business subscriber services, optimize and secure network traffic, and engage with subscribers.

Sandvine's network policy control solutions are deployed in more than 300 networks in over 100 countries, serving hundreds of millions of data subscribers worldwide. www.sandvine.com.

FORWARD-LOOKING STATEMENTS
This press release includes certain forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable securities laws. In particular, this press release contains forward-looking statements relating to, among other things, the acquisition of all of the common shares of Sandvine, the receipt of regulatory and Court approvals in connection with the PNI Arrangement, the timing of the Special Meeting and the closing of the PNI Arrangement pursuant to the terms of the PNI Arrangement Agreement. Any statements contained herein that are not statements of historical facts are forward-looking statements. The completion of the proposed transaction pursuant to the PNI Arrangement Agreement is subject to a number of terms and conditions, including, without limitation: (i) receipt of required shareholder approval; (ii) receipt of all necessary Court approvals; (iii) the waiver or fulfillment of each of the conditions set out in the PNI Arrangement Agreement; and (iv) certain termination rights available to the parties under the PNI Arrangement Agreement. These approvals may not be obtained, the other conditions to the transaction may not be satisfied in accordance with their terms, and/or the parties to the PNI Arrangement Agreement may exercise their termination rights, in which case the proposed PNI Arrangement could be modified, restructured or terminated, as applicable. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with a transaction, that the ultimate terms of the transaction will differ from those that are currently contemplated, and that the transaction will not be successfully completed for any reason (including the failure to obtain any required approvals). Sandvine does not intend, and disclaims any obligation, except as required by law, to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Any forward-looking statements are made as of the date hereof and, except as required by law, Sandvine assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

¹The "cash-adjusted" calculation deducts the Corporation's cash and investments on hand at February 28, 2017 (adjusted for NCIB purchases through April 5), from both its market capitalization and from the total acquisition price implied by the offer in order to better measure the premium being offered.

SOURCE Sandvine

Sandvine Investor Contact: Rick Wadsworth, Sandvine, [phone] ext. 3503, [email protected]; Sandvine Media Contact: Dan Deeth, Sandvine, [phone], [email protected]; Procera Media Contact: Richard Deggs, Procera, [phone], [email protected]

Related Links

http://www.sandvine.com