Platinum Equity to Acquire Electro Rent for
$13.12 per Share in All Cash Transaction
BEVERLY HILLS and VAN NUYS, Calif. – May 31,
2016 – Platinum Equity and Electro Rent Corporation (Nasdaq: ELRC) today
announced that they have entered into a definitive agreement under which
Electro Rent would be acquired by Platinum Equity for approximately $323.4
million.
Under the agreement, Platinum Equity would
acquire all of Electro Rent’s common stock. Electro Rent stockholders will
receive $13.12 per share, representing a premium of 24.4% over the closing
price on May 27, 2016, and 34.8% over the average closing price of Electro
Rent’s common stock over the past three (3) months. In light of the agreement,
Electro Rent will not pay its next quarterly common stock dividend
scheduled for July 2016.
The agreement followed the unanimous
recommendation of Electro Rent’s board of directors. Completion of the
transaction, which is expected to close in the next 90 to 120 days, is
subject to customary closing conditions, including approval of Electro
Rent’s stockholders and various regulatory agencies.
Electro Rent Chairman Daniel Greenberg and a
member of his immediate family, who collectively own approximately 29% of
the company’s outstanding shares of common stock, have entered into voting
agreements in support of the sale and have granted an affiliate of
Platinum Equity irrevocable proxies to execute those agreements.
Steven Markheim, recently named Chief Executive
Officer of Electro Rent, and Allen Sciarillo, recently named Chief
Financial Officer, will retain their current roles under the ownership of
Platinum Equity.
Upon completion of the transaction, Electro
Rent’s common stock will cease to be publicly traded. Houlihan Lokey acted as
financial advisor to the Strategic Alternatives Committee of the Board of
Directors of Electro Rent and Sheppard Mullin acted as Electro
Rent’s legal counsel. Latham & Watkins LLP is serving as legal counsel
to Platinum Equity.
“Electro Rent has built an excellent reputation
as one of the most well respected companies in its industry. Its team of
dedicated employees will continue to play an essential role in providing
Electro Rent’s customers and OEM partners with the first-class service for
which the company is known,” said Platinum Equity Partner Louis Samson. “We
look forward to working closely with the company’s experienced leadership
to put Electro Rent in the best position to take full advantage of future
opportunities.”
“We are excited to begin this new phase in
Electro Rent’s history, and look forward to partnering with Platinum as we
continue to meet and exceed the needs of our customers and manufacturing
partners around the globe,” said Markheim. “The transaction presents an
outstanding opportunity for all of our stakeholders, as we should greatly
benefit from additional resources and experience to further enhance our
already high inventory, service and support standards. Platinum is fully
committed to our industry and to ensuring Electro Rent’s success.”
About
Platinum Equity
Founded in 1995 by Tom Gores, Platinum Equity
(www.platinumequity.com) is a global investment firm with more than $6 billion
of assets under management and a portfolio of more than 25 operating
companies that serve customers around the world. Platinum
Equity specializes in mergers, acquisitions and operations – a trademarked
strategy it calls M&A&O® – acquiring and operating companies in a
broad range of business markets, including manufacturing, distribution,
transportation and logistics, equipment rental, metals services, media and
entertainment, technology, telecommunications and other industries. Over the
past 20 years Platinum Equity has completed more than 175 acquisitions.
About
Electro Rent
Electro Rent Corporation (www.ElectroRent.com)
is one of the largest global organizations devoted to the rental, leasing and
sales of general purpose electronic test equipment, personal computers and
servers.
Important
Additional Information will be Filed with the SEC
In connection with the proposed transaction,
Electro Rent Corporation will file or furnish relevant documents, including a
proxy statement, concerning the proposed transaction with the SEC. Investors
and stockholders of Electro Rent Corporation are urged to read the proxy
statement and other relevant materials when they become available because they
will contain important information about Electro Rent Corporation and the
proposed transaction. The final proxy statement will be mailed to the company’s
stockholders.
Investors and stockholders may obtain a free
copy of the proxy statement and any other relevant documents filed or furnished
by Electro Rent Corporation with the SEC (when available) at the SEC’s Web site
at www.sec.gov. In addition, copies of the proxy statement and other filings
made by the Company with the SEC can also be obtained, free of charge, by
directing a request to Electro Rent Corporation, 6060 Sepulveda Boulevard, Van
Nuys, CA 91411, Attention: Corporate Secretary.
Electro Rent Corporation and its directors and
certain executive officers may be deemed to be participants in the solicitation
of proxies from Electro Rent Corporation stockholders in respect of the
proposed transaction. Information about the directors and executive officers of
Electro Rent Corporation and their respective interests in Electro Rent
Corporation by security holdings or otherwise is set forth in its proxy statement
for the 2015 Annual Meeting of Stockholders, which was filed with the SEC on
September 9, 2015 and its Annual Report on Form 10-K for the year ended May 31,
2015, which was filed with the SEC on August 13, 2015. Stockholders may obtain
additional information regarding the interests of Electro Rent Corporation and
its directors and executive officers in the Merger, which may be different than
those of Electro Rent Corporation’s stockholders generally, by reading the
proxy statement and other relevant documents regarding the Merger, when filed
with the SEC. Each of these documents is, or will be, available as described
above.
“Safe
Harbor” Statement
Except for the historical statements and
discussions in this press release, the company’s statements above constitute
forward-looking statements within the meaning of section 21E of the Securities
Exchange Act of 1934. These forward-looking statements reflect Electro Rent’s
management’s views and expectations at this time with respect to future events and
financial performance, based on currently available information. Forward
looking statements in this press release include statements regarding the
completion of the sale transaction to Platinum Equity. When used, the words
“anticipate”, “believe”, “expect” and “will” and other similar expressions
identify forward-looking statements. Forward-looking statements are based on
assumptions about future operations and market conditions, and are subject to
certain risks and uncertainties. The company believes its assumptions are
reasonable; nonetheless, it is likely that at least some of these assumptions
will not come true. Accordingly, Electro Rent’s actual results will differ from
the outcomes contained in any forward-looking statement, and those differences
could be material. Factors that could cause or contribute to these differences
include, among others, those risks and uncertainties discussed in the company’s
periodic reports on Form 10-K and 10-Q and in its other filings with the
Securities and Exchange Commission, including: general macroeconomic conditions
may not improve or may deteriorate; U.S. federal government spending with
respect to defense and other research and development activities may not
increase or may decline; Electro Rent may not succeed in retaining its key
sales or other personnel; competition may cause the company to lower prices and
margins to effectively compete; and manufacturers of test and measurement
equipment may not be willing to enter reseller arrangements with Electro Rent
or those agreements may not succeed to the level anticipated. Should one or
more of the risks discussed, or any other risks, materialize, or should one or
more of our underlying assumptions prove incorrect, the company’s actual
results may vary materially from those anticipated, estimated, expected or
projected. In light of the risks and uncertainties, there can be no assurance
that any forward-looking statement will in fact prove to be correct. You should
not put undue reliance on these statements. Electro Rent undertakes no
obligation to update or revise any forward-looking statements.
