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Lionbridge Technologies to acquire Bowne Global Solutions
Accretive acquisition to create world's largest globalization and offshoring services company
OUR BUSINESS CORRESPONDENT
Mumbai, June 30, 2005: Lionbridge Technologies, Inc. (Nasdaq: LIOX), a leading provider of globalization and testing services, has announced that it has signed a definitive agreement to acquire Bowne Global Solutions, a division of Bowne & Co., Inc. (NYSE: BNE), for at least $180 million (excluding cash received), in a combination of cash and common stock. The transaction is expected to close in the third quarter of 2005 and is expected to be accretive to Lionbridge earnings within the first full quarter of combined operations, excluding restructuring and related expenses.
Lionbridge has a growing presence in India with two state-of-the-art development centers in Powai, Mumbai and a recently inaugurated development center at Chennai, employing more than a 1000.
The transaction pairs two leading organizations in the estimated $6 billion globalization outsourcing industry, creating a $400 million provider with global scale across more than 25 countries and approximately 500 customers. Both Lionbridge and Bowne Global Solutions (BGS) provide globalization services that enable organizations to release products and content that meets the linguistic, technical and cultural requirements of customers, partners and employees worldwide. BGS' worldwide presence, language expertise and broadly diversified customer base will complement Lionbridge's advanced language technology and its comprehensive offshore development and testing outsourcing services. This combination creates a firm with scale, innovation and global resources.
"This combination is strategically compelling. We are leveraging the combined capabilities of two successful organizations," said Rory Cowan, Chairman and Chief Executive Officer of Lionbridge Technologies. "Customers will benefit from a unified commitment to service excellence, the most advanced technology-enabled services and the efficiencies that joining the two companies will bring. Our employees will benefit from our shared traditions of growth, innovation and career advancement. Shareholders will benefit from the combined efficiencies, broadening of revenues and industry leadership."
Philip Kucera, Chairman and Chief Executive Officer of Bowne, continued, "By bringing together two well-established and highly regarded companies, Lionbridge is providing the world's leading organizations with a dedicated outsourcing partner that has scale and resources to address their ever- changing, global product and content lifecycles. Lionbridge brings the capability and desire to grow the globalization outsourcing business over the next several years and to fulfill the demand for global products and content. We look forward to participating in the combined business as future shareholders."
Under the terms of the Agreement, Bowne will receive no less than $180 million, consisting of $130 million in cash, up to 9.4 million shares of Lionbridge common stock, subject to adjustment, and a potential subordinated note of no more than $20 million. In addition, Bowne will hold one director seat on the Lionbridge Board of Directors.
The transaction is expected to be accretive to Lionbridge's earnings within the first quarter of combined operations and thereafter, excluding the impact of transaction-related expenses and restructuring. In addition to potential revenue synergies, the combined company expects to realize cost synergies of between $15 and $20 million in 2006.
Excluding restructuring, financing expenses and debt repayment, Lionbridge expects to generate cash flow from operations of $35 to $45 million and earnings per share of between $0.40 and $0.55 within the first full fiscal year of consolidated operations, based on approximately 60 million weighted average fully diluted common shares outstanding.
The closing of the acquisition is subject to customary conditions and approvals, including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The approval of the stockholders of Lionbridge and Bowne will not be required to consummate the proposed acquisition. Lionbridge has obtained a bank commitment to finance approximately $100 million of the purchase price. This commitment is subject to customary conditions.
OUR BUSINESS CORRESPONDENT
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