RECENT NEWS

Feb
11
Shareholder Update Re Tender Offer


SimiGon Ltd


("SimiGon" or the "Company")



Update related to the Notice of Special General Meeting of Shareholders



SimiGon Ltd. (LON: SIM) wishes to update shareholders that on February 9, 2022 the lawyers of D.D. Goldstein Real Estates and Investments Ltd. ("Goldstein") sent a letter to the attorneys of the Company and its directors, setting out a draft (and therefore non-binding) tender offer for a portion of the Company’s shares (the “Draft Tender Offer”).



As previously notified, Goldstein have filed an application for approval of a derivative action. Goldstein have not submitted a position paper with regards to the Merger Proposal announced in the Notice of Special General Meeting of Shareholders (“Shareholders Meeting") issued by the Company on January 14, 2022 (the “Notice”).



SimiGon's Board of Directors (the “Board”) cannot attest to the certainty that an actual tender offer will actually be submitted. The Draft Tender Offer provides a draft of the proposed terms that could be included in the final offer. SimiGon has not been provided with any further clarity on when or if the Draft Tender Offer will be made binding (if at all). The Draft Tender Offer is therefore not currently capable of acceptance and there can be no assurance that any offer will be made.



An electronic copy of the Draft Tender Offer is available on the Company's website: https://www.simigon.com/draft-to.



The Board have considered its merits of the Draft Tender Offer, as presented, and compared to the Company’s existing strategy to merge with Maxify. The Board have concluded, for the reasons set out below, that the Draft Tender Offer is an inferior proposal for the Company’s shareholders and have resolved not to postpone the Shareholders Meeting



The Board believes that the Draft Tender Offer is an inferior proposal to SimiGon and its shareholders compared to the actual binding Merger Proposal and therefore does not propose any changes to the Notice of Special General Meeting of Shareholders issued by the Company on January 14, 2022.



The primary considerations for the Board’s conclusion are summarized below:


• The Draft Tender Offer is still subject to additional data and approvals required and it does not include a commitment to the date by which it will be submitted and become legally binding. The Draft Tender Offer includes a long list of conditions to the offer. The Board believes some of these conditions are not likely or simply cannot be fulfilled and therefore that Goldstein’s true and primary intent is to prevent the Merger Proposal (as stated by Goldstein in the Draft Tender Offer).


• The Draft Tender Offer seems to explicitly worsen the status of the shareholders who will accept it relative to the alternative available to shareholders today, which is not to approve the Merger Proposal on the basis that if shareholders do not approve the Merger Proposal, then the Company will continue to operate as a publicly traded company on the AIM and Goldstein can continue its application for approval of the derivative claim. Assuming Goldstein will prevail and under further assumption that there will be a court ruling in which the defendants will be obligated to pay the full "damage" claimed, the entire amount will be available to the Company. In this event, assuming that the Company will be able to distribute a dividend to its shareholders, each shareholder will receive 100% of the dividend that will be distributed for their shares. On the other hand, in the Draft Tender Offer, the same shareholder who accepted the Draft Tender Offer and sold shares to Goldstein will receive a dividend from him at a rate of only 50% for the shares sold.


• The Draft Tender Offer does not provide an offer to purchase all SimiGon shares but rather only an aggregate amount of 9,025,000 to 12,600,000 Shares compared to the Merger Proposal in which the merger applies to all SimiGon shareholders.


• The Merger Proposal that is subject to the approval of the Company’s shareholders, is made on the basis of a fully-diluted valuation of the Company of $8,500,000, representing a premium of 226.86% to the average closing price on the AIM Market for the last 12 months, a premium of 250.66% to the average closing price on the AIM Market for the last 6 months, a premium of 285.54% to the closing price on the AIM Market on the last full trading day immediately preceding the public announcement of the Merger and a premium of 285.54% to the closing price on the AIM Market on Thursday, 13 January 2022 (being the most recent practicable date prior to the date of this announcement). On the other hand, the Draft Tender Offer offers a cash consideration of 6.7 Pence per share, which it claims reflects a premium of 21.8% in relation to the closing price of the share on the trading day preceding the Draft Tender Offer; however, a true comparison of the share price in the past three weeks since the Notice shows that the average share price is 6.2 Pence per share, reflecting an actual premium of 8%. Even if the Board accepts the premium claimed by Goldstein, including the theoretical conditional additional consideration, the Merger Proposal provides a significantly better premium to all SimiGon’s Shareholders.


• In addition, the conditional price instalment offered by Goldstein, according to which Goldstein will distribute to the shareholders who approve the Draft Tender Offer an additional consideration of 50% of the dividend allegedly received by Goldstein after the application for approval of the derivative claim submitted by Goldstein (the “Conditional Price Instalment”), is theoretical, abstract and far from certain - especially since the request for approval of a derivative claim is still in its initial stages.



There is no certainty that dividends will be distributed to shareholders in order to execute the Conditional Price Instalment, as there is no guarantee that the Company will meet the required dividend distribution test at an unknown future date nor on the ability of Goldstein as a shareholder of the Company to execute a distribution of dividend, taking into account that legally only the Board has authority to approve distribution of dividends.


• The Draft Tender Offer includes only a vague description of how it is expected to improve future business growth of the Company and improve returns to shareholders, as compared to the Merger Proposal.


• It appears that the Draft Tender Offer in jurisdictions outside the United Kingdom or to certain persons not resident in the United Kingdom or who are citizens, residents or nationals of other countries outside the United Kingdom may be prohibited or affected by the laws of the relevant jurisdictions. The Merger Proposal applies to all shareholders.



While, in the opinion of the Board, the Draft Tender Offer also includes multiple flawed statements and serious inaccuracies with respect to the Merger Proposal, the Board resolved, at this stage, to only address and focus on the proposed terms of the Draft Tender Offer and not on correcting these statements; SimiGon’s lawyers have sent a letter to Goldstein’s lawyers in this regard.



As provided above, the Board believes that the Draft Tender Offer is an inferior proposal to SimiGon and its shareholders compared to the actual binding Merger Proposal. In addition, a delay of the Shareholders Meeting could jeopardize the Merger Proposal. For these reasons the Board does not propose any changes to the Notice or delaying the Shareholders Meeting.



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