Independent Fairness Opinion related to Project Olympus
1. Background and introduction
The Board of Directors (the “Board”) of ECIT AS (“ECIT” or the “Company”) has requested the opinion of SEB Corporate Finance, Skandinaviska Enskilda Banken AB (“SEB Corporate Finance”), as to the fairness, from a financial point of view, to the holders of ECIT shares of the offer consideration of NOK 10, in cash per share, proposed to be paid to those holders of shares that tender their shares pursuant to a public offer (the “Offer”) by TowerBrook Capital Partners (U.K.) LLP and its affiliates (“TowerBrook”).
In connection with the presentation of this opinion, SEB Corporate Finance has, inter alia, reviewed relevant parts of the final proposal from TowerBook, provided to SEB on 4 June 2024. SEB has not evaluated any tax, accounting, or legal issues in relation to the Offer. Hence our assessment is based on financial, economic, market and other conditions as in effect of, and the information made available to us as of, the date of this opinion.
2. Methodology
This statement is based on a review and assessment of information publicly available or made available to SEB as per the date of this statement, inter alia:
• Publicly available information, such as annual reports, quarterly presentations, prospectuses, stock exchange notices and company presentations;
• Certain non-public information from the Company, limited to a presentation of the company’s outlook for 2024 dated in May 2024;
• Excerpts of the Final Proposal letter from TowerBrook Capital Partners (U.K) LLP dated 3 June 2024;
• Broker reports; and
• Market data such as share price data for ECIT and peers from Factset, and transaction data from Mergermarket and Bloomberg.
In preparing this statement, we have relied on, and assumed, without independent verification, the accuracy and completeness of the information provided to us by the Company. We have also relied upon and assumed the accuracy, completeness, and fairness of all the financial and other information that was provided to the public by the Company.
The evaluations supporting the assessment contain subjective elements and reflect our reasonable best estimates based on the assumptions set out herein and is taken to be in accordance with industry standards set out by the Norwegian Securities Dealers Association. Other data and information have been collected from sources deemed to be reputable and reliable, such as e.g. Factset and Mergermarket.
3. Assessment of the Offer
SEB has prepared the independent valuation assessment based on generally accepted and recognized valuations methods deemed appropriate, including
- Cash flow valuations;
- Multiple valuation including historical and current multiples of listed peers and multiples paid in precedent transactions; and
- Stock market valuation comprised of trading levels and broker views from equity research analysts;
SEB has applied cash flow valuations, in the form of a discounted cash flow method and leveraged buyout method, that give credit to the Company’s long term organic and inorganic growth and profitability potential. The applied estimates are based on equity research reports and publicly stated guidance from the Company.
Multiple based valuation has been performed based on various historical financial figures and forward estimates for the Company. The publicly listed relevant benchmarks have been found within the categories Nordic IT Services and Business Process Outsourcing, with additional support from Nordic Compounders. We also consider several recent precedent transactions relevant valuation datapoints in the assessment of the Offer.
The offered price per share represents premiums of 39.7% and 32.3% compared to the three-month volume weighted average price and the closing price as of 23 July 2024 respectively. The premiums reflected in the Offer is considered attractive compared to historical public offers in Norway.
4. Conclusion
Based upon the foregoing and such other matters that SEB Corporate Finance deems relevant, it is SEB Corporate Finance’s opinion that, as of the date hereof, the Offer is fair from a financial point of view.
5. Reservations
This statement is prepared on the basis of the mandate as a financial advisor for the Board of ECIT, and it is not addressed to, and may not be relied upon by, any third party for any purpose whatsoever.
Evaluations of the nature contained in this assessment will always contain elements of uncertainty, and although reasonable care and efforts have been exerted, we do not accept any legal or financial liability related to this assessment or for any consequences resulting from acting to or relying on statements made in this assessment.
Our assessment is based on the work and assumptions described above. We have assumed and relied upon, without independent verification, the accuracy and completeness of the information reviewed by us for the purposes of this statement. We cannot and will not provide any assurance that the content of the information that we have based our statement on is correct or complete and cannot give any guarantees or assurances with regards to the content.
We assume that ECIT is not involved in any legal disputes, and we are not informed of any other possible, future legal disputes or allegations regarding liability on the Company which, in our opinion, in both cases, would be of material importance for the evaluation of the Company’s financial situation, besides those already covered in the public documents provided by the Company. Further we assume that all corporate decisions and resolutions have been taken by the relevant corporate bodies and in accordance with relevant legislation.
SEB Corporate Finance is part of Skandinaviska Enskilda Banken AB (publ) Oslo Branch (SEB), an investment firm engaged in securities trading and brokerage activities, as well as providing investment banking and financial advisory services including valuation of businesses and their securities in connection with mergers and acquisitions, secondary distributions of public and non-public securities, private placements and valuations for corporate and other purposes. In order to ensure that assignments undertaken by SEB Corporate Finance are kept confidential, SEB’s other activities, including research and stock broking, are separated from SEB Corporate Finance by Chinese walls. The client acknowledges that SEB research and stock broking activity may act in conflict with the client’s interests with regard to this evaluation and recommendation as a consequence of such Chinese walls.
As financial advisor to the Board in connection with the Offer, SEB Corporate Finance will receive a fixed fee for our services upon delivery of this statement, and the Company has agreed to reimburse our expenses arising from this assignment. In the ordinary course of our trading and brokerage activities, SEB or its associated companies, may at any time hold long and short positions, and trade or otherwise effect transactions, for our own account or the account of customers, in debt or equity securities of the Company. Furthermore, employees of SEB and related parties could be owning shares in the Company at present and could in the future buy and sell ECIT shares. In addition, regulatory requirements in certain jurisdictions require research to disclose, amongst other things, the fact that the publisher has received remuneration from the company covered (or entities associated with it) in respect of investment banking activities, and/or the facts that it has been involved in underwriting or placing its securities, in the previous 12 months.
Any dispute arising out of, or relating to, this statement shall be governed by the laws of Norway and shall be subject to the exclusive jurisdiction of the Norwegian courts.
Yours faithfully,
SEB Corporate Finance
