Lowrance reaches agreement to settle shareholder lawsuit: Simrad

Journal Record, The (Oklahoma City), Mar 1, 2006 by Kirby Lee Davis

U.S. District Judge Terence Kern issued an order Tuesday to establish a starting point in the shareholder lawsuit against Lowrance Electronics.

Kern's order for a joint status report established a schedule of initial disclosure within 14 days, with up to 120 days for determining future action.

But the move may have come too late. Lowrance announced Tuesday it had reached an agreement in principal with Troy Siebels of Medford, Mass., owner of 150 Lowrance shares, to settle his challenge of Lowrance's buyout by Simrad Yachting of Egersund, Norway.

Hinted at in a series of filings last week with the U.S. Securities and Exchange Commission, that move appeared to take the wind out of speculators' sails on Wall Street. After a month of trading far above Simrad's offer of $37 a share, the Nasdaq stock closed Monday right at $37 and dropped another 5 cents Tuesday - the last day for trading under the tender offer. Volume totaled 22,889 shares.

Announcement of the $215 million deal's completion could come today from Lowrance and Navico Acquisition Corp., the wholly owned subsidiary of Simrad established for this transaction.

The lawsuit filed Feb. 2 by Siebels in Tulsa County Court, only to move to federal court, claimed Lowrance had failed to obtain the best possible price for the company in its Simrad agreement - even though the lawsuit based its conclusions on the deal's Jan. 30 SEC filing that detailed how Lowrance had drawn increasingly larger buyout offers leading up to the Simrad accord.

Siebels' lawsuit also had challenged the role of JPMorgan in the negotiations and attacked as illegal the $7.5 million termination fee revealed in the SEC documents.

Under Tuesday's agreement, Lowrance, Simrad, Navico and their advisors would be released from all claims. Lowrance agreed to include additional SEC disclosures, which it made on Feb. 23, and not to oppose a $325,000 fee application by Siebels' attorneys.

Tulsa-based Lowrance would become a Simrad subsidiary under the deal unanimously approved in January by the directors of both companies.

Lowrance Chief Financial Officer Paul Murphy said the merger would bring an expansion of Lowrance's Tulsa operations with a 35,000-square-foot warehouse and distribution center. Construction could start by the middle of the year.

The firm now employs 250 at its 115,000-square-foot headquarters at 12000 E. Skelly Dr. It has 1,650 workers outside the United States, mostly at its Mexico manufacturing facility.

Darrell Lowrance, who founded his company in 1957 and serves as its chairman and chief executive, would become CEO of the combined company. Jan Berner, now CEO of Simrad Yachting, would become deputy chief and lead the integration work.

Because there is little overlap in product lines, segment focus or geographic markets, officials feel the combined firms should complement each other.

Lowrance (www.lowrance.com) manufactures and markets global positioning systems and fish finders for the leisure boat industry. It also sells hand-held GPS mapping products for campers and hikers, and navigation systems for the automotive and aviation markets. Murphy said Lowrance would continue to build on its non-maritime product lines.

The company has sold more than 5 million sonar units over the last 48 years and won numerous industry awards for its innovations.

Simrad (www.simradyachting.com) builds and sells marine electronics to high-end leisure boats and smaller commercial vessels under the brand names Simrad and B&G. It is owned by Altor 2003 Fund, a Nordic-based private equity fund advised by Altor Equity Partners (www.altor.com), and Kongsberg Gruppen, a Norwegian-based maritime electronics and defense company.

Murphy said his firm draws about 70 percent of sales from the United States and 20 percent from Europe. Simrad generates only 23 percent of its sales in the United States. They also target larger offshore vessels, while Lowrance serves inland marine markets.

Kirby Lee Davis is Tulsa bureau chief of The Journal Record.