Tender offer fast-tracks Tulsa-based Lowrance Electronics takeover

Journal Record, The (Oklahoma City), Mar 10, 2006 by Kirby Lee Davis

With 95.6 percent of Lowrance Electronics stock tendered, Simrad Yachting should complete its $215 million takeover of Lowrance by Monday.

Horten, Norway-based Simrad acquired 4,911,856 shares of Lowrance common stock with the Wednesday midnight close of Simrad's $37-a- share tender offer. That put Simrad over the 90-percent level needed to expedite its takeover.

Navico Acquisition Corp., a Simrad subsidiary created to acquire the Lowrance stock, will now take over all of the remaining Lowrance shares through a short-form merger under Delaware law. Under that process, Navico will dissolve into Tulsa-based Lowrance, making Lowrance a subsidiary of Simrad Yachting - which is itself owned by Altor 2003 Fund, a Nordic-based private equity fund advised by Altor Equity Partners (www.altor.com) of Stockholm, Sweden, and Kongsberg Gruppen, a Norwegian-based maritime electronics and defense company.

How Lowrance develops through this remains to be seen. When the takeover was announced Jan. 30, officials said 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. That starts with the short-form merger, which Lowrance Chief Financial Officer Paul Murphy expects to be completed by Monday and will continue over the next few weeks.

Darrell Lowrance will be in Europe during that period, Murphy said.

Questions remain over the future name and finances of the new company, where its headquarters will be and how it will develop. In U.S. Securities and Exchange Commission files, Simrad is listed as a Horten company because its chairman, Hugo Maurstad, lives there.

Simrad's a global company. To many people, it's wherever the CEO is, Murphy said concerning the headquarters. In this case, the CEO has his office in Tulsa.

Murphy had no idea what that might mean for Oklahoma's second- largest city. Lowrance now employs 250 at its 115,000-square-foot office at 12000 E. Skelly Dr. It has 1,650 workers outside the United States, mostly at its Ensenada, Mexico, manufacturing facility.

Following the merger, Lowrance will expand its Tulsa operations with a 35,000-square-foot warehouse and distribution center alongside its headquarters. Construction could start by the middle of the year.

Because there is little overlap in product lines, segment focus or geographic markets, officials expect the combined firms to benefit from improved synergies.

Lowrance (www.lowrance.com) manufactures and markets global positioning systems and fish finders for the leisure boat industry. It also sells hand-held GPS location systems for campers and hikers, and navigation systems for the automotive and aviation markets.

It draws about 70 percent of sales from the United States and 20 percent from Europe.

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. Only 23 percent of its sales come from U.S. markets.

Altor was formed in 2003 to create a leading private equity firm investing in medium-sized Nordic-based companies. The Altor 2003 Fund, advised by Altor Equity Partners, has a committed capital of $650 million from leading institutional investors.

Negotiations continue toward settling a shareholder lawsuit in Tulsa federal court to challenge the Lowrance deal. Under the agreement being finalized, Lowrance said it, Simrad, Navico and their advisors would be released from all claims. Lowrance made additional SEC disclosures addressing the lawsuit's complaints and agreed to not oppose a $325,000 fee application by the plaintiff's attorneys - the firms Federman and Sherwood of Oklahoma City and Schiffrin and Barroway of Radnor, Penn.

In Nasdaq trading Thursday, Lowrance stock fell 10 cents to $36.86. Volume totaled 17,175 shares.

Financial details on Simrad were not available.

In its first fiscal quarter ended Oct. 31, Lowrance posted a net loss of $2.78 million, or 54 cents per share, despite record revenue of $23.58 million. While strong automotive and hand-held GPS products had lifted sales, Lowrance noted they had lower average returns.

Even so, the company maintained its projection for 20-percent net income growth in fiscal 2006, which ends July 31. Lowrance increased selling and marketing efforts to introduce and support new automotive GPS, Sonar and Sonar/GPS products that began volume shipment during the quarter that ends today.

For fiscal 2005, Lowrance reported record net income of $9.4 million, or $1.90 per diluted share, on record sales of $146.4 million.

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