PARAGON
TECHNOLOGIES ANNOUNCES A DEFINITIVE AGREEMENT WITH TGW TRANSPORTGERÄTE GMBH
- - - - -
EASTON,
PA — May 23, 2005
-- Paragon Technologies, Inc. (AMEX:PTG), a leading supplier of “smart”
material handling solutions, including systems, technologies, products and
services, announced today that it has entered into a definitive agreement with
TGW Transportgeräte GmbH and a wholly-owned subsidiary of TGW, under which the
TGW subsidiary will purchase substantially all of the assets of Ermanco
Incorporated, Paragon’s wholly-owned conveyor and sortation subsidiary located
in Spring Lake, Michigan. The transaction is subject to customary closing
conditions as well as approval by Paragon’s stockholders.
The
terms of the acquisition agreement provide that TGW will pay cash in the amount
of $23 million (subject to working capital adjustments) and will assume certain
liabilities. In connection with such approval, the Company’s Board received an
opinion from the Company’s financial advisors, Boenning & Scattergood,
Inc., that the consideration to be received by Paragon in the transaction is
fair from a financial point of view to Paragon’s stockholders. The transaction
is expected to close during the third quarter of 2005.
In
connection with this transaction, TGW has entered into a voting agreement with
certain directors and officers of Paragon that control approximately 18.6% of
the voting power of the Company, under which they have agreed to vote their
shares in favor of the transaction.
Ermanco
is a manufacturer of Ermanco branded light to medium duty unit handling and
conveyor and sortation products, serving the material handling industry through
a network of approximately 100 experienced material handling equipment
distributors and one licensee. Ermanco offers services ranging from the
delivery of basic transportation conveyors to turnkey installations of complex,
fully automated work-in-process production lines and distribution centers,
utilizing sophisticated, custom-designed controls software.
The
proposed sale of Ermanco to TGW is the first major step in the Board of
Paragon’s review of strategic alternatives announced earlier this year. The
sale allows the Company to focus its efforts and redirect its assets to
potentially higher growth markets, including markets served by the Company’s SI
Systems branded Order Fulfillment technologies and SI Production & Assembly
Systems branded technologies. Paragon’s Board plans to continue to review and
consider alternatives intended to maximize stockholder value, including
acquisitions, divestitures and other transactions that could provide Paragon’s
investors with liquidity opportunities.
Following
the sale of Ermanco, Paragon will continue to offer and sell products under its
SI Systems and SI Production & Assembly Systems brands, including material
handling solutions that address order fulfillment and unit assembly handling
applications.
SI
Systems’ branded Order Fulfillment Systems capabilities have been enhanced by
providing sophisticated turnkey software and hardware products, and fulfilling
orders in distribution centers, ranging from health and beauty aids to
entertainment products in the music and computer fields. The Company has a
well established clientele in mail order operations, wholesale drug and chain
store drug distribution centers, and numerous other sophisticated warehouse
management operations.
The
newly developed SINTHESIS™ Software Suite, offering 26 modules of integrating
software, enables expansion and growth potential in warehouse and distribution
management centers, beyond its current customer base. SINTHESIS™ supports order
fulfillment needs, from small manual systems to large sophisticated systems,
integrating proprietary as well as nonproprietary products.
The
Company’s SI Production & Assembly Systems capabilities have enabled it to
become a market leader in serving customers in selected niches seeking
horizontal transport of unit load products. Its LO-TOW® Ergonomic
Towline Vehicle™ employs RFID (Radio Frequency Identification)
technology to impart ergonomic capability to the production of vehicles,
ranging from golf carts, motorcycles, and snowmobiles to the assembly of lawn
mowers, motor assemblies, and farming vehicles. This product line is installed
in numerous government facilities, ranging from the Defense Logistics Agency to
the U.S. Postal Service. Paragon’s high precision CARTRAC® product
line has a well established customer base in the appliance and automotive
industry, with new applications possible in the radiation technology field,
where the need for precision guidance is paramount.
Paragon’s
SI Systems and SI Production Assembly Systems branded technologies drive
productivity for Fortune 1000 companies and the United States government.
Commenting
on the transaction, Len Yurkovic, President and Chief Executive Officer of
Paragon Technologies said, “Our future is very exciting, and we believe this is
the right thing to do for our stockholders, our customers, and our employees.
This transaction will allow for a significant redeployment of assets to address
the needs of our core markets and our investors.”
“For
TGW the time has come to adjust to the success of our products in the US market because we are already doing one third of our business here” Georg Kirchmayr,
Chief Executive Officer of TGW, said. “To satisfy our customers’ expectations,
we must increase our presence and guarantee an even higher level of service
than today. The acquisition of Ermanco is a strong commitment to the North
American market”.
In
connection with the acquisition agreement and its requirement of stockholder
approval, Paragon will file with the Securities and Exchange Commission a Proxy
Statement on Schedule 14A providing information related to a special meeting of
the Company’s Stockholders to consider and vote upon the transaction. SECURITY
HOLDERS OF PARAGON ARE ADVISED TO READ THE PROXY STATEMENT REGARDING THE
STOCKHOLDER APPROVAL OF THE TRANSACTION WHEN IT BECOMES AVAILABLE BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. Security holders
may obtain a free copy of the proxy statement when it is available and other
documents filed by Paragon with the SEC at the SEC’s website at
http:/www.sec.gov/. The proxy statement and those other documents may also be
obtained for free from Paragon by contacting Corporate Secretary, Paragon
Technologies, Inc., 600 Kuebler Road, Easton PA 18040, telephone (610)
252-3205.
Paragon
and its executive officers and directors may be deemed to be participants in
the solicitation of proxies from Paragon stockholders with respect to the
acquisition agreement and related transactions. Information regarding such
officers and directors is included in Paragon’s Proxy Statement for its 2004 Annual
Meeting of Stockholders filed with the SEC on May 18, 2004. This document is
available free of charge at the SEC’s Web site at http:/www.sec.gov/ and from
Paragon.
Contemporaneously
with the issuance of this press release, Paragon will file a report on Form 8-K
describing the terms and conditions of the TGW transaction in additional
detail. Once filed, this document will be available free of charge at the
SEC’s website at http:/www.sec.gov/ and from Paragon.
Cautionary Statement.
Certain statements contained herein are not based on historical fact and are
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995 and the Securities and Exchange Commission rules,
regulations and releases. Paragon intends that such forward-looking statements
be subject to the safe harbors created hereby. Among other things, the
forward-looking statements regard Paragon’s earnings, liquidity, financial
condition, review of strategic alternatives, and other matters. Words or
phrases denoting the anticipated results of future events, such as
“anticipate,” “does not anticipate,” “should help to,” “believe,” “estimate,”
“is positioned,” “expects,” “may,” “will,” “is expected,” “should,” “continue,”
and similar expressions that denote uncertainty, are intended to identify such
forward-looking statements. Paragon’s actual results, performance, or
achievements could differ materially from the results expressed in, or implied
by, such “forward-looking statements:” (1) as a result of factors over which
Paragon has no control, including the strength of domestic and foreign
economies, sales growth, competition, and certain cost increases; and (2) if
the factors on which Paragon’s conclusions are based do not conform to its expectations.
In particular, the closing of the transaction with TGW is subject to the
satisfaction of a number of customary closing conditions. If these conditions
are not satisfied, the transaction may not be consummated. Furthermore,
achievement of the objectives of the Company following the sale of Ermanco is
subject to risks associated with business disruption resulting from the
announcement of the sale and other risks outlined in Paragon’s filings with the
Securities and Exchange Commission, including its annual report on Form 10-K
for the year ended December 31, 2004 and the most recent quarterly report on
Form 10-Q for the first fiscal quarter ended March 31, 2005.
This press release and prior releases are
available at www.ptgamex.com.
