Vacon - Tender offer

Vacon Plc: Danfoss launches a voluntary recommended public tender offer for all shares in Vacon

Vacon Plc, Stock Exchange Release, 12 September 2014 at 8.30 a.m. (EET)

Danfoss A/S together with its group companies ("Danfoss") and Vacon Plc
("Vacon") have on 11 September 2014 entered into a combination agreement under
which they agree to combine the drives businesses of Danfoss and Vacon (the"Combination Agreement"). In order to effect the combination Danfoss will,
through its wholly owned subsidiary Oy Danfoss Ab (the "Bidder"), make a
voluntary recommended public tender offer to purchase all the issued and
outstanding shares in Vacon (the "Tender Offer"). In the Tender Offer Vacon
shareholders are being offered a cash consideration of EUR 34.00 for each share
in Vacon representing an aggregate equity purchase price of approximately EUR
1,038 million. Combining the two companies will create a Nordic based, global
player - a new drives business with the clear ambition to build a leading
position in the drives market.



Summary of the Tender Offer

  * Tender Offer of EUR 34.00 in cash for each share in Vacon (the "Offer
    Price");

      * The Offer Price represents a premium of:

          * 13.1 percent to the closing price of Vacon on NASDAQ OMX Helsinki
            Ltd ("NASDAQ OMX Helsinki") on 11 September, i.e. last day of
            trading before the announcement of the Tender Offer;
          * 19.0 percent to the 3 months volume weighted average price on the
            NASDAQ OMX Helsinki; and
          * 20.3 percent to the 12 months volume weighted average price on the
            NASDAQ OMX Helsinki;

      * The Board of Directors of Vacon has unanimously decided to recommend the
        shareholders to accept the Tender Offer;
      * The Bidder and Vacon's largest shareholder, AC Invest Three B.V., have
        entered into an agreement on the sale of the whole current holding of AC
        Invest Three B.V. in Vacon corresponding to a 10.56 percent shareholding
        in Vacon to the Bidder;
      * Certain large shareholders, together representing approximately 14.32
        percent of the shares in Vacon, have subject to certain customary
        conditions undertaken to accept the Tender Offer;
      * The Tender Offer is subject to e.g. approvals by the relevant
        authorities, such as competition authorities and the Finnish Ministry of
        Employment and Economy, and the Bidder gaining control of more than 90
        percent of the Vacon shares;
      * The Bidder will on or about 24 September, 2014 publish a tender offer
        document with detailed information on the Tender Offer."After a careful examination of the Tender Offer, the Board of Directors of
Vacon has unanimously decided to recommend the shareholders to accept it. Vacon
is truly one of the great industrial success stories, even globally speaking. By
joining forces the two companies will create a Nordic based, global player - a
new AC drives business with the clear ambition to build a leading position in
the AC drives market," says Panu Routila, Chairman of the Board at Vacon.

Background and strategic rationale

The background for the Tender Offer is Danfoss' strategic focus on creating
profitable growth. Vacon is a good match to this ambition. Today both Danfoss
Power Electronics division and Vacon are significant players in the drives
business and combined they will gain an even stronger market position."We have a clear strategic ambition of being among the absolute top players in
the businesses where we operate. Vacon is a very strong and innovative player
and together we can ensure a clear long-term growth trajectory," says Niels B.
Christiansen, CEO at Danfoss.

By joining forces Danfoss and Vacon will become a strong alternative to
competitors in the market and be able to give customers a broader and more
innovative offering of drives faster. Together the entities will also get a base
for enhancing growth from critical mass in mature and emerging markets and be
able to invest further in both R&D and sales force and gain scale, which is a
key success factor in the drives business."I believe that customers will benefit significantly from the two entities
joining forces as they will bring even more competitive, innovative and
attractive AC drives to the market. Today Vacon is stronger than ever, and it
has a great future ahead together with Danfoss," says Vacon's President and CEO
Vesa Laisi.

Vacon is a global company with unique R&D, Production, Supply Chain competences
in China, Finland, India, Italy and US, and highly skilled sales and service
organization in 31 countries. They have a crucial role in building a new drives
business to challenge the top players in the world. Finland as a hotspot in the
global drives business has an especially crucial role and Danfoss will be
positioning Finland as one of its future centers of excellence along with the
other power electronics centers worldwide.



The Tender Offer

Danfoss A/S and Vacon have on 11 September 2014 entered into the Combination
Agreement, according to which the Bidder will make a public tender offer to
purchase all issued and outstanding shares in Vacon. For a brief description of
the Combination Agreement please see section "Combination Agreement" below.

The completion of the Tender Offer is conditional on, among other things, the
following conditions being met or the Bidder waiving the fulfilment thereof on
or by the date on which the Bidder announces the final outcome of the Tender
Offer:

 1. the valid tender of outstanding shares representing (together with any
    outstanding shares that may be held by the Bidder or any of its direct or
    indirect parent companies) more than ninety per cent (90%) of the issued and
    outstanding shares and voting rights of Vacon calculated in accordance with
    Chapter 18 Section 1 of the Finnish Companies Act (624/2006, as amended);

 2. the receipt of all applicable regulatory permits, consents and approvals,
    including anti-trust approvals and an approval of the Finnish Ministry of
    Employment and the Economy or the Finnish Government, as applicable, under
    the Finnish Act on Monitoring Foreign Acquisitions (laki ulkomaisten
    yritysostojen seurannasta, 172/2012), necessary to permit the completion of
    the Tender Offer in such a manner that the terms and conditions possibly
    included in such permits, consents or approvals are reasonably acceptable to
    the Bidder in that they do not have material impact as referred to in
    chapter 4.3 of the Regulations and guidelines 9/2013 (Takeover bid and the
    obligation to launch a bid) issued by the Finnish Financial Supervisory
    Authority;

 3. no order or regulatory action by a court or regulatory authority of
    competent jurisdiction preventing, postponing or materially challenging the
    completion of the Tender Offer or the exercise of the rights of ownership of
    shares in Vacon by the Bidder having been issued (other than an order or
    regulatory action related to the permits, consents and approvals referred to
    in section 2) above);

 4. no information made public or disclosed by Vacon being materially
    inaccurate, incomplete or misleading and Vacon not having failed to make
    public any information that should have been made public by it under
    applicable laws and regulations, provided that such disclosure or failure to
    disclose information constitutes or results in a material adverse change in
    Vacon and its subsidiaries, taken as a whole;

 5. no fact or circumstance having arisen after the date of this announcement
    that constitutes a material adverse change in respect of Vacon and its
    subsidiaries, taken as a whole;

 6. the external financing committed to the Danfoss for purchasing the shares
    pursuant to the Tender Offer still being available to Danfoss provided that
    this condition only applies in situations where the non-availability of said
    financing is due to conditions or circumstances outside the control of the
    Bidder and Danfoss A/S or its group companies have not in any way breached
    the terms and conditions of said financing;

 7. the Combination Agreement still being in force;

 8. the recommendation of the Board of Directors of Vacon being in force and not
    amended (other than with respect to amendments which are required under
    applicable laws and regulations including the Helsinki Takeover Code and
    which do not amend the material substance of the recommendation); and

 9. in the event that a competing offer is made, the Board of Directors of Vacon
    having confirmed to the Bidder within two business days their intention to
    uphold the recommendation for the Tender Offer.

The Bidder has on 11 September 2014 entered into an agreement with Vacon's
largest shareholder AC Invest Three B.V. ("AC Invest") pursuant to which the
Bidder has agreed to acquire all shares in Vacon currently held by AC Invest, in
aggregate 10.56 percent of all issued shares in Vacon (the "Sale Shares"). In
accordance with the agreement the Bidder has simultaneously with the signing of
the Combination Agreement by Danfoss A/S acquired such number of Sale Shares
that corresponds to 9.98 percent of all shares in Vacon. Further the Bidder has
agreed to acquire and AC Invest has agreed to sell the remaining Sale Shares,
corresponding to 0.58 percent of all shares of Vacon, subject to the approval by
the Finnish Ministry of Employment and the Economy required under the Finnish
Act on Monitoring Foreign Acquisitions. Such additional trade shall take place
immediately upon receipt of such approval. The sale price of the Vacon shares
held by AC Invest is EUR 29.70 per share. If the Tender Offer is successful, the
Offer Price of EUR 34.00 per share will be used as the sale price for all Vacon
shares sold by AC Invest.

Further, certain large shareholders, together representing approximately 14.32
percent of the shares in Vacon, have subject to certain customary conditions
undertaken to accept the Tender Offer;

The Board of Directors of Vacon has unanimously decided to recommend the
shareholders to accept the Tender Offer and considers that the terms and
conditions of the Tender Offer are fair to the shareholders. The Board of
Directors of Vacon has received a fairness opinion from its financial adviser
Aventum Partners according to which the consideration to be offered to the
shareholders in the Tender Offer is fair. The Board of Directors will issue its
complete statement on the Tender Offer in accordance with the Finnish Securities
Market Act before the publication of the tender offer document and such
statement will be incorporated into the tender offer document.

The intention of the Bidder is to acquire all issued and outstanding shares in
Vacon (excluding treasury shares not covered by the Tender Offer) amounting to
30,534,502 shares. Should such amount of shares be tendered in the Tender Offer
that the Bidder obtains more than 90 per cent of all shares and voting rights in
Vacon, the Bidder intends to initiate compulsory redemption proceedings for the
remaining of the shares and thereafter apply for delisting of the shares of
Vacon from the NASDAQ OMX Helsinki.

On the date of the announcement of the Tender Offer, the Bidder or Danfoss A/S
do not hold any shares or voting rights in Vacon other than Sale Shares acquired
from AC Invest.

The Bidder will make all necessary filings to obtain approvals from e.g. the
relevant Competition Authorities as soon as possible after this announcement of
the Tender Offer as well as the approval of the Finnish Ministry of Employment
and the Economy or the Finnish Government, as applicable, under the Finnish Act
on Monitoring Foreign Acquisitions.

The acceptance period for the Tender Offer is expected to commence on or about
29 September 2014 and initially expected to run until 21 October 2014.

The Bidder reserves the right to extend the offer period from time to time in
accordance with the terms and conditions of the Tender Offer.

The Tender Offer and the combination will not have any immediate impact on the
business operations or assets of Vacon. Provided that the Tender Offer is
completed, the businesses of Vacon and Danfoss will be combined based on a joint
integration plan between Vacon and Danfoss. The integration process will,
however, start only upon receipt of all necessary authority approvals and the
completion of the Tender Offer.

The detailed terms and conditions of the Tender Offer as well as instructions on
how to accept the Tender Offer will be included in the offer document, which the
Bidder expects to publish around 24 September 2014.

The Bidder and Vacon have undertaken to comply with the recommendation regarding
the procedures to be complied with in Finnish tender offers, the Helsinki
Takeover Code.

Vacon has in the Combination Agreement agreed to a standard non-solicitation
clause whereby Vacon has undertaken not to solicit any competing proposals and,
subject to the fiduciary duties of the Board of Directors of Vacon, promote the
progress of such proposals. Having carefully assessed the terms and conditions
of the Tender Offer, including the preconditions set by Danfoss for launching
the Tender Offer, the Board of Directors of Vacon has concluded that entering
into the Combination Agreement, including said non-solicitation clause, is in
the interest of Vacon's shareholders.

The offer consideration

The consideration offered in the Tender Offer is EUR 34.00 in cash for each
issued and outstanding share in Vacon. The Offer Price represents a premium of:

  * 13.1 percent to the closing price of Vacon on the NASDAQ OMX Helsinki on 11
    September, i.e. the last day of trading before the announcement of the
    Tender Offer;
  * 19.0 percent to the volume weighted average price on the NASDAQ OMX Helsinki
    during the three months preceding the date of the announcement of the Tender
    Offer; and
  * 20.3 percent to the volume weighted average price on the NASDAQ OMX Helsinki
    during the last twelve months preceding the date of the announcement of the
    Tender Offer.

Any dividend or other distribution of funds by Vacon decided after the date of
the announcement of the Tender Offer, which a shareholder who has accepted the
Tender Offer is entitled to, will be deducted from the offer price.



Combination Agreement

The Combination Agreement entered into by and between Danfoss and Vacon sets
forth the principal terms under which the Bidder will make the Tender Offer.

Under the Combination Agreement, the Board of Directors of Vacon undertakes to
issue a formal recommendation to the shareholders of Vacon to accept the Tender
Offer. The Board of Directors of Vacon may nevertheless decide to withdraw,
modify or change the recommendation and take actions contradictory to the
recommendation if the Board of Directors determines in good faith after taking
advice from external legal counsel and its financial advisers and after
providing the Bidder with a reasonable opportunity to discuss with the Board of
Directors of Vacon, that such withdrawal, modification, or change is required in
order for the Board of Directors to comply with its mandatory fiduciary duties
to Vacon's shareholders under Finnish laws and the Helsinki Takeover Code.
Further, in the event of a competing offer, the Board of Directors of Vacon may
withdraw, modify or change the recommendation if (i) Vacon has not solicited
competing offers as described below, (ii) a final announcement regarding a
public tender offer is published and a third party shall under such announcement
offer to purchase all outstanding shares in Vacon on terms and conditions which
are more favorable to the shareholders of Vacon than the terms and conditions of
the Tender Offer, (iii) the Board of Directors of Vacon has provided certain
time period to the Bidder to upgrade the Tender Offer; and (iv) the Board of
Directors of Vacon under its mandatory fiduciary duties reasonably and in good
faith considers that it would no longer be in the interest of the shareholders
of Vacon to accept the Tender Offer. If a competing offer would be published but
the Bidder would upgrade its Tender Offer so as to, in the reasonable opinion of
the Board of Directors of Vacon rendered in good faith, be at least equally
favorable to the shareholders as the competing offer, the Board of Directors of
Vacon shall confirm and uphold the recommendation for the Tender Offer, as
amended.

Vacon has also undertaken not to solicit or encourage any competing offers or
proposals for such offers or other transactions competing with the Tender Offer,
nor to promote any such proposals, except if the Board of Directors of Vacon
considers that such promoting measures are required in order for the Board of
Directors to comply with its mandatory fiduciary duties. Vacon has agreed to
inform the Bidder of any competing proposals and to provide the Bidder with an
opportunity to negotiate with the Board of Directors of Vacon of matters arising
from such competing proposals.

In the Combination Agreement, Vacon and Danfoss have also agreed on the
conditions to completion of the Tender Offer as set out above.

The Combination Agreement further includes certain representations, warranties
and undertakings by both parties, such as conduct of business by Vacon in the
ordinary course of business before the completion of the Tender Offer, and
cooperation by the parties in making necessary regulatory filings.

Subject to the Bidder acquiring more than ninety per cent of the issued and
outstanding shares and voting rights of Vacon, the Bidder has undertaken to
commence compulsory redemption proceedings of the remaining shares of Vacon and
to cause the Vacon shares to be delisted from NASDAQ OMX Helsinki.

The Combination Agreement may be terminated by either Vacon or the Bidder (i) in
case of a material breach by the other party of any of the warranties,
undertakings or obligations under the Combination Agreement, (ii) if the Board
of Directors of Vacon has in accordance with the Combination Agreement
withdrawn, modified or changed the recommendation, (iii) if the conditions to
completion of the Tender Offer have not been satisfied or waived by the Bidder
in accordance with the terms and conditions of the Tender Offer and the Bidder
has announced that it will not complete the Tender Offer or (iv) if the closing
of the Tender Offer has not occurred on or before 31 May 2015.

Danfoss A/S will in accordance with the Combination Agreement assign the
agreement to the Bidder in which case Danfoss A/S shall automatically be deemed
to guarantee as for its own debt the obligations of the Bidder.

Financing

Danfoss has secured the necessary financing for the Bidder to complete the
Tender Offer, including mandatory redemption proceedings, and plans to use a
combination of cash positions, unutilized committed credit facilities and
further credit approved financing from its financing institutions.

Authority approvals

The completion of the tender offer is, among other things, conditional upon
receipt of all applicable regulatory permits, consents and approvals, including
antitrust approvals, necessary to permit the completion of the Tender Offer. The
Bidder intends to seek antitrust approvals in several jurisdictions.
Furthermore, the Bidder will have to seek for an approval of the Finnish
Ministry of Employment and the Economy or the Finnish Government, as applicable,
under the Finnish Act on Monitoring Foreign Acquisitions. The Bidder and Vacon
have agreed to carry out these approval processes in co-operation so that they
can be completed in the most expeditious manner practicable.

According to information currently available to the Bidder, it is uncertain
whether all necessary authority approvals can be obtained by the end of the
offer period due to some of the authority processes not having a statutory
deadline. In case all necessary approvals have not been obtained by the end of
the offer period, the Bidder will extend the offer period in order to receive
the necessary approvals to be able to complete the Tender Offer. The parties
currently estimate that the competition clearances could obtained by the end of
November.

Advisers

Danfoss has appointed Nordea Markets Investment Banking as financial adviser,
Castrén & Snellman Attorneys Ltd as legal adviser, and Deloitte as financial
transaction service provider in connection with the Tender Offer.

Vacon has appointed Aventum Partners as financial adviser and Roschier Attorneys
Ltd. as legal adviser.



Further information

·  Danfoss Media Relations, phone +45 70 20 44 88

 ·   Sebastian Linko, Director, Corporate Communications and Investor Relations,
Vacon Plc, phone +358 (0)40 8371 634, sebastian.linko(at)vacon.com



Analyst meeting at 14:00-15:00 EET, to be held at Restaurant Savoy,
Eteläesplanadi 14, Helsinki.

Media conference at 15:15-16:15 EET, to be held at Restaurant Savoy,
Eteläesplanadi 14, Helsinki.

These are also all webcasted live at the above mentioned times. The webcast
information is as follows:

Link: http://qsb.webcast.fi/c/customers/customers_2014_0912_vacon_live_helsinki/

Username: Vacon

Password: Danfoss



Vacon in brief:

Vacon is driven by a passion to develop, manufacture and sell the best AC drives
and inverters in the world - and provide customers with efficient product
lifecycle services. Our AC drives offer optimum process control and energy
efficiency for electric motors. Vacon inverters play a key role when energy is
produced from renewable sources. Vacon has production and R&D facilities in
Europe, Asia and North America, and sales offices in 30 countries. Further,
Vacon has sales representatives and service partners in nearly 90 countries. In
2013, Vacon's revenues amounted to EUR 403.0 million, and the company employed
globally approximately 1,600 people. The shares of Vacon Plc (VAC1V) are quoted
on the main list of the Helsinki stock exchange (NASDAQ OMX Helsinki).

Driven by Drives, www.vacon.com



Danfoss in brief:

Danfoss engineers technologies that enable the world of tomorrow do more with
less. Danfoss meets the growing need for infrastructure, food supply, energy
efficiency and climate-friendly solutions. The products and services are used in
areas such as refrigeration, air conditioning, heating, motor control and mobile
machinery. The company is also active in the field of renewable energy as well
as district heating infrastructure for cities and urban communities. Danfoss
innovative engineering dates back to 1933 and today the company is a world-
leader, employing 22,500 employees and serving customers in more than 100
countries. The company is privately held by the founding family.

THIS RELEASE IS NOT A TENDER OFFER DOCUMENT AND AS SUCH DOES NOT CONSTITUTE AN
OFFER OR AN INVITATION TO MAKE A SALES OFFER. INVESTORS SHALL ACCEPT THE TENDER
OFFER FOR THE SHARES ONLY ON THE BASIS OF THE INFORMATION PROVIDED IN THE TENDER
OFFER DOCUMENT. OFFERS WILL NOT BE MADE DIRECTLY OR INDIRECTLY IN ANY
JURISDICTION WHERE EITHER THE OFFER OR PARTICIPATION THEREIN IS PROHIBITED BY
APPLICABLE LAW OR WHERE THE TENDER OFFER DOCUMENT WOULD HAVE TO BE PUBLISHED OR
REGISTERED OR THE OFFER WOULD BE SUBJECT TO OTHER REQUIREMENTS IN ADDITION TO
THOSE UNDERTAKEN IN FINLAND. THE TENDER OFFER IS NOT BEING MADE DIRECTLY OR
INDIRECTLY IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW AND, WHEN
PUBLISHED, THE TENDER OFFER DOCUMENT AND RELATED CONSENT FORMS WILL NOT AND MAY
NOT BE DISTRIBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE
PROHIBITED BY APPLICABLE LAW. IN PARTICULAR, THE TENDER OFFER IS NOT BEING MADE,
DIRECTLY OR INDIRECTLY, IN OR INTO, OR BY USE OF THE POSTAL SERVICE OF, OR BY
ANY MEANS OR INSTRUMENTALITY (INCLUDING, WITHOUT LIMITATION, FACSIMILE
TRANSMISSION, TELEX, TELEPHONE OR THE INTERNET) OR THROUGH A NATIONAL SECURITIES
EXCHANGE OF CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG. THE TENDER
OFFER CANNOT BE ACCEPTED BY ANY SUCH USE, MEANS OR INSTRUMENTALITY OR FROM
WITHIN CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG.



Special notice to securityholders in the United States

The Tender described in this announcement is subject to the laws of Finland. It
is important for US securities holders to be aware that this press release and
all tender offer documentation are subject to disclosure and takeover laws and
regulations in Finland that are different from those in the United States. As
applicable, the Bidder will comply with Regulation 14E under the US Securities
Exchange Act of 1934, as amended in connection with the Offer. Any extension of
the tender offer into, or any separate tender offer, in the United States will
be made solely under the accompaniment of a dealer-manager that is a broker-
dealer registered under the US Securities Exchange Act of 1934, as amended.

Securityholders in the United States should read the tender offer documents when
they become available for instructions on how to tender their shares and
American Depository Shares.

Pursuant to an exemption from Rule 14e-5 under the Exchange Act, the Bidder and
certain of its Representatives may, from time to time, purchase or make
arrangements to purchase shares outside the Tender from the time the Tender was
announced until the expiration of the acceptance period of the Tender, including
purchases in the open market at prevailing prices or in private transactions at
negotiated prices, in each case, outside of the United States and to the extent
permitted under the applicable Finnish laws and regulations. Any such purchases
will not be made at prices higher than the price of the Tender provided in this
announcement unless the price of the Tender is increased accordingly. Any future
purchases will be made in accordance with applicable laws, rules and
regulations. Any such purchases of shares will be disclosed to the extent
required by Finnish law or rules or regulations and, if so disclosed, will also
be disclosed in the US.

NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY U.S. STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF
THIS OFFER, PASSED UPON THE FAIRNESS OR MERITS OF THIS ANNOUNCEMENT OR
DETERMINED WHETHER THIS ANNOUNCEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES.


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