GSI Group to acquire Excel for ~$360M

GSI Group has entered into a definitive agreement to acquire Excel in an all-cash transaction for $32.00 per share, or ~$360 million, before fees and transaction costs. The offer price represents a 30.2% premium to the average Excel closing share price over the last 30 trading days.

The acquisition will be effected through a cash tender offer for all outstanding shares of Excel common stock at a price of $32.00 per share, followed by a second-step merger in which any untendered shares will be acquired at the same per share price. The boards of directors of both companies have unanimously approved the transaction. The tender offer is expected to commence on or about July 23, 2008. Subject to customary conditions and regulatory approvals, GSI expects that the transaction will close in the 3rd quarter.

GSI intends to pay the aggregate purchase price through a combination of available cash and external financing. GSI and its wholly owned subsidiary, GSI Group Corp., have entered into definitive agreements with various investors to provide, subject to customary conditions, financing of $210 million for the transaction through the issuance of senior unsecured notes and warrants. On a non-GAAP cash basis, excluding the impact of any acquisition and purchase accounting related charges, the transaction is expected to be accretive to GSI for the full year 2009.

"This acquisition constitutes a major step in the execution of our strategy to expand our presence in our most attractive markets," said Sergio Edelstein, president and CEO of GSI. "GSI and Excel have a set of uniquely complementary products, technologies, and distribution channels, which will enable the combined company to provide customers with a significantly broader set of solutions."

Antoine Dominic, president and CEO of Excel commented; "As the industry evolves, geographical reach and breadth of product offerings become paramount. By joining forces, GSI and Excel will be in a very strong position to accelerate new product introductions and global market penetration. Although Excel has performed quite well independently over the years, this combination rewards our shareholders, creates opportunities for employees and offers more solutions for our customers."

For the twelve months ended December 31, 2007, Excel reported revenues of $160.0 million and net income of $17.7 million. For the same period, GSI Group Inc. reported revenues of $317.8 million and net income of $19.0 million.

GSI reaffirmed that its second quarter results will be slightly above the midpoint of the previously stated range with revenue expected between $64.0 million and $68.0 million and earnings per share of approximately two cents. The company expects to release its full second quarter earnings on July 31.

UBS Investment Bank acted as exclusive financial advisor and placement agent to GSI Group Inc. in connection with the transaction. Needham & Company, LLC provided a fairness opinion to Excel's Board of Directors.

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