HALO Technology Holdings to Acquire InfoNow Corporation
HALO Technology Holdings and InfoNow Corporation announced that HALO has agreed to acquire InfoNow Corporation in a merger transaction valued at $7.2 million. Pursuant to the terms of the definitive Agreement and Plan of Merger dated December 23, 2005, a newly formed, wholly owned subsidiary of HALO will be merged with and into InfoNow Corporation with InfoNow Corporation surviving the merger as a wholly owned subsidiary of HALO.
Under the terms of the definitive merger agreement, which was approved by both companies' boards of directors, each share of InfoNow common stock outstanding immediately prior to the merger will be converted into the right to receive approximately $0.71 in a combination of cash and common stock of HALO. The amount of cash per share to be received in the merger by the InfoNow stockholders will be determined by the amount of InfoNow's cash on hand and net working capital available to it three days prior to the closing.
The lesser of the two amounts will be paid in cash by HALO pro rata in proportion to each stockholder's ownership of InfoNow at the closing of the merger. The remainder of the approximately $0.71 per share merger consideration will be paid in shares of HALO common stock, the value of which will be deemed to be the greater of $1.00 or the average closing price of HALO's common stock as reported on the over-the-counter bulletin board for the twenty consecutive trading days ending two trading days prior to the closing of the merger (the "HALO Conversion Price").
In addition, each InfoNow common stock option outstanding at the closing with an exercise price less than $0.71 per share will be converted into the right to receive cash and common stock of HALO to the extent that the approximately $0.71 per share merger consideration exceeds the applicable exercise price. The amount of cash and HALO common stock to be issued in respect of the outstanding in-the-money stock options as described above will be calculated based upon the relative proportions of the cash and HALO common stock issued in the merger in respect of the outstanding InfoNow common stock.
HALO will also issue a contingent value right in respect of each share of HALO common stock issued in the merger. The CVRs will be payable on the 18-month anniversary of the closing date and will entitle each holder thereof to an additional cash payment if the trading price of HALO's common stock (based on a 20-day average) is less than the HALO Conversion Price. The CVRs will expire prior to the 18-month payment date if during any 45 consecutive day trading period during that time when the volume of HALO's common stock is not less than 200, 000 per day, the stock price is 175% of the HALO Conversion Price. The shares of HALO common stock and related CVRs to be issued in the merger are expected to be registered with the Securities and Exchange Commission.
The $0.71 per share value represents a premium to InfoNow's stockholders of approximately 41.9%, 55.2% and 106.4% over the six-, three- and one-month average closing prices per share, respectively, for InfoNow's common stock as quoted on the Nasdaq Stock Market in each instance through December 19, 2005, the last day InfoNow's common stock traded on the Nasdaq Stock Market. It also represents a premium of approximately 114.1% over the last reported sales price per share for InfoNow's common stock as reported on the Pink Sheets on December 23, 2005, the last trading day for InfoNow's common stock prior to the announcement of the merger.
The merger, which is expected to close during the first quarter of 2006, is subject to the approval of a majority of the outstanding shares of InfoNow common stock, the applicable trailing 20-trading day average HALO stock price equaling or exceeding $1.00 per share, and the satisfaction of certain other closing conditions, including approval by a majority of the Company's common shares entitled to vote thereon, negotiation of the final terms of the CVR agreement and the effectiveness of a registration statement on Form S-4 filed by HALO, registering the shares of HALO common stock and related CVRs to be issued in the Merger. Q Advisors LLC acted as exclusive financial advisor to InfoNow, and Hogan & Hartson L.L.P., Denver, Colorado, provided legal advice. Bell, Boyd & Lloyd LLC, Chicago, Illinois, provided legal advice to HALO.
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