THE KEITH COMPANIES/TKC
NEWS RELEASE
STANTEC
FOR IMMEDIATE RELEASE
NORTH AMERICAN DESIGN FIRMS STANTEC AND THE KEITH COMPANIES TO COMBINE
Stantec to obtain US Listing
EDMONTON, AB and IRVINE, CA (April 14, 2005) TSX:STN; NASDAQ:TKCI
Stantec (TSX:STN) and The Keith Companies (NASDAQ:TKCI) announced today that
they have entered into an agreement to combine the two firms. The agreement,
which has been approved by the boards of directors of Stantec and The Keith
Companies (TKC), will help both companies realize strategic business goals
benefiting employees, clients, and shareholders.
TKC shareholders will receive approximately US$22.00 per share in cash, Stantec
common shares, or a combination of cash and Stantec common shares. The
transaction is expected to be accretive to Stantec's earnings while
significantly strengthening the firm's presence in the US by adding 10 locations
throughout southern California and approximately 850 employees. TKC also has
offices in Portland, Oregon; Las Vegas, Nevada; Phoenix, Arizona; Houston,
Texas; Salt Lake City, Utah; and Ann Arbor, Michigan. Stantec provides
professional design and consulting services in planning, engineering,
architecture, surveying, and project management and has over 4,200 employees in
50 locations throughout North America.
SUMMARY OF THE TRANSACTION
o Stantec will acquire TKC through a merger of TKC into a wholly owned
US subsidiary of Stantec.
o Pursuant to the merger agreement, each share of TKC common stock will
be exchanged for the following:
- US$11.00 in cash
- 0.23 Stantec shares (which was worth US$5.33 based on Stantec's
closing price on April 14, 2005), and
- US$5.50 worth of Stantec shares to be calculated by dividing
US$5.50 by the simple average of the weighted average sales price
of the Stantec common shares on the Toronto Stock Exchange (TSX)
for each of the 20 trading days ending on the second trading day
prior to the closing of the merger, converted into US dollars for
each trading day at the noon buying rate quoted by the Federal
Reserve Bank of New York on such trading day.
o TKC shareholders will have the option to elect to receive their merger
consideration in cash, Stantec common shares, or a combination of cash
and Stantec common shares, in each case subject to proration.
o In connection with the merger agreement Stantec will become a US
Securities and Exchange Commission (SEC) registrant and on completion
of the transaction, Stantec's common shares will be listed on both the
Toronto Stock Exchange (TSX) and a major US stock exchange.
o The transaction is subject to customary conditions, including approval
of the transaction by TKC's shareholders and expiration of the waiting
period under the Hart Scott Rodino Act. Stantec's shareholders will
not be required to vote on the transaction.
o Stantec has entered into a shareholder support agreement with TKC's
Chairman & Chief Executive Officer whereby he has agreed to vote his
shares of TKC common stock in favor of the merger.
o The merger agreement contemplates that Aram Keith, TKC Chairman & CEO
will become a director of Stantec following completion of the
transaction.
o In certain circumstances, TKC will pay Stantec a breakup fee in the
amount of US$3 million plus expenses if TKC terminates the merger
agreement.
o The transaction is expected to close in the third quarter of 2005.
"The addition of TKC will increase the revenue of our operations in the United
States by approximately seventy per cent--based on 2004 numbers," says Tony
Franceschini, Stantec President & CEO. "The combination of Stantec and TKC will
make up one of the most diversified design firms in North America and a leading
urban land development services group."
In 2004 TKC's gross revenues were US$105.3 million (C$137.7 million) and
Stantec's gross revenues were C$520.9 million (US$398.4 million).
"With TKC, Stantec will gain a strong presence in California--a key market in
North America--and an opportunity to lever this local base to cross sell our
public sector services in Transportation and Environment," adds Franceschini.
"This is a key strategic move in our plan to become a top 10 global design
firm."
Stantec provides professional design and consulting services in planning,
engineering, architecture, surveying, and project management and supports public
and private sector clients in a diverse range of markets, at every stage, from
initial concept and financial feasibility to project completion and beyond.
Stantec's services are offered through more than 4,200 employees operating out
of approximately 50 locations in North America and the Caribbean.
"This is an exciting transaction for The Keith Companies' employees, clients,
and shareholders," says Aram Keith, TKC Chairman and CEO. "Joining Stantec will
substantially accelerate our growth plans and make TKC a part of a North
American firm with a widely diversified service offering. Our employees will
have access to more service specialists, experts, and greater technological
resources while our clients will gain access to a wider range of services."
"Our shareholders will receive an immediate premium upon the close--Stantec's
offer represents an approximate 30% premium to TKC's closing price on April
14--and they will have the opportunity to reinvest in the combined company and
take advantage of the revenue and cost synergies that should result from the
combination," adds Keith.
TKC, headquartered in Irvine, California is a multi-disciplined engineering and
consulting services company. With approximately 850 staff, TKC provides a wide
spectrum of skilled resources including land planning, engineering, surveying,
mapping, environmental studies, and water and cultural resources. Additionally,
TKC provides mechanical, electrical, chemical, power/energy engineering, and
other industrial engineering services to design and improve the efficiency and
reliability of automated and manufacturing processes, production lines, and fire
protection systems. TKC benefits from a diverse public and private client base
varying from residential and commercial real estate projects to institutional,
manufacturing, and processing facilities.
In connection with the transaction, Stantec plans to list its shares on a major
US stock exchange, while maintaining its listing on the Toronto Stock Exchange.
The issuance of Stantec shares in connection with the transaction is also
subject to the approval of the TSX. The TSX has neither approved nor disapproved
the contents of this release.
CONFERENCE CALL FOR ANALYSTS AND INVESTORS
The management teams from Stantec and TKC will be holding a conference call for
analysts and investors to discuss the proposed acquisition. The call will be
held tomorrow morning (Friday, April 15) at 8:00 AM EDT (6:00 AM MDT - 5:00 AM
PDT).
The live discussion can be accessed by dialing (800) 374-1207.
A webcast of the analyst and investor conference call will also be available on
the Internet at www.stantec.com/keithco, www.keithco.com, and www.stantec.com.
There will be a replay of the webcast available on the websites for those
shareholders and analysts who are unable to listen to the live call.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction, Stantec and TKC will file a
Registration Statement on Form F-4, a joint proxy statement/prospectus and other
related documents with the Securities and Exchange Commission (the "SEC").
Stockholders of Stantec and TKC are advised to read these documents when they
become available because they will contain important information. Stockholders
of the companies may obtain copies of these documents for free, when available,
at the SEC's website at www.sec.gov. These and such other documents may also be
obtained for free from:
Stantec
10160-112 Street
Edmonton, Alberta, Canada, T5K 2L6
Phone: (780) 917-7000 Fax: (780) 917-7330
And from:
The Keith Companies
19 Technology Drive
Irvine, California, USA 92618-2334
Phone: (949) 923-6000 Fax: (949) 923-6121
Stantec and TKC and their respective directors, executive officers and other
members of their management and employees may be deemed to be participants in
the solicitation of proxies in connection with Stantec's proposed acquisition of
TKC. Information regarding the special interests of these directors and
executive officers in the transaction described herein will be included in the
joint proxy statement/prospectus described above. Additional information
regarding Stantec's directors and executive officers is also included in its
management information circular for its 2005 Annual Meeting of Shareholders,
which was filed with the applicable securities commissions in Canada on or about
March 31, 2005 and is available free of charge at the Canadian Securities
Administrators' web site at www.sedar.com or by contacting Stantec at the
address or telephone number set forth above. Additional information regarding
TKC's directors and executive officers is also included its proxy statement for
its 2005 Annual Meeting of Stockholders, which was filed with the SEC on or
about April 12, 2005 and is available free of charge at the SEC's web site at
www.sec.gov or by contacting TKC at the address or telephone number set forth
above.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. In some cases,
forward-looking statements can be identified by words such as "believe,"
"expect," "anticipate," "plan," "potential," "continue" or similar expressions.
Such forward-looking statements are based upon current expectations and beliefs
and are subject to a number of factors and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. Some of the forward-looking statements contained in this press
release include statements about the proposed Stantec and TKC merger; including
statements that: (i) the merger will allow the combined company to realize
strategic goals; (ii) the merger is expected to be accretive to earnings of the
combined company; (iii) the merger will allow Stantec to increase its revenues
from its United States operations by approximately 70%; (iv) the combination
with TKC will allow Stantec opportunities to cross sell services to TKC's client
base; and (v) the TKC shareholders will realize a premium of approximately 30%.
These statements are not guarantees of future performance, involve certain
risks, uncertainties and assumptions that are difficult to predict, and are
based upon assumptions as to future events that may not prove accurate.
Therefore, actual outcomes and results may differ materially from what is
expressed herein. For example, if TKC
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does not receive required shareholder approvals, if Stantec is unable to list
its stock on a major US exchange or either party fails to satisfy other
conditions to closing, the merger will not be consummated. In addition, the
combined companies may not realize all or any of the expected benefits of the
merger. The following factors, among others, could cause actual results to
differ materially from those described in the forward-looking statements: global
capital market activities, fluctuations in interest rates and currency values,
the effects of war or terrorist activities, the effects of disease or illness on
local, national, or international economies, the effects of disruptions to
public infrastructure, such as transportation or communications, disruptions in
power or water supply, industry and worldwide economic and political conditions,
regulatory and statutory developments, the effects of competition in the
geographic and business areas in which the companies operate, the actions of
management, and technological changes. Actual results may differ materially from
those contained in the forward-looking statements in this press release.
STANTEC CONTACTS THE KEITH COMPANIES CONTACTS
Media Aram Keith
Jay Averill TKC Chairman & CEO
Tel: (780) 917-7441 Tel: (949) 923-6001
javerill@stantec.com
Investor Financial Relations Board
Simon Stelfox Tricia Ross
Tel : (780) 917-7288 Tel: (617) 520-7064
sstelfox@stantec.com
VISIT WWW.STANTEC.COM/KEITHCO (WILL BE POSTED LIVE AT 6:00 PM EASTERN TIME)