QSC and Broadnet agree on exchange ratio
Cologne, April 2, 2007. Today, the Supervisory Boards of QSC AG, Cologne, (ISIN DE0005137004 und ISIN DE000A0JQ4T8) and Broadnet AG, Hamburg, (ISIN DE0005490866) have approved a definitive agreement on the merger of Broadnet AG into QSC AG and the exchange ratio of shares. Accordingly, Broadnet shareholders will receive 12 QSC shares for 11 Broadnet shares.
The exchange ratio was determined on the basis of the company valuations conducted by both companies, with the assistance of IVA VALUATION & ADVISORY AG Wirtschaftsprüfungsgesellschaft, Frankfurt/Main. The valuations also considered the relevance of publicly quoted stock prices for both companies. The equity value (Unternehmenswert) was conducted on the basis of the applicable discounted earnings method (Ertragswertverfahren). The determined equity value amounts to € 5.28 per share for Broadnet AG, and to € 6.06 per share for QSC AG. However, the weighted average stock-exchange price during a period of 3 months before the announcement of the intention to merge on January 30, 2007, (according to sec. 5 para. 1 WpÜG-Angebotsverordnung) amounts to € 6.61 per share for Broadnet AG, and to € 5.18 per share for QSC AG. QSC AG und Broadnet AG have decided to incorporate the respectively higher amount for each of the participating companies into the exchange ratio, consequently € 6.61 per share for Broadnet AG and € 6.06 per share for QSC AG, in order to ensure the adequacy for both companies and their respective shareholders.
The adequacy of the exchange ratio has been approved today by the court-appointed joint merger auditor, PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft, Frankfurt/Main, today. The shareholders of Broadnet AG will vote on the draft of the merger agreement at the annual general meeting on May 23, 2007.
The calculation of a company valuation on the basis of the discounted earnings methodology (Ertragswertmethode) is a highly complex process and is not necessarily susceptible to partial analysis or summary description. The analyses performed by the management boards with the assistance of IVA VALUATION & ADVISORY AG Wirtschaftsprüfungsgesellschaft, Frankfurt a.M., are not necessarily indicative of future results or actual values derived in accordance with other valuation methodologies, which may be significantly more or less favorable than those expressed in this ad hoc release. These analyses involved numerous judgments and assumptions with regard to industry performance, general business, economic, competitive, market and financial conditions, many of which are beyond the control of the companies, as well as judgments and assumptions regarding "risk-free rates", "beta factors", "market risk premia" and "typified shareholder income tax rates", "dividend payout rates", "debt to equity ratios" and "terminal values", all of which involved the exercise of discretion on the part of management. Further information regarding the calculation of the company valuations will be provided in the merger report and merger auditor's report described above.
This ad hoc announcement contains forward-looking statements. These forward-looking statements are based on current expectations and forecasts of future events by the management of QSC AG, whereby QSC does not necessarily intend to communicate changed expectations and forecasts. Due to risks or mistaken assumptions, actual results may deviate substantially from those made in such forward-looking statements. The assumptions that may involve material deviations due to unforeseeable developments include, but are not limited to, the demand for our products and services, the competitive situation, the development, dissemination and technical performance of DSL technology and its prices, the development and dissemination of alternative broadband technologies and their respective prices, changes in respect of telecommunications regulation, legislation and adjudication, prices and timely availability of essential third-party services and products, the timely development of additional marketable value-added services, the ability to maintain and enlarge upon marketing and distribution agreements and to conclude new marketing and distribution agreements, the ability to obtain additional financing in the event that management's planning targets are not attained, the punctual and full payment of outstanding debts by sales partners and resellers of QSC AG, and the availability of sufficient skilled personnel. Neither QSC AG nor Broadnet AG undertakes any responsibility to update such forward-looking statements in light of future events or developments. The statements on the company valuations on the basis of the discounted earnings methodology do not constitute a forecast or assumption of the future development of the market prices of shares of QSC AG or Broadnet AG.