Sphere 3D and Overland Storage Enter Into Definitive Merger
Agreement
Combination Creates Leading Virtualization and Data Management
Software Solutions Company
MISSISSAUGA, ON and SAN DIEGO, CA--(Marketwired - May 15, 2014)
- Sphere 3D Corporation (TSX-VENTURE: ANY) (OTCQX: SPIHF) ("Sphere
3D") and Overland Storage, Inc. (NASDAQ: OVRL) ("Overland") today
announced that both companies' Boards of Directors have unanimously
approved a definitive merger agreement under which the companies
would combine to create a leading global virtualization and data
management software solutions company. The name of the
combined company will be Sphere 3D.
Under the terms of the merger agreement ("Transaction"), each
outstanding share of Overland common stock will be exchanged for
0.510594 common shares of Sphere 3D, subject to certain potential
adjustments as set forth in the agreement. After completion of
the Transaction, it is expected that current holders of Overland
Shares will own approximately 28.8% of Sphere 3D on a fully diluted
basis as a result of their exchange of shares in the
merger. Based on the closing sales price of Sphere 3D common
shares on May 14, 2014, the last trading day prior to the
announcement of the transaction, on the TSX Venture Exchange (the
"TSXV"), the total consideration payable to holders of Overland
equity in the transaction has an implied value of approximately
US$81.13 million or approximately US$4.43 per Overland Share.
On May 14, 2014, the last trading day prior to the announcement
of the Transaction, the closing price of the Overland Shares on the
NASDAQ was US$2.90 and the closing price of the Sphere 3D Shares on
the TSXV was C$9.46 (or US$8.68). The acquisition price represents
a premium of approximately 53% over the closing price of the
Overland Shares on the NASDAQ on the last trading day immediately
preceding the announcement of the Transaction and a premium of
approximately 27% over the weighted average trading price of the
Overland Shares on the NASDAQ and Sphere 3D on the TSX-V for the 30
trading days immediately preceding the announcement of the
Transaction.
Sphere 3D and Overland have been working in tandem to develop an
integrated application virtualization and data storage platform, as
well as a virtual desktop infrastructure (VDI) solutions, which are
already installed at select strategic customers and
partners. The application virtualization platform allows
native third party applications to be delivered in the cloud or on
premise on a multitude of endpoint devices independent of their
operating system. The VDI market, a key segment of the
virtualization market, is estimated to be over $5 billion and
growing 20% annually, according to Frost & Sullivan. Through
the combination, Sphere 3D will have greater financial and
operational scale, and a large and well established worldwide
distribution network and tier one OEM partnerships.
The combination of Sphere 3D's Glassware 2.0 virtualization
solution and Overland's data storage solutions will enable mobile
device users the full functionality of any software program or
application on any device, anywhere, eliminating the application
limitations, data management and security problems for enterprises
created by the BYOD (Bring Your Own Device) phenomenon. Mobile
users that need productivity applications such as word processing,
spreadsheets, presentations and collaborations, specialized
software for computer-aided design (CAD), magnetic resonance
imaging (MRI), software development, video production or customized
legacy applications can now experience full application
functionality via the cloud or in the data center.
Management Comments
Commenting on behalf of Sphere 3D, Peter Tassiopoulos, Chief
Executive Officer stated: "This transformational deal allows us to
immediately gain the scale, infrastructure and resources required
to become a leading global virtualization company and strengthens
Sphere's ability to service and support partners and customers
globally. In addition, this transaction provides greater
certainty in leveraging Overland's existing global distribution
network as well as their significant Tier One OEM
relationships."
Eric Kelly, President and CEO of Overland Storage, said, "This
merger brings together next generation technologies for
virtualization and cloud coupled with end-to-end scalable storage
offerings enabling us to address the larger and growing
virtualization and cloud markets. This along with Overland's
global network of services and reseller partners and our worldwide
manufacturing capabilities supports our path for growth and
profitability to create significant value for shareholders of both
companies."
Approvals
The Transaction requires customary closing conditions,
shareholder approval of Overland and receipt of all necessary
regulatory approvals. The Transaction is expected to close in
the third calendar quarter of 2014. Upon the completion of the
Transaction, Overland's common stock will cease trading on the
NASDAQ and Sphere 3D shares are expected to trade on the TSX and
NASDAQ markets.
Pursuant to the Agreement, Overland is subject to customary
non-solicitation covenants. In the event a superior proposal is
made and if in response, Overland's board of directors changes its
recommendation of the transaction to the Overland shareholders or
terminates the Transaction under certain circumstances, Overland
has agreed to pay Sphere 3D a termination fee of US$3.5
million.
The Transaction has received the unanimous support of the boards
of directors and management of both Sphere 3D and
Overland. Certain significant shareholders of Overland,
including Cyrus Capital Partners and its affiliates, have entered
into voting agreements with Sphere 3D pursuant to which they have
agreed to vote the Overland Shares beneficially owned by them
(collectively representing approximately 64% of the outstanding
Overland Shares) in favor of the Transaction, subject to the terms
and conditions set forth in the voting agreements.
Eric Kelly, the Chief Executive Officer, President, and board
member of Overland, is also the Chairman of the Board of Sphere 3D
and accordingly declared his conflict and recused himself from
casting any vote with respect to the Transaction. Mr. Kelly
has non-material share ownership in both Overland and Sphere
3D. No collateral benefit has been paid to Mr. Kelly in
connection with the consummation of the Transaction. The
Overland board of directors formed a special committee of
independent directors to review and evaluate the proposed
transaction. Sphere 3D appointed Glenn Bowman, the Chairman of
the Audit Committee, as its lead director with respect to the
evaluation of this Transaction.
Advisors
Roth Capital Partners was retained to provide a customary
fairness opinion to the special committee of the board of directors
of Overland. Cormark Securities Inc. has provided a fairness
opinion to the board of directors of Sphere 3D. Both Roth and
Cormark shall be entitled to fees customary for such advisory and
transaction services.
Investor Conference Call
Sphere 3D and Overland Storage will host an investor conference
call today, Thursday, May 15, at 5:00 pm ET (2:00 pm PT). To
access the call dial 888-846-5003 (+1 480-629-9856 outside the
United States) and when prompted provide the pass code "Overland
Storage" to the operator. Participants are asked to call the
assigned number approximately 10 minutes before the conference call
begins. In addition, a live and archived webcast of the conference
call will be available over the Internet at www.overlandstorage.com
and www.sphere3d.com in the Investor Relations section. A replay of
the conference call will also be available via telephone by dialing
(800) 406-7325 (+1 (303) 590-3030 outside the United States) and
entering access code, 4682043#, beginning 8:00 p.m. ET on May 15,
2014 through 11:59 p.m. ET on May 22, 2014.
Important Information for Investors and Stockholders
This announcement is for informational purposes only and does
not constitute an offer to purchase, a solicitation of an offer to
sell the Overland Shares or a solicitation of any proxy, vote or
approval. Sphere 3D will file with the United States Securities and
Exchange Commission ("SEC") a registration statement on Form F-4
that will include a proxy statement of Overland that also
constitutes a prospectus of Sphere 3D. Sphere 3D and Overland also
plan to file with or furnish other documents to securities
regulatory authorities in Canada and the United States regarding
the proposed Transaction.
INVESTORS AND STOCKHOLDERS OF OVERLAND ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION.
Anyone may obtain free copies of these documents when available
free of charge under Sphere 3D's profile on SEDAR at www.sedar.com,
or by accessing Sphere's website at www.sphere3d.com under the
heading "Investors" and from Sphere 3D directly by contacting T.
Scott Worthington, Chief Financial Officer: (416)
749-5999. Documents will also be available free of charge
under Overland's profile on EDGAR at www.sec.gov, or by accessing
Overland's website at www.overlandstorage.com under the heading
"Investors" and from Overland directly by contacting Kurt
Kalbfleisch, Chief Financial Officer: (858) 495-4211. Sphere 3D,
Overland, their respective directors and certain of their executive
officers may be deemed to be participants in the solicitation of
proxies from the shareholders of Overland in connection with the
proposed Transaction. Information about the directors and executive
officers of Overland is set forth in its proxy statement for its
2014 annual meeting of shareholders, which was filed with the SEC
on April 14, 2014. Information about the directors and executive
officers of Sphere 3D can be found in its 2014 management
information circular dated April 25, 2014, which is available at
www.sedar.com. Other information regarding the participants in the
proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC when they become available.
About Overland Storage
Overland Storage is a trusted global provider of unified data
management and data protection solutions across the data lifecycle.
By providing an integrated range of technologies and services for
primary, nearline, offline, and archival data storage, Overland
makes it easy and cost effective to manage different tiers of
information over time, whether distributed data is across the hall
or across the globe. Overland SnapServer, RDX removable disk-based
technology, SnapScale, SnapServer, SnapSAN, NEO Series and REO
Series solutions are available through a global channel of
value-added resellers and system integrators. This channel model is
supported by OEM agreements with major manufacturers. For more
information, visit www.overlandstorage.com and
http://www.tandbergdata.com/us/.
About Sphere 3D Corporation
Sphere 3D Corporation (TSX-VENTURE: ANY) (OTCQX: SPIHF) is a
virtualization technology solution provider. Sphere 3D's Glassware
2.0™ platform delivers virtualization of many of the most demanding
applications in the marketplace today; making it easy to move
applications from a physical PC or workstation to a virtual
environment either on premise and/or from the cloud. Sphere
3D's V3 Systems division supplies the industry's first purpose
built appliance for virtualization as well as the Desktop Cloud
Orchestrator management software for VDI. Sphere 3D maintains
offices in Mississauga, Ontario, Canada and in Salt Lake City,
Utah, U.S. For additional information visit www.sphere3d.com or
access the Company's public filings at www.sedar.com.
Forward-Looking Statements
Certain statements contained in this press release include
"forward-looking statements" that involve a number of risks and
uncertainties, and actual results or events may differ materially
from those projected or implied in those statements. Examples
include the parties' ability to consummate the proposed Transaction
and timing thereof, the benefits and impact of the proposed
Transaction, including tax effects to shareholders, the combined
company's ability to achieve synergies and value creation that are
contemplated by the parties, Sphere 3D's ability to promptly and
effectively integrate Overland's business and the diversion of
management time on Transaction-related issues.
Forward-looking statements, without limitation, may contain the
words believes, expects, anticipates, estimates, intends, plans, or
similar expressions. Forward-looking statements are not guarantees
of future performance. They involve risks, uncertainties and
assumptions and actual results could differ materially from those
anticipated. Forward-looking statements are based on the opinions
and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ
materially from those projected in the forward-looking
statements.
Sphere 3D and Overland caution you that you should not rely
unduly on these forward-looking statements, which reflect their
current beliefs and are based on information currently available.
Neither Sphere 3D nor Overland undertakes any obligation to update
or revise any forward-looking statements as of any future date.
Additional information concerning these statements and other
factors can be found in Sphere 3D's and Overland's filings with
securities regulatory authorities in Canada (www.sedar.com) or the
SEC (www.sec.gov.), as applicable.
Overland Storage, SnapScale, SnapServer, SnapSAN, NEO
Series, REO Series, RDX and the Overland logo are trademarks
Overland Storage, Inc., that may be registered in some
jurisdictions. All other trademarks used are owned by their
respective owners.
Neither TSXV nor its Regulation Services Provider (as that term
is defined in policies of the TSXV) accepts responsibility for the
adequacy or accuracy of this release.
Overland Investor Relations Contact: Todd Kehrli or Jim Byers
MKR Group Inc. 323-468-2300 ovrl@mkr-group.com Sphere 3D Contact:
Sphere 3D Corporation Peter Tassiopoulos Chief Executive Officer
416-749-5999 Peter.Tassiopoulos@Sphere3D.com
Sphere 3D Corporation (TSXV:ANY)
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Sphere 3D Corporation (TSXV:ANY)
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