Sandvine Corporation ("Sandvine" or the "Corporation") (TSX: SVC), announced today that it has entered into an arrangement agreement (the "PNI Arrangement Agreement") with PNI Canada Acquireco Corp. ("PNI"), an affiliate of Francisco Partners and Procera Networks, Inc. ("Procera"), pursuant to which PNI will acquire all of the issued and outstanding common shares of Sandvine by way of plan of arrangement (the "PNI Arrangement") for cash consideration of CAD$4.40 per share.  The price per share implies an aggregate fully-diluted equity value for Sandvine of approximately CAD $562 million.

The Corporation's special meeting of shareholders scheduled for July 18, 2017 has been postponed and a meeting to consider the PNI Arrangement will be held at a date to be determined by the Board of Directors of the Corporation (the “Special Meeting”).

The combined company will be led by Procera’s Chief Executive Officer, Lyndon Cantor, and Procera’s Chief Financial Officer, Richard Deggs, and retain the Sandvine name.

“Sandvine has done a tremendous job becoming a leader in its market,” said Lyndon Cantor, the Chief Executive Officer of Procera.  “Along with the rest of the Procera team, we look forward to bringing the best of both companies together to accelerate our strategy as the preeminent provider in the emerging Network Intelligence market.  The combined organization will deliver greater capability to serve our customers, execute on innovation initiatives and expand our addressable market.”

“This is a very exciting next step for Sandvine and Procera. As technologies and networks continue to evolve, I firmly believe that the combination of Sandvine and Procera creates the premier provider in our markets—with the scale and innovation needed to address our customers’ opportunities to build more intelligent networks,” said Dave Caputo, Sandvine’s President and Chief Executive Officer, who will join the Board of Directors of the combined company as Non-Executive Chairman.

Founded in 2001 and headquartered in Waterloo, Ontario, Sandvine’s network policy control solutions add intelligence to fixed, mobile and converged communication service provider networks, to increase revenue, reduce network costs and improve subscriber quality of experience.  Procera provides network visibility and control across mobile and fixed broadband networks, transforming data into actionable intelligence for operators to make informed business decisions and improve the quality of subscriber experience.  Together, the two companies will be the premier provider of Network Intelligence solutions to communication service providers around the world.

“We are excited to bring together two great companies and teams in the combination of Procera and Sandvine,” said Andrew Kowal, Partner at Francisco Partners. “The combined company will serve over 400 communications service provider customers, with over 1 billion subscribers in more than 100 countries, as well as over 500 enterprise customers and more than 100 OEM and channel partners. We are confident that the combined capabilities of these two companies will deliver more innovative solutions and greater value to customers.”

“The Special Committee and the entire Board of Directors of Sandvine is pleased with the outcome of this process.  We firmly believe that this transaction creates the most value for our shareholders today and for customers and the Sandvine team well into the future,” said Ken Taylor, Sandvine Director and Chairman of the Special Committee.

Transaction Highlights

• The cash purchase price represents a 40% premium to Sandvine's closing share price of CAD $3.15 on May 26, 2017 and a 61% premium to the cash-adjusted1 closing price on May 26, 2017.
• The Corporation's Board of Directors, based on the recommendation of a Special Committee of independent directors, consisting of Kenneth Taylor, Osama Arafat and Roger Maggs, has unanimously approved the PNI Arrangement and recommends that Sandvine shareholders vote in favour of the PNI Arrangement. The Special Committee made its recommendation with the benefit of input from its legal and financial advisors.
• The PNI Arrangement Agreement is backed by a full equity backstop of the entire purchase price with the right of Sandvine to specific performance and is not conditioned on debt financing.
• The PNI Arrangement does not require management of the Corporation to roll their shares into the resulting entity and each holder of common shares will receive the same consideration for such common shares.
• The termination fee payable to PNI, in certain circumstances, is CAD$16.9 million.
• Following closing, Sandvine common shares will be de-listed from the TSX and no longer traded publicly.

Transaction Details

The PNI Arrangement will be implemented by way of a court approved plan of arrangement under the Business Corporations Act (Ontario). The implementation of the PNI Arrangement will be subject to shareholder approval at the Special Meeting, which is expected to be held in August 2017. The PNI Arrangement will constitute a "business combination" for the purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101") and will require the approval of the holders of a majority of the common shares cast at the Special Meeting excluding those shares held by persons described in items (a) through (d) of Section 8.1(2) of MI 61-101, in addition to approval by two-thirds of all votes cast at the Special Meeting. The PNI Arrangement is also subject to the approval of the Ontario Superior Court of Justice (the "Court"), in addition to certain regulatory approvals and closing conditions customary to a transaction of this nature.
In connection with the PNI Arrangement, senior management of Sandvine (including the CEO and CFO) who together hold in aggregate approximately 4.9 million of the fully-diluted shares (representing approximately 3.9% of the fully-diluted shares of the Corporation), have entered into support agreements with PNI pursuant to which they have agreed to vote all their shares in favour of the PNI Arrangement. 
The Corporation will be appearing before the Court to seek an amendment to the interim order which was granted on June 16, 2017. Further details regarding the PNI Arrangement and timing will be included in a management information circular in respect of the Special Meeting which will be mailed to shareholders in due course. The PNI Agreement will be filed on SEDAR at www.sedar.com.

Advisors

The Board of Directors retained Canaccord Genuity Corp. as its exclusive financial advisor.  Dentons Canada LLP is acting as Canadian legal counsel and Dentons US LLP is acting as US legal counsel to the Board of Directors and the Special Committee.  Procera is being advised on the transaction by J.P. Morgan Securities, LLC.  Osler, Hoskin & Harcourt LLP is acting as Canadian legal counsel to Procera and Francisco Partners, and Kirkland & Ellis is acting as US legal counsel to Procera and Francisco Partners.

Source: Procera Networks media announcement