UPDATE: Peerless Systems Announces Will Be Purchased by Mobius Acquisition for $7/Share in Cash

Peerless Systems Corporation

today reported that it has entered into a definitive merger agreement to be acquired by Mobius Acquisition, LLC for $7.00 per share in cash, pursuant to a cash tender offer and second step merger. Upon completion of the transaction, Peerless will become a privately held company. The Peerless board of directors has unanimously approved the agreement and recommended that the shareholders of Peerless accept the offer and tender their shares into the offer. Neither management nor members of the Board of Directors of Peerless have any affiliation with Mobius. Under the terms of the agreement, Peerless shareholders will receive $7.00 in cash for each share of Peerless common stock, representing a premium of approximately 91.8% over Peerless' closing price prior to the announcement of the Deer Valley acquisition on September 2, 2014, a 54.6% premium over Peerless' average closing price during the 90 trading days ending December 19, 2014, and a 43.4% premium over Peerless' average closing price during the 30 trading days ending December 19, 2014. "We believe this transaction is in the best interests of Peerless and our shareholders. Our agreement with Mobius represents an attractive valuation for our shareholders, and we look forward to closing the transaction expeditiously," said Timothy Brog, Chief Executive Officer of Peerless. Under the terms of the merger agreement, Peerless intends to solicit superior proposals from third parties pursuant to a "go-shop" provision in the Merger Agreement until the earlier of the 50th day following execution of the Merger Agreement and the closing of the Tender Offer. There can be no assurances that the solicitation of proposals will result in an alternative transaction. Unless required by law, Peerless does not intend to disclose developments with respect to this solicitation process until it is completed. If Peerless terminates the Merger Agreement due to a breach by Mobius, or because Mobius fails to consummate the Tender Offer or the Merger, Mobius is required to pay to Peerless a termination fee in the amount of $6,000,000. Payment of such termination fee is secured by a letter of credit from First Niagara Bank. Under the terms of the merger agreement, Mobius will commence a cash tender offer to purchase all of the outstanding shares of Peerless' common stock no earlier than January 6, 2015 and no later than January 13, 2015. The closing of the tender offer is subject to customary closing conditions, including the tender of at least a majority of Peerless' common stock. If the tender offer closes, Mobius will acquire any Peerless shares that are not purchased in the tender offer in a second-step merger, at the same price per share paid in the tender offer. The transaction is not subject to a financing condition. Peerless expects the transaction to close in February or March 2015. There can be no assurance that the tender offer will be completed, or if completed, that it will be completed in February or March 2015.