Letter of Intent for a merger between EDB ASA and companies owned by Telenor Programvare AS

Letter of Intent for a merger between EDB ASA and companies owned by Telenor Programvare AS

The managements of EDB ASA and Telenor Programvare have signed a Letter of Intent for a merger between the EDB group and the companies which make up Telenor Programvare. The merger would be carried out with effect from 1 January 1999. The aim is to create a leading expertise-based IT group with a focus on systems solutions, consultancy and computer ope-rations services. The new group will have a nation-wide presence, and will be well placed for further profitable growth. The group will be a large player in terms of the Nordic market, with 2,100 employees.

The Letter of Intent has been entered into by the EDB group as one party and the Telenor companies 4tel, Dataservice, Dolphin, Infomedica and Novit, as well as Telenor's 50% interest in the merged operation of Telenor Allianse/SDS Divisjon Fagtjenester, as the other party.

The new group will be known as EDB. The stock exchange listing of EDB ASA will be maintained.

On the basis of preliminary accounts for 1998 the merged company's pro forma accounts for 1998 would be as follows:


Operating revenues      NOK             2,766

Operating profit  *)      NOK                 171

Pre-tax profit  *)          NOK                175

Profit after tax  *)        NOK                109

Total assets                NOK               1,683

Interest bearing debt   NOK                   43

Equity                         NOK                855

Capital ratio                 %                   050.8

Earnings per share  *)   NOK                    1.40

No. of shares                NOK      77,461,470

*) Before any depreciation of goodwill arising from the merger (NOK 337)

There are certain areas of overlap between the activities of the EDB group and the Telenor companies in question, and this will permit synergy benefits to be realised in the form of cost savings without any plans for reductions in staffing. In other areas the two businesses are complementary, and this offers a good basis for profitable growth. The merged company will have a strategy for growth, both through internally generated growth and through the acquisition of related businesses. The merged company will have a strong balance sheet, with good liquidity and a high capital ratio.

The overriding objective of the merged company will be to generate continuing growth in earnings per share, which on a pro forma basis would be NOK 1.40 for 1998 before any depreciation of goodwill.

The proposed exchange ratio has been agreed on terms which give the current shareholders of EDB a 30% interest in the merged company, with Telenor having a 70% interest. Telenor will sell shares in connection with the merger in order to reduce its interest to 60%, and the size of its interest will be further reduced over time.

It is proposed that the Board of Directors of the new company will have five members, elec-ted by the shareholders. Jon Fredrik Baksaas, Senior Executive Vice President of Telenor, will be proposed as the Chairman of the Board, with the current Chairman of the Board of EDB ASA, Jarle Gundersen, being proposed as the Deputy Chairman.

Bjørn Trondsen will be proposed as the Group Chief Executive of the new group, with Eivind Kinck proposed as the Deputy Group Chief Executive.

It is intended that the business activities of the new company will be organised on a group structure with business activities carried out by subsidiary companies, and these subsidiaries will largely be a continuation of the current companies.

It has also been agreed that the proposed merger agreements will be placed before the res-pec-tive Boards of Directors in mid-March 1999, with the intention of holding Annual General Meetings prior to the end of April 1999.

Contact names:
Eivind Kinck, Managing Director,
EDB ASA, Tel. +47 22 72 80 01 / 90 10 32 54
Bjørn Trondsen, Managing Director,