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DDS Wireless Announces Proposed Going-Private Transaction

RICHMOND, BRITISH COLUMBIA -- (Marketwired) -- 05/01/14 -- DDS Wireless International Inc. (TSX: DD), a world leader in providing wireless data solutions for fleet management for more than 26 years ("DDS Wireless" or the "Company") is pleased to announce that it has entered into a formal arrangement agreement (the "Arrangement Agreement") with Ghai Investments Ltd. ("GIL"), a private company controlled by Vari Ghai, the Chief Executive Officer and a director of the Company, and 0998556 B.C. Ltd. (collectively with GIL, the "Purchaser"), a wholly-owned subsidiary of GIL, to purchase all of the outstanding securities of the Company. The obligations of 0998556 B.C. Ltd. are guaranteed by GIL.

Under the Arrangement Agreement, and subject to the satisfaction of the conditions in the Arrangement Agreement, the Purchaser will acquire all of the common shares of DDS Wireless (the "Common Shares"), other than those Common Shares held by the Purchaser and its affiliates, at a price of CDN$2.25 per Common Share (the "Consideration") by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the "Arrangement"). In addition, under the Arrangement, all of the outstanding options of the Company (the "Options") will be transferred to the Purchaser and cancelled and holders of Options will receive a cash amount equal to the amount by which the Consideration exceeds the exercise price payable under such Options, if any. The Consideration implies an equity value for DDS Wireless of approximately $31 million.

The Arrangement, if consummated, will constitute a "business combination" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Board of Directors of the Company (the "Board") formed a special committee (the "Special Committee") comprised of independent directors James Topham (Chair), Sal Visca and Mark Joseph to, among other things, review and evaluate the terms of the proposal from the Purchaser, to obtain and supervise the preparation of a formal valuation of the fair market value of the Common Shares, to make recommendations to the Board in respect of the proposal and to negotiate the terms and conditions of the Arrangement Agreement and related matters.

MNP LLP ("MNP"), a chartered accountancy and business advisory firm, was retained by the Special Committee to provide, under the supervision of the Special Committee, a formal valuation of the Common Shares in accordance with MI 61-101 (the "Valuation") and MNP's opinion as to the fairness of the Consideration to shareholders of the Company, other than the Purchaser and its affiliates, from a financial point of view (the "Fairness Opinion").

MNP has provided the Valuation to the Company, which reflects the determination that, based upon and subject to the assumptions, limitations and qualifications contained in the Valuation, as of March 31, 2014, the fair market value of the Common Shares is in the range of CDN$1.75 to CDN$1.92 per Common Share. Pursuant to the Fairness Opinion, MNP has provided its opinion that, based upon the scope of its review, analysis, qualifications and assumptions contained in the Fairness Opinion, as of April 30, 2014, the Consideration to be received by shareholders of the Company, other than the Purchaser and its affiliates, is fair, from a financial point of view, to such shareholders.

After consideration of the Valuation, the Fairness Opinion, the terms and conditions set forth in the Arrangement Agreement, the advice of its legal advisor and other factors set forth below the Special Committee determined that the Arrangement is in the best interests of DDS Wireless and fair to the affected securityholders and unanimously recommended that the Board approve the Arrangement, that the Company enter into the Arrangement Agreement and that the Board recommend to DDS Wireless shareholders that they vote in favour of the Arrangement. The Board (with interested directors abstaining), after receiving the unanimous recommendation of the Special Committee, has unanimously determined that Arrangement is in the best interests of the Company and fair to the affected securityholders and recommends that DDS Wireless shareholders vote in favour of the Arrangement.

In determining that the Arrangement is in the best interests of the Company and fair to the affected securityholders, and in turn recommending that shareholders of the Company vote in favour of the Arrangement at the Annual and Special Meeting (as defined below), the Board relied upon a number of factors, including, but not limited to the following:

--  The value of the Consideration payable under the Arrangement represents
    a premium of approximately 35% to the closing price of the Common Shares
    on the TSX on April 30, 2014, the trading day ending immediately prior
    to this announcement of the Arrangement, and a premium of approximately
    33% over the 20-day volume weighted average trading price of the Common
    Shares on the TSX prior to May 1, 2014.
--  As determined by the Valuation, and subject to the scope, key
    assumptions, restrictions and qualifications noted in the Valuation, the
    Consideration of CDN$2.25 per Common Share is above the valuation range
    of CDN$1.75 to CDN$1.92 per Common Share.
--  Trading in the Common Shares has been subject to low volumes and
    infrequency of trades for at least 6 months which indicates that the
    actual ability of large numbers of shareholders of the Company to
    realize the current trading price for their Common Shares is highly
    unlikely. Under the Arrangement, shareholders of the Company, other than
    the Purchaser and its affiliates, are offered 100% cash consideration
    for all of their Common Shares, providing shareholders with certainty of
    value and liquidity at an attractive premium to trading prices as well
    as the opportunity to sell their Common Shares free of broker
    commissions and fees.
--  Pursuant to the Fairness Opinion, MNP has provided its opinion that,
    based upon the scope of their review, analysis, qualifications and
    assumptions set out therein, as of April 30, 2014, the Consideration
    offered to shareholders of the Company, other than the Purchaser and its
    affiliates, is fair from a financial point of view.
--  The Special Committee unanimously approved the Arrangement.
--  The Board has not identified any realistic alternative transaction to
    the proposed Arrangement. While the terms of the Arrangement Agreement
    enable the Company to respond, prior to the approval of the Arrangement
    by shareholders, to bona fide acquisition proposals that the Board
    determines in good faith could reasonably be expected to lead to a
    Superior Proposal (as defined in the Arrangement Agreement), in view of
    the absolute majority control position of the Purchaser and its
    affiliates of 63.9% in the Company and their stated position that they
    will not sell their Common Shares to any third party, the emergence of a
    Superior Proposal is considered to be remote.
--  Certain shareholders of the Company, who collectively beneficially own
    or exercise control over approximately 11.7% of the outstanding Common
    Shares of the Company, have entered into support agreements with the
    Purchaser pursuant to which they have agreed to vote their respective
    Common Shares in favour of the Arrangement.

The Arrangement is subject to customary TSX, Court and regulatory approvals, including, but not limited to, the approval by not less than two-thirds of the votes cast by DDS Wireless shareholders, at a special meeting of the Company being called to consider the Arrangement and annual business (the "Annual and Special Meeting") and the approval by the "majority of the minority", being a majority of the votes cast by shareholders other than the Purchaser and its affiliates or other shareholders whose votes may not be included in determining if minority approval is obtained pursuant to MI 61-101.

The record date for the determination of shareholders of the Company entitled to receive notice of and to vote at the Annual and Special Meeting is May 19, 2014. The Annual and Special Meeting is expected to be held on or about June 23, 2014. An information circular in connection with the Arrangement is expected to be mailed to DDS Wireless shareholders by the end of May. It is anticipated that the Arrangement, if approved by DDS Wireless shareholders and the Supreme Court of British Columbia, will be completed as soon after the Annual and Special Meeting as possible.

The Arrangement Agreement provides, among other things, that the Company will not solicit, assist, initiate, facilitate, entertain or encourage any discussions, negotiations, proposals or offers concerning the pursuit of any other acquisition proposals or offers. Further, the Purchaser has the right to match any competing Superior Proposal for DDS Wireless in the event such a proposal is made.

The Arrangement Agreement also provides for a termination fee to be paid by the Company to the Purchaser, or by the Purchaser to the Company, in certain circumstances, including by the Company if the Company terminates the Arrangement Agreement to enter into an agreement with respect to a Superior Proposal.

Following completion of the Arrangement, the Common Shares will be de-listed from the TSX and DDS Wireless will apply to cease to be a reporting issuer under applicable securities laws. The DDS Wireless leadership team will remain in place after the Arrangement has been completed.

Copies of the Arrangement Agreement and certain related documents will be available on the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com. Further details regarding the Arrangement will be contained in the information circular for the Annual and Special Meeting which will be mailed to shareholders of the Company and filed on SEDAR in due course.

About DDS Wireless International Inc.

DDS Wireless International Inc. is a global leader in providing application software for multiple vertical markets within the transportation industry. The Company specializes in transit routing and scheduling, real-time dispatching, vehicle location and tracking software applications, communications infrastructure as well as in-vehicle wireless devices. DDS Wireless operates three businesses dedicated for Taxi, Transit and New Markets such as OEM partners, Limousines, Airport Shuttles and Buses. The Company supports its customers worldwide through its offices in Canada, Finland, Singapore, Sweden, U.K. and U.S.A.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking information or forward-looking statements (collectively referred to as "forward-looking statements"), including statements that use forward-looking terminology such as "may", "will", "expect", "anticipate", "believe", "continue", "potential", or the negative thereof or other variations thereof or comparable terminology. Such forward-looking statements include, without limitation, statements regarding the completion of the Arrangement, the holding of the Annual and Special Meeting, the impact of the Arrangement on the continued growth and success of the Company and other statements that are not historical facts. While such forward-looking statements are expressed by DDS Wireless, as stated in this release, in good faith and believed by DDS Wireless to have a reasonable basis, they are subject to important risks and uncertainties including, without limitation, required DDS Wireless shareholder approval, TSX and Court approvals, the satisfaction or waiver of the conditions set out in the Arrangement Agreement, and changes in applicable laws or regulations, which could cause actual results to differ materially from future results expressed, projected or implied by the forward-looking statements. As a result of these risks and uncertainties, the Arrangement could be modified, restructured or not be completed, and the results or events predicted in these forward-looking statements may differ materially from actual results or events. These forward-looking statements are not guarantees of future performance, given that they involve risks and uncertainties. DDS Wireless is not affirming or adopting any statements made by any other person in respect of the Arrangement and expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. Investors should not assume that any lack of update to a previously issued forward-looking statement constitutes a reaffirmation of that statement. Reliance on forward -looking statements is at investors' own risk.

For further information about DDS Wireless, please visit www.ddswireless.com.

Contacts:
DDS Wireless International Inc.
Investor Relations
(604) 241-1441
[email protected]
www.ddswireless.com

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