NISKU, AB, April 20 /CNW/ - SHAWCOR LTD. (TSX: SCL.SV.A, SCL.MV.B) and GARNEAU INC. (TSX: GAR) jointly announced that they have entered into a definitive arrangement agreement whereby ShawCor Ltd. will acquire all of the outstanding common shares of Garneau Inc. The transaction will be effected by means of a court approved plan of arrangement. Under the terms of the arrangement, shareholders of Garneau (other than ShawCor and certain members of the Garneau family) will receive a cash payment of $2.20 per share of Garneau. Holders of options to acquire common shares of Garneau which are not exercised prior to the effective date of the plan of arrangement will receive a cash payment per share equal to the difference between $2.20 and the exercise price of the options. Members of the Garneau family will exchange their common shares of Garneau Inc. for non- voting preferred shares of Garneau Inc. which preferred shares will be redeemable after 3 years and retractable after 2 years at a price to be based on future profitability of certain ShawCor pipecoating operations, subject to a minimum of $2.20 per share, and bear fixed cumulative dividends of 5% per annum. As part of the plan of arrangement, Garneau Inc. will sell its equipment manufacturing division to Garneau Industries Ltd., a corporation controlled by Glen Garneau, for a purchase price of $3.0 million. Garneau Inc. established an independent committee of its Board of Directors to consider the transaction. Completion of the plan of arrangement is subject to regulatory approval, court approval, the approval of the shareholders of Garneau Inc. and to other customary conditions. Shareholders will be asked to approve the transaction at the annual and special meeting of shareholders of Garneau Inc. scheduled to be held on May 30, 2006. The transaction will require the approval by holders of two-thirds of the Garneau Inc. shares and options who vote thereon and by a majority of the minority shareholders who vote thereon, excluding the votes of shares owned by ShawCor and by certain members of the Garneau family. Garneau Inc. will mail a management proxy circular in respect of the meeting to its shareholders in early May. This circular will contain important information respecting this transaction. Garneau Inc. engaged Peters & Co. Limited as its financial advisor to assist in the negotiations with ShawCor. The independent committee of the Board of Directors of Garneau Inc. engaged FirstEnergy Capital Corp. to provide a formal valuation of Garneau Inc. and its equipment manufacturing division pursuant to Ontario Securities Commission Rule 61-501 and Regulation Q-27 of the AuthoritDe des marchDes financiers. The valuation concluded that as of the date indicated in the valuation, subject to the assumptions and qualifications to be set forth in the circular, the fair market value of the Garneau common shares was in the range of $2.00 to $2.25 per common share and the fair market value of the equipment manufacturing business was in the range of $2,700,000 to $3,100,000. Peters & Co. Limited has provided an opinion that the proposed transaction is fair, from a financial point of view, to the shareholders of Garneau Inc. A copy of the valuation and fairness opinion will be included in the management proxy circular to be mailed to the shareholders of Garneau Inc. The Independent Committee was unanimous in recommending the arrangement transaction to the shareholders of Garneau Inc. Mr. Bill Buckley, President and CEO of ShawCor Ltd. stated that: "It is our intention to inject significant capital into Garneau's Camrose plant to add capacity and to improve productivity, quality and health, safety and environmental performance. In addition, by integrating this plant into our existing western Canadian pipe coating network, we will be able to achieve production efficiencies resulting in improved service to customers in this active market." Subject to receipt of all approvals, the transaction is expected to be completed prior to June 30, 2006. Caution on Forward Looking Statements This news release contains certain "forward looking statements" which are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward looking statements. Reference should be had to the Annual Information Form for the year ended December 31, 2005 of each of ShawCor Ltd. and Garneau Inc. for a discussion of the risks and uncertainties impacting on ShawCor Ltd. and Garneau Inc., respectively, which Annual Information Forms are available at www.sedar.com. %SEDAR: 00008952E