Statement by the Board of Directors of IBS in relation to the public takeover offer by Symphony Technology Group

Statement by the Board of Directors of IBS in relation to the public
takeover offer by Symphony Technology Group

IBS reports lower Q1 earnings and need for additional capital

The Board of Directors of IBS unanimously[1] recommends the shareholders
of IBS to accept the public takeover offer by Symphony Technology Group.

Background

This statement is made by the Board of Directors (the “Board”) of IBS AB
(publ) (“IBS”) pursuant to Section II.19 of the rules concerning public
takeover offers on the stock market adopted by First North (the
“Takeover Rules”).

Sweden Acquisition Corp., a Delaware corporation owned by the Symphony
Technology Group funds STG III, L.P. and STG III-A, L.P., both being
Delaware limited partnerships (“STG”), has today, on 17 May, 2011,
announced a public takeover offer to the shareholders of IBS to tender
all of their shares in IBS to STG (the “Offer”). The shareholders of IBS
are offered a cash payment of SEK 1.75 per share in IBS.

The acceptance period is expected to commence on 30 May 2011 and to end
on 28 June 2011. The Offer is, among other things, conditional on STG
becoming the owner of more than 90 per cent of the total number of
shares in IBS (calculated before as well as on a fully diluted basis,
however, excluding treasury shares and warrants held by IBS or its
subsidiaries). The Offer is not conditional upon financing. For more
information on the Offer, reference is made to STG's press release that
was made public earlier today.

The Board has, at the request of STG, entered into a transaction
agreement with STG (the “Transaction Agreement”), that contains certain
undertakings by STG and IBS respectively. STG has also been allowed to
conduct a limited due diligence investigation prior to the announcement
of the Offer. During the due diligence investigation, STG has received
information on the results of IBS of the first quarter 2011, which
information is included below in this press release. The Transaction
Agreement will be disclosed in the offer document.

Due to an Irrevocable undertaking by Deccan Value Advisors Fund L.P.,
A/D Value Fund L.P., and Y/D Value Fund L.P. (each a Delaware limited
partnership) and DVA Master Fund Ltd. (a Cayman Islands exempted
company) (jointly, “Deccan”) to accept the Offer, Vinit Bodas, chairman
of the Board, has not participated in the Board's dealings with the
Offer or the preparation of this statement.

Dr. Pallab Chatterjee, Managing Director and Operating Partner at STG,
was chairman of the Board of Directors of IBS until October 2010. The
Board has therefore, pursuant to Section IV.3 of the Takeover Rules,
obtained a fairness opinion from an independent financial advisor.

Lower Q1 2011 earnings in IBS and need for additional capital

The Board has found it appropriate to release the following information
as a basis for the shareholders' considerations on the merits of STG's
offer announced earlier today.

First quarter results

The profit of IBS for the first quarter 2011 is lower than expected. IBS
has under the first quarter 2011 not performed as well as expected,
especially in the light of the outcome of Q3 and Q4 2010 and the cost
restructuring program. The revenue as well as the EBITDA result of Q1
2011 is significantly lower compared to the outcome of the Q4 2010. IBS
generated a revenue of SEK 279 million and an EBITDA result of SEK -14
million in the first quarter 2011 compared to revenue of SEK 376 million
and EBITDA result of SEK 18 million in the fourth quarter 2010. The main
reason for this outcome is lower than expected professional services
revenues, primarily due to fewer consultants in the organization.

Need for additional capital

The Q1 2011 decline in sales and EBITDA result and the current year
outlook for the business will result in a need for additional capital to
finance current operations and to further develop the company. The Board
has undertaken a review of IBS' financing requirements in relation to
its current business as well as its future plans, and identified the
need for further capital. The total financing need amounts to
approximately SEK 200 million.

STG has in its press release stated their intention to supply IBS with
appropriate funding, subject to the consummation of the Offer. Since the
Offer is, among other things, conditional on STG becoming the owner of
more than 90 per cent of the total number of shares in IBS the funding
from STG is not guaranteed. The Board has therefore found it necessary
to proceed with measures to prepare for a guaranteed rights issue of new
shares in IBS with total proceeds of approximately SEK 200 million, as a
back-up available in the event the Offer is not consummated. The
shareholders of IBS will have a pre-emptive right to subscribe for the
new shares. No offering to subscribe for the new shares will take place
unless it has become clear that the Offer is terminated or withdrawn
without being consummated. STG has confirmed in the Transaction
Agreement that they are informed of and waive any right to withdraw the
Offer based on the continued preparation for the rights issue, including
entering into of guarantee agreements.

The Board's recommendation

The Board has based its evaluation of the Offer on the development of
IBS' result, future expectations and the need for additional capital.
The opinion is also based on an assessment of other factors that the
Board has deemed relevant for an evaluation of the Offer.

The Board's assessment is further based on a fairness opinion from OBI
AB to the Board, stating that in the opinion of OBI AB, and subject to
the assumptions and qualifications set out in the opinion, the
consideration in the Offer is fair from a financial point of view for
the shareholders of IBS. The fairness opinion is attached to this press
release.

Under the Takeover Rules, the Board must also, based on the statements
made by STG in connection with the announcement of the Offer, set out
its views on the impact the implementation of the Offer will have on
IBS, especially employment, and its views on STG's strategic plans for
IBS and the impact these could be expected to have on employment and on
IBS' business locations. In this respect, the Board notes that STG does
not expect any major near term changes for IBS employees or its global
locations, however, given the profitability challenges of IBS, STG will
evaluate options on an ongoing basis to ensure that IBS can be a
sustainably profitable company in order to be the best partner for its
global customers. The Board's view does not differ from STG's.

On this basis, the Board unanimously[1] (../#_ftn1) recommends IBS'
shareholders to accept the Offer.

The Board has been advised by OBI AB as financial adviser and Hannes
Snellman Attorneys as legal adviser in connection with the Offer.

This statement shall in all respects be governed by and construed in
accordance with substantive Swedish law. Disputes arising from this
statement shall be settled exclusively by Swedish courts.

Stockholm, 17 May, 2011

IBS AB (publ)

The Board of Directors

For further information please contact

Christian Paulsson, Director of the board IBS AB

Tel: +46 70 211 0010

E-mail: christian.paulsson@ibs.net

Fairness opinion given by OBI AB

The Board of Directors of

IBS AB

Stockholm 16 May, 2011

The Board of IBS AB (publ) has requested OBI AB to provide an opinion,
from a financial point of view, regarding the terms in the public
takeover offer to the shareholders in IBS ( the ”Offer” ) expected to be
made directly or indirectly by Symphony Technology Group LLC( The
”Bidder” ) on 17 May 2011.

The shareholders of IBS will be offered a cash payment of SEK 1.75 per
share.

Deccan Value Advisors, representing 75.5% of the shares, has irrevocably
undertaken to accept the Offer. The only condition for completion of the
offer in addition to customary permits, approvals, decisions by
government authorities, is an acceptance level of 90%.

As a basis for this opinion, OBI has considered:

i)                    A draft of the Bidder's press release regarding
the Offer, containing the terms and conditions of the Offer

ii)                  Historical business related and financial
information relating to IBS, including annual reports and interim
reports.

iii)                Management's projections for IBS's development for
2011, selected parts of IBS's budget for 2011 and management's
assessment of the financial outlook for IBS

iv)                Internal financial analyses and forecasts prepared by
the management of IBS relating to the IBS business

v)                  Discussions with the management of IBS regarding the
company's historical development, current and future business and
offerings, cost structure, strategy, financial position, investment
requirements and future prospects and development

vi)                Certain official information regarding IBS's share
price and trading volumes

vii)              Information regarding other companies OBI believes to
be comparable and peers to IBS

viii)            Other information and analysis concerning the business
of IBS deemed necessary and appropriate to take into account as a basis
for this opinion

The information on which this opinion is based has been obtained from
public sources or furnished by IBS for the purposes of this opinion. OBI
has relied upon, without independent verifications, the accuracy and
completeness of such information.

Regarding financial forecasts and other forward looking information
presented to OBI by the management of IBS, we have assumed that they
have been  reasonably prepared on bases reflecting the best currently
available estimates and judgements of IBS management as to the
assessments of IBS's ability to reach its financial and operational
goals, without performing any independent assessment. The Board of
Director's of IBS has approved such forecasts and other forward looking
information.

This opinion is necessarily based on current market conditions,
economic, financial and other circumstances as in the effect of and the
information obtained by or provided to OBI up to and including the date
of this opinion.

The circumstances on which this opinion is based may be affected by
subsequent events.

IBS has been involved in various discussions with potential investors
during the last couple of years. The outcome of these discussions is
reflected in the opinion. The opinion does not address the relative
merits of the Offer as compared to a stand-alone alternative or any
stand-alone alternatives available to the shareholders of IBS. Further,
this opinion does not constitute a recommendation to any shareholders of
IBS as to whether or not the Offer should be accepted.

Based on and subject to the foregoing, it is OBI's opinion that, as of
the date of the opinion, the consideration in the Offer is fair, from a
financial point of view, for the shareholders of IBS.

OBI is acting as advisor to the Board of Directors of IBS in respect of
the Offer. Irrespective of the outcome of the Offer OBI receives a fixed
fee for its advisory services and for providing this opinion.

This opinion is addressed to the Board of Directors of IBS and is
provided solely for the benefit of the Board of Directors of IBS for the
purpose of the Board's deliberations and evaluation of the Offer and may
not be used for any other purpose. No other party shall be entitled to
rely upon this opinion.

The opinion is governed by Swedish law and any disputes relating thereto
shall be settled exclusively by Swedish courts.

OBI AB

Arvid Carlsen

 

[1] (../#_ftnref1) Due to an Irrevocable undertaking by Deccan to accept
the Offer, Vinit Bodas has not participated in the Board's of IBS
dealings with the Offer or the preparation of this statement.