SC TO-C

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):   August 21, 2007

RCM Technologies, Inc.

(Exact Name of Registrant as Specified in Charter)

Nevada	1-10245	95-1480559
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

2500 McClellan Avenue, Suite 350
Pennsauken, NJ	08109-4613
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:   (856) 486-1777

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Section Act (17 CFR 230.425).

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

x   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)).

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c)).

Item 8.01.Other Events.

On August 21, 2007, RCM Technologies, Inc. (the “Registrant”) issued a press release announcing its proposal to combine with Computer Task Group, Inc. in a merger in which the consideration would consist in part of cash and in part of the Registrant’s common stock. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Also attached as Exhibits 99.2 and 99.3, respectively, are letters from the Registrant to Computer Task Group, Inc. dated June 25, 2007 and July 25, 2007.  These letters are referred to in the August 21, 2007 press release.

Item 9.01.              Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

None.

(b) Pro Forma Financial Information.

None.

(c) Shell Company Transactions.

None.

(d) Exhibits.

Exhibit Number	Exhibit Title
99.1	Press Release by the Registrant, dated August 21, 2007.
99.2	Letter from the Registrant to Computer Task Group, Inc. dated June 25, 2007.
99.3	Letter from the Registrant to Computer Task Group, Inc. dated July 25, 2007.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

RCM TECHNOLOGIES, INC.
By:	/s/ Stanton Remer
	Stanton Remer
	Chief Financial Officer, Treasurer and Secretary

Dated: August 21, 2007

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Exhibit Index

Exhibit Number	Exhibit Title
99.1	Press Release by the Registrant, dated August 21, 2007.
99.2	Letter from the Registrant to Computer Task Group, Inc. dated June 25, 2007.
99.3	Letter from the Registrant to Computer Task Group, Inc. dated July 25, 2007.

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EX-99.1

Exhibit 99.1

 

RCM Technologies, Inc.	Tel:  856.486.1777	Corporate Contacts:
2500 McClellan Avenue	Fax: 856.488.8833	Leon Kopyt
Pennsauken, NJ 08109-4613	info@rcmt.com	Chairman, President & CEO
	www.rcmt.com	Stanton Remer
		Executive VP & CFO
		Kevin D. Miller
		Senior Vice President

P R E S S   R E L E A S E

RCM TECHNOLOGIES, INC. PROPOSES

MERGER WITH COMPUTER TASK GROUP, INC.

Pennsauken, New Jersey, August 21, 2007 — RCM Technologies, Inc. (NASD: RCMT; “RCM”), a leading provider of business and technology solutions, announced today that it has made a proposal to acquire all of the outstanding common stock of Computer Task Group, Inc. (NASD: CTGX; “CTG”) for $5.25 per share resulting in a total equity value of approximately $105 million.
The offer is structured as 50% cash and 50% RCM stock and would result in CTG shareholders owning approximately 35% of the combined company. RCM’s offer represents a premium of 21% to CTG’s closing share price as of August 20th, 2007 and a 22% premium to CTG’s closing share price on June 25, 2007, the date of RCM’s first offer.
RCM’s President and CEO, Leon Kopyt, said, “We believe a combination of RCM and CTG is in the best interests of both companies’ stockholders and would position the combined company as an industry leader with the scale and ability to better compete in its sectors.”
Based on RCM’s current knowledge of CTG’s operations, management and business opportunities, the combination of the two companies should produce an entity strongly positioned to become an industry leader having the following benefits:
	·	Approximately $550 million in combined revenue — creating a top-tier service provider in its sectors
	·	Substantially increased profitability with over $20 million of combined EBITDA before potential cost savings — better positioning the combined company for future economic downturns
	·	Potential for meaningful cost savings resulting in accelerated earnings accretion
	·	Strong balance sheet — pro forma leverage at approximately 2.5x combined EBITDA before incorporating any revenue or cost synergies
	·	Significant improvement of the new combined public company profile — larger market capitalization, greater liquidity, potential for increased research analyst coverage and potential for improved valuation through multiple expansion
	·	Significant expansion of customer base with potential for cross-selling opportunities
	·	Facilitation of services transformation to higher value-oriented solutions offerings due to larger size
	·	Complementary geographic footprint — only three overlapping office locations out of 57 total locations

RCM made its first proposal in a letter from Mr. Kopyt to James R. Boldt, CTG’s Chairman, President and CEO, on June 25, 2007. CTG informed RCM that it would discuss the matter with its Board and subsequently indicated in a July 12, 2007 letter to RCMthat its Board had declined the proposal believing that the interests of CTG and its shareholders are best served by remaining independent and continuing its current business strategy. RCM’s June 25 letter to CTG has been furnished to the Securities and Exchange Commission as an exhibit to an 8-K dated August 21, 2007 and highlights the strategic and financial merits of a potential transaction.

RCM continued to present the compelling benefits of a merger in a follow-up letter from Mr. Kopyt to Mr. Boldt dated July 25, 2007. This second letter updated the original proposal, including an increase in the offer price from $5.10 per share to $5.25 per share, and emphasized the goal of a collaborative evaluation of a potential transaction. CTG informed RCM that it would review the revised offer during a Special Board Meeting, but again declined the offer reitterating its goal to remain an independent company. This letter has also been furnished as an exhibit to the 8-K dated August 21, 2007.

After exhaustive efforts to discuss a merger with CTG’s Board, RCM concluded that the most prudent next step is to make its offer public so that CTG shareholders can be aware of RCM’s interest and can share their views about the future of their company with CTG’s management and directors.

The terms of RCM’s proposal are based on publicly-disclosed CTG financial information. Despite the fact that RCM believes the offer to be very attractive from a financial perspective, RCM welcomes the opportunity to consider non-public information regarding CTG and would consider revising the offer for any additional value that may be demonstrated during further discussions. Also, given the substantial stock component of the total merger consideration, RCM would consider including an appropriate number of CTG-designated directors to the Board of Directors of RCM with the number to be negotiated.

The RCM proposal is conditioned upon final due diligence to be completed in a timely manner. Both companies’ shareholders’ approval as well as regulatory approval are required. RCM believes that a transaction can be completed during late 2007/early 2008. RCM management is cognizant of the current financing market but remains confident that the proposed transaction can be financed at reasonable terms with attractive leverage ratios.

Robert W. Baird & Co. is financial advisor to RCM, while Morgan, Lewis and Bockius LLP serves as legal counsel.

About RCM Technologies, Inc.:

RCM Technologies, Inc. is a premier provider of business and technology solutions designed to enhance and maximize the operational performance of its customers through the adaptation and deployment of advanced information technology and engineering services. RCM is an innovative leader in the design, development and delivery of these solutions to commercial and government sectors for more than 35 years. RCM’s offices are located in major metropolitan centers throughout North America. Additional information can be found at www.rcmt.com.

Caution Regarding Forward Looking Statements:
The statements contained in this release that are not purely historical are forward-looking statements within the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, these statements are subject to various risks, uncertainties and other factors that could cause the actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include, but are not limited to, all statements, other than statements of historical facts, included in this release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including our statements relating to the proposed merger with CTG and its anticipated benefits if consummated. Investors are directed to consider such risks, uncertainties and other factors described in documents filed by RCM with the Securities and Exchange Commission, including the risk factors described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 30, 2006, and the following:
	Proposed Merger Risks and Uncertainties
		·	Our business and the business of CTG may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected;
		·	Expected combination benefits from the proposed merger may not be fully-realized or realized within the expected time frame;
		·	The CTG shareholders and/or our stockholders may not approve the merger;
		·	The regulatory approvals and any other required approvals in connection with the merger may not be obtained on the proposed terms or on the anticipated schedule;
		·	Revenues following the merger may be lower than expected; and
		·	Operating costs, customer loss and business disruption, including difficulties in maintaining relationships with employees, customers, clients or suppliers, may be greater than expected following the merger.
New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise.
Additional Information:
Investors and securityholders are urged to read the disclosure documents regarding the proposed merger when they become available because they will contain important information. Investors and securityholders will be able to obtain a free copy of such disclosure documents when they become available, as well as other filings containing information about RCM and CTG, without charge, at the SEC’s internet site (http://www.sec.gov). Copies of the disclosure documents and the filings with the SEC that will be incorporated by reference in such disclosure documents can also be obtained without charge, when they become available, by directing a request to: Corporate Secretary, RCM Technologies, Inc., 2500 McClellan Avenue, Suite 350, Pennsauken, New Jersey 08109-4613, Telephone Number: (856) 486-1777.

The directors and executive officers of RCM may be deemed to be participants in the solicitation of proxies from RCM shareholders and CTG stockholders in respect of the proposed merger. Information regarding the directors and executive officers of RCM is currently available in its proxy statement filed with the SEC by RCM on April 19, 2007. Other information regarding the participants in such proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the disclosure documents and other relevant materials that will be filed by RCM with the SEC when they become available.

Any information concerning CTG contained in this document has been taken from, or is based upon, publicly available information. Although RCM does not have any information that would indicate that the information contained in this document that has been taken from such documents is inaccurate or incomplete, RCM does not take any responsibility for the accuracy or completeness of such information.

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EX-99.2

Exhibit 99.2

RCM Technologies, Inc.

2500 McClellan Avenue

Pennsauken, NJ 08109

Tel:  856.486.1777, Ext. 100

Fax: 856.486.2123

leon.kopyt@rcmt.com

www.rcmt.com

Leon Kopyt

President & CEO

June 25, 2007

Mr. James Boldt

Chairman, President & Chief Executive Officer

Computer Task Group, Inc.

800 Delaware Avenue

Buffalo, NY  14209

Dear Mr. Boldt:

As you know from our prior conversations, the Board of Directors and management of RCM Technologies, Inc. (“RCM”) continue to believe that a combination of RCM and Computer Task Group, Inc. (“CTG”) presents an exciting opportunity to create significant value for our respective shareholders, employees and clients.  Therefore I am writing to you summarizing our proposed terms for a combination of RCM and CTG.  Given the seriousness of this topic, I ask that you share our thoughts with your Board of Directors.

Based on our current knowledge of your operations, management and business opportunities, we believe that a combination of our companies would produce a powerful business entity capable of becoming an industry leader as a result of:

1)Our combined practices with $550 million in total revenue—creating a top tier service provider in our industry

2)A complementary geographic footprint—only three office locations overlap from a total of 57

3)Substantially increased profitability—exceeding $20 million of EBITDA before synergies and better positioning both companies for future economic downturns

4)The potential to realize meaningful expense elimination—reduced public company costs alone should save $2 million

5)Exceptional balance sheet strength—initially a company with no debt and a net cash position of $5.3 million

6)Perhaps most import to our respective shareholder bases, a much stronger public company profile—larger market capitalization, greater liquidity, potential for increased analyst coverage and an improved valuation through multiple expansion

Our proposal, likely structured in the form of a merger, offers CTG shareholders $5.10 per share, payable in a combination of RCM stock and cash, which equates to total equity value of approximately $106 million, based on 20.8 million fully-diluted shares outstanding.  This offer represents an implied stock price premium of approximately 18% over your closing stock price of $4.32 on June 25, 2007 and a 12% premium over the price per share for your March 2007 share repurchase.  This price is also a premium to all but 5% of the total volume at which the stock has traded over the past five years, and implies an approximate LTM EBITDA multiple of 10.4x, which is above the mean of comparable companies.

The split between stock and cash would be negotiated after further due diligence, in part to determine the potential synergies and pro forma earnings capability.  We expect CTG shareholders would receive the majority of the consideration in RCM stock, so that they would be able to participate in the value-creating attributes discussed above.  A significant stock component should also have attractive tax consequences for your shareholders.  Given the size and profile of the pro forma business, we are confident we will be able to fund the cash portion of the consideration.

We would envision a combined company with senior executives and directors of both companies in key positions of leadership.   These leaders would ensure achieving our genuine collective intention of preserving the core values of our companies.  It would be our intention to i)  retain as many key employees as possible without material changes in the terms and conditions of their employment and ii)  maintain current or offer comparable benefit plans to employees.  In all respects, our goal is to make a seamless transition for CTG employees in the context of a potential transaction.

While we have expended substantial effort in developing this value on the basis of publicly-available information, we anticipate working diligently to complete additional diligence prior to signing a definitive merger agreement.  While we feel that we understand most of the salient issues in conjunction with a potential transaction, we would request access to other information presently not available in the public domain to complete what we would characterize as confirmatory due diligence, which can be completed promptly and confidentially.  We are also willing to afford representatives of your company the opportunity to review non-public information about RCM.  To that end we would be prepared to enter into an appropriate mutual confidentiality agreement.

We have made no public announcement of this matter at this time and we would prefer to discuss our ideas with you and your Board on a confidential, non-public basis.  We and our advisors are prepared to begin our due diligence and negotiations with your Board of Directors, its management and its legal and financial advisors as soon as possible.  Any transaction would be subject to the negotiation of a definitive merger agreement on customary terms and conditions, and based on the contemplated structure, the approval of both sets of shareholders.

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We hope that you will share our confidence and enthusiasm for this transaction—a transaction that serves the best interests of both of our companies and our stockholders, employees, suppliers, customers, communities and other stakeholders.  We believe that together we have the unique opportunity to build a leading company in our industry.  I am available to discuss the contents of this letter at any time.  As always, please don’t hesitate to contact me directly at (856) 486-1777, ext. 100 with any questions you may have.  Thank you for your time and consideration.

Sincerely,

Leon Kopyt

President & CEO

cc:Board of Directors - RCM
Bret Schoch - Robert W. Baird & Co.

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EX-99.3

Exhibit 99.3

July 25, 2007

Mr. James Boldt

Chairman, President & Chief Executive Officer

Computer Task Group, Inc.

800 Delaware Avenue

Buffalo, NY  14209

Dear Mr. Boldt:

As conveyed to you in our letter dated June 25, 2007, the Board of Directors and management of RCM Technologies, Inc. (“RCM”) believe that a combination of RCM and Computer Task Group, Inc. (“CTG”) presents an exciting opportunity to create significant value for our respective shareholders, employees and clients.  We were disappointed with your letter dated July 12, 2007 in which you declined our initial proposal.  I am writing to update our proposed terms for a combination of RCM and CTG and ask that your Board give the proposal the utmost attention.  It is readily apparent to us and we believe your shareholders will agree, that a combination of CTG and RCM would be in the best interest of each of our shareholders.

Our proposal offers CTG shareholders $5.25 per share, payable in a combination of RCM stock and cash.  This price equates to total equity value of approximately $104 million, based on 19.9 million fully-diluted shares outstanding and results in:

·an implied stock price premium of approximately 20% over your closing stock price of $4.38 on July 25, 2007

·a premium to all share prices but 5% of the total volume at which the stock has traded over the past five years

We propose a transaction, which would presumably be structured as a merger that would consist of 50% cash and 50% RCM stock.  Consequently, we expect CTG shareholders will realize an even larger increase in the value of their holdings as a result of the substantial earnings accretion from the combination with RCM.  A significant stock component should also have attractive tax consequences for your shareholders.  Given the size and profile of the pro forma business, we are confident the combined company will maintain a strong balance sheet even after financing the cash portion of the consideration. We have reviewed your publicly-available documents and would require limited due diligence primarily with respect to potential cost synergies between our companies and to confirm potential earnings accretion.

We have made no public announcement to date and continue to prefer discussing our ideas with your Board on a confidential, non-public basis.  Given your limited response to our prior letter, we wanted to provide your Board the opportunity to review and respond in detail to our revised proposal.  We believe that your shareholders should ultimately make a decision regarding this transaction and we will strongly consider communicating this offer publicly should you decide not to discuss this offer further with us.  We respectfully request your response by the close of business on Tuesday, July 31, 2007.

We are ready to begin immediate dialogue with your Board and are confident there will not be any regulatory or financing issues prior to consummating this transaction.  I am available to discuss the contents of this letter at any time.  As always, please don’t hesitate to contact me directly at (856) 486-1777, ext. 100 with any questions you may have.  We would appreciate your prompt reply to our proposal.

Sincerely,

Leon Kopyt

President & CEO

cc:Board of Directors - RCM
Bret Schoch - Robert W. Baird & Co.

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