BluePhoenix Solutions Ltd. of Herzliya, which provides modernization solutions for legacy information systems, is making its third acquisition in less than a year. The company announced today that it had signed a letter of intent (LOI) for the acquisition of Amalgamated Software North America Inc. (ASNA), a private company based in San Antonio, Texas. The consideration to be paid is $9.5 million in cash at closing. BluePhoenix said it would fund the acquisition from its available cash. The company has some $19.1 million cash.
BluePhoenix will also pay an earn-out to ASNA shareholders if certain profit targets are achieved by ASNA. The additional consideration will be calculated incrementally based on a multiple of between 6.5x to 8x of ASNA's average net profit in the years 2008 and 2009, provided that the average annual net profit during these two years exceeds $1.5 million. The completion of the acquisition is subject to BluePhoenix's due-diligence of ASNA and the execution of definitive agreements.
ASNA has been developing visual programming and systems software for the midrange community since 1982. ASNA Monarch is a fully integrated solution for transforming RPG applications to the Microsoft .NET platform.
"We are extremely excited to have the ASNA team join forces with BluePhoenix to expand our modernization offering to enterprises running legacy applications on the IBM AS/400, iSeries and System i," said BluePhoenix CEO Arik Kilman. "There are hundreds of thousands of these systems around the globe and a multitude of companies who are facing the mounting challenge of modernizing their RPG-based applications.
"We look forward to providing these enterprises both the software tools and services needed to successfully tackle these challenges. The ASNA acquisition expands our addressable market size by an estimated $5 billion over the next fifteen years, in software sales and services. It is accretive, and will contribute nicely to our bottom line."
BluePhoenix released second quarter financials yesterday that showed a non-GAAP net profit of $2.8 million, or $0.16 per share, on revenue of $21 million.
Last December, BluePhoenix bought UK company CodeStream for $10 million, and in May it announced the acquisition of a Russian company for a few million dollars.
BluePhoenix, which is traded on Nasdaq and in Tel Aviv, has market cap of $182 million.
Published by Globes [online], Israel business news - www.globes.co.il - on August 1, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007