Magic Software Enterprises Ltd. (Nasdaq: MGIC; TASE: MGIC) has bought the AppBuilder business of BluePhoenix Solutions Ltd. (Nasdaq: BPHX; TASE: BPHX) for $17 million, confirming a "Globes" report from last week.
BluePhoenix estimates its net proceeds from the sale at $14-14.5 million, of which $2 million will be held in escrow for up to two years.
The AppBuilder is a comprehensive application development infrastructure used by many Fortune 1000 enterprises around the world. BluePhoenix chairman Eric Green said, “This transaction will significantly improve the financial condition of the company, while allowing us to more diligently focus our efforts on core competencies that will provide us the best long term opportunities for growth and enhanced shareholder value." He added that the company would continue investing in its core business of developing automated software tools for migrating legacy mainframe applications onto modernized platforms written in languages such as Java and C#. "We will soon be announcing an innovative new Cobol-to-Java software product targeted at system integrators," he said.
Magic chairman Guy Bernstein said, "The acquisition of AppBuilder will enable Magic Software to further expand and enhance its portfolio of products, strengthening its standing as a global provider of application development platforms. We will develop and invest in all aspects of AppBuilder’s activity." He added that the acquisition would boost the company's market share and create new business opportunities by leveraging BluePhoenix’s worldwide customer base."
BluePhoenix's share price was flat on Nasdaq on Friday at $0.80, giving a market cap of $19 million, and rose 15% by mid-afternoon on the TASE today to NIS 3.17. Magic's share price rose 3.6% on Nasdaq on Friday to $4.94, giving a market cap of $158 million, and rose 2.8% by on the TASE today to NIS 18.
Published by Globes [online], Israel business news - www.globes-online.com - on October 31, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011