BOS Better Online Solutions (Nasdaq:BOSC) announced yesterday that it bought 63.6% of Odem Electronic Technologies 1992 Ltd.. Odem is a private company that distributes electronics components and advanced technologies in the Israeli market. The closing of the transaction is subject to certain closing conditions.
BOS will pay $1.97 million cash and 290,532 BOS ordinary shares (amounting to approximately 6.5% of its the current outstanding shares), plus options to purchase 73,000 BOS ordinary shares.
In addition, the selling shareholders and BOS have granted each other certain put and call options on the remaining Odem shares held by the sellers, exercisable against cash and BOS shares. If all the options are exercised, BOS will hold 100% of Odem.
Odem represents over 30 international suppliers of electronic and electromechanical components, information technology network equipment and image processing products. Among the companies represented are Texas Instruments Inc. and Honeywell International Inc. Odem is heavily involved in design-in process with many of the electronic manufacturers in Israel.
According to BOS, following the acquisition of Odem and the recent acquisition of Quasar Communication Systems, its combined sales will rise significantly.
BOS president and CEO Adiv Baruch said, "This transaction is a continuation of our M&A strategy. It represents a great opportunity for us, for our customers and for our shareholders. We look forward to working together with Odem's strong management team, who will continue to lead Odem. Odem will provide us with knowledge and expertise that will contribute to our R&D and business development efforts."
Baruch joined BOS after the Catalyst Fund acquired a controlling interest in the company. He was previously a senior executive at Ness Technologies (Nasdaq:NSTC), and he helped restructure BOS. "We saw eye-to-eye on the company's strategy, and we began to map our existing assets and build the company as a platform for technology products. We divided the company into three areas of business: information and communications; VoIP, which we'll expand thanks to our acquisition of Quasar Communication Systems; and enterprise software. Ness Technologies will distribute the product in Israel and in other countries. We built a management team, and the moment we felt ready, we began to grow and started acquisitions. Within two months, we acquired Quasar in share-swap deal, and Odem, through which we'll expand our coverage of the medical and security sectors."
BOS chairman Edouard Cukierman said, "Odem is a synergetic company to BOS, which will contribute to turn BOS from an R&D driven company to a marketing driven company.
"BOS's sales reached $6 million last year. We hope that the acquisition of Quasar and Odem will enable us to reach $25 million in sales a year. Odem has an annual sales turnover of $18 million, and it is profitable."
Cukierman says the changeover from a small company into a company with $25 million in sales will give BOS critical mass. "This will enable us to think about greater leaps in magnitude in the future. This measure will also enable to us to meet European and American financial investors who wouldn’t have looked at the company before. We can ask investment houses to cover the company. We're already negotiating with foreign investment institutions."
"Globes": Are you planning another issue?
Cukierman: "Our policy is to grow through acquisitions and raising capital. We've proved our ability to do this. We made two PIPE deals that enabled us to finance acquisitions to date. We'll make more acquisitions and raise more capital in the future. We won't stop here."
Published by Globes [online] - www.globes.co.il - on November 4, 2004