iseemedia and Synchronica Announce Friendly Take-Over of iseemedia by Synchronica
July 20 2010 - 9:35AM
PR Newswire (Canada)
TORONTO and LONDON, UK, July 20 /CNW/ -- Agreed takeover is next
step towards market leadership in next generation mobile messaging
for emerging markets TORONTO and LONDON, UK, July 20 /CNW/ -
iseemedia Inc. ("iseemedia" - TSX-V: IEE) and Synchronica plc
("Synchronica" - AIM: Sync) jointly announced today that they have
entered into a definitive support agreement (the "Agreement")
pursuant to which Synchronica will offer to acquire (the "Offer")
all of the issued and outstanding common shares (the "iseemedia
Shares") and warrants (the "Warrants") of iseemedia. Synchronica
has agreed to offer iseemedia shareholders 4.03 ordinary
Synchronica shares for each iseemedia Share and 4.03 Synchronica
warrants for each iseemedia Warrant. The boards of directors of
both companies have unanimously approved this transaction and the
board of directors of iseemedia will recommend that Shareholders
tender to the Offer upon receipt of a written fairness opinion to
be delivered by Northern Securities Inc. that states the Offer is
fair, from a financial point of view, to the shareholders of
iseemedia. Highlights: - iseemedia and Synchronica have entered
into a definitive support agreement pursuant to which Synchronica
has offered to acquire all of the issued and outstanding common
shares and warrants of iseemedia, subject to shareholder approval
and funding scheduled to be completed by 31st August 2010. -
Synchronica will launch a friendly tender offer to iseemedia
shareholders and warrant-holders, offering to acquire 100% of
outstanding iseemedia shares, plus 100% of outstanding iseemedia
warrants, plus 100% of all iseemedia shares and iseemedia warrants
to be issued in a concurrent private placement of up to CDN $7.0
million, through the sale of subscription receipts at a rate of CDN
$0.09 per subscription receipt, which receipts will automatically
be converted prior to closing of the transaction into one common
share of iseemedia and one warrant of iseemedia exercisable at CDN
$0.12 per share for 36 months. All shares and warrants issued in
this financing will automatically be tendered to the offer. - The
acquisition will extend the combined entity's contracted
addressable market to 44 mobile operators representing 853 million
subscribers with the addition of iseemedia's 193 million
subscribers from its four contracts with large operators in India
and South-East Asia. - All iseemedia contracts are based on monthly
active user fees accelerating the transition of Synchronica's
revenue profile towards recurring revenue streams. - Synchronica
plans to integrate iseemedia's advanced document transcoding engine
iseedocs into Synchronica Mobile Gateway providing streaming
download of Email attachments. - The acquisition of iseemedia's
patent portfolio in the context of Email attachment transcoding and
streaming will strengthen Synchronica's IPR position. - Synchronica
will maintain its listing on AIM and will apply for a listing on
the TSX Venture Exchange, resulting in a dual listing in both
markets and extending Synchronica's shareholder base in the UK, US
and Canada. Background iseemedia and Synchronica are currently
operating in the sector of mobile Email solutions for operators and
share a strong focus on opportunities in emerging markets. Both
iseemedia and Synchronica have built businesses by developing,
marketing and selling mobile Email solutions targeted specifically
at high-growth emerging markets. In these markets, characterized by
low PC and fixed-line penetration, mobile phone penetration is
soaring. This means that many users in these regions will have
their first contact with Internet services via their mobile phone,
creating a unique opportunity for mobile operators to establish the
mobile phone as the primary access device, and themselves as the
value added service provider. Both iseemedia and Synchronica are
offering clientless solutions to mobile operators enabling
entry-level devices to send and receive Email using Email-to-SMS
and WAP industry standards. While iseemedia successfully has
focused on entry-level services, Synchronica's flagship product
Mobile Gateway also offers true push Email (IMAP) and
synchronization (SyncML) services for mid-range feature phones and
high-end Smartphones including support for both consumer and
business messaging systems such as Microsoft Exchange. Further,
Mobile Gateway 5 enables mobile connectivity to Social Networking
Services (SNS) such as Facebook, Twitter and LinkedIn and enables
users to chat on-line using Instant Messaging (IMPS). iseemedia
provides a patent-pending document transcoding engine, iseedocs,
enabling on-the-fly conversion of office and multimedia documents.
Using advanced streaming, iseedocs can dramatically reduce network
bandwidth consumption by as much as 90% when downloading Email
attachments. Benefits of the Proposed Transaction iseemedia and
Synchronica's proven mobile Email solutions are already deployed by
operators in emerging markets and, as a combined entity, are well
positioned to win the race to market leadership for next-generation
mobile messaging in emerging markets. As of today Synchronica has
more than 40 mobile operators signed up with a combined addressable
market of 660 million subscribers, while iseemedia has secured four
large operator contracts with a total addressable market of 193
million subscribers. iseemedia and Synchronica expect that the
proposed transaction will produce a number of strategic benefits
for the combined entity and iseemedia shareholders including: -
Expanded global distribution footprint in global mobile messaging
with a combined addressable market of 853 million subscribers. -
Complementary technologies, including iseemedia's advanced document
transcoding engine, which will enhance Synchronica Mobile Gateway's
Email attachment handling. - Opportunity to up-sell Synchronica's
Instant Messaging (IM) and Social Networking Services (SNS) to the
four iseemedia contracts with large mobile operators in emerging
markets. - Immediate access to two revenues of live deployments
with large mobile operators in India, the world's 2nd largest
mobile messaging market with monthly subscription fees will
accelerate the transition of Synchronica's revenue profile to
recurring revenue streams. - Improved operating efficiencies and
access to capital markets to fund global expansion strategy through
organic growth and acquisitions. Commenting on the proposed
transaction, Anthony DeCristofaro, CEO and President of iseemedia,
said: "The proposed transaction with Synchronica will create a
fast-growing mobile messaging player that already counts 44 of the
world's mobile operators as customers, including some of the
largest carriers worldwide. Our combined addressable market of 853
million subscribers provides excellent opportunities for up-selling
and fast organic growth. We are confident that the combined reach
of iseemedia and Synchronica will accelerate the company's ability
to achieve its goal of market leadership in next-generation mobile
messaging for emerging markets." Following completion of the
acquisition Mr. DeCristofaro will join the Synchronica board as a
non-executive director. Carsten Brinkschulte, CEO of Synchronica
commented: "The proposed acquisition of iseemedia further
demonstrates our commitment to shape the future of mobile messaging
in emerging markets and is a key step towards a market-leading
position for Synchronica in this fast-growing segment. Delivering
an enhanced user experience for next-generation mobile messaging on
any handset is core to our mission. The proposed transaction
perfectly complements our existing competencies, specifically
iseemedia's patent-pending document transcoding technology, and the
additional contracts with large mobile operators in India, which
will accelerate our transition to a sustainable, recurring revenue
profile." In its interim report for the six months ended June 30,
2010 Synchronica demonstrated accelerated market traction and
revenue growth to (pnds stlg)3.43 million (CDN $5.53 million), an
increase to 250% of the comparable period in 2009 and 90% of the
total revenues in FY '09. In the period, Synchronica announced
several contracts with mobile operators, expanding its customer
base to more than 40 contracts representing a total addressable
market of 660 million subscribers. In the first six months of 2010,
Synchronica also launched a major upgrade to its flagship product
Mobile Gateway, introduced MessagePhone(TM), a family of low-cost
mobile devices, optimized for use with Mobile Gateway and secured 3
further contracts with device manufacturers to bundle Mobile
Gateway. Through its reseller agreements with Brightstar, Nokia
Siemens Networks and a top-5 Asian Network Equipment Provider,
Synchronica now has established scalable international channels
with global reach and local presence. Details of the Proposed
Transaction The acquisition of iseemedia will be completed by way
of a take-over bid whereby Synchronica will offer to acquire each
outstanding iseemedia Share for 4.03 Synchronica shares and each
outstanding iseemedia Warrant for 4.03 Synchronica Warrants. The
board of directors has unanimously approved the entering into of
the Agreement and will recommend that iseemedia security holders
tender their shares and warrants to the bid, upon receipt of a
written fairness opinion to be delivered by Northern Securities
that states the Offer is fair, from a financial point of view, to
the shareholders of iseemedia. Prior to the completion of the bid,
iseemedia will also complete a financing of up to $7 million
through a private placement of subscription receipts (the
"Subscription Receipts"). Each Subscription Receipt will be issued
at a price of $0.09 and will, upon the satisfaction of certain
conditions (which include the satisfaction of all conditions of the
Offer), be exercisable into one iseemedia Share and one common
share purchase warrant (a "Financing Warrant"). Each Financing
Warrant will entitle the holder to acquire one iseemedia Share at
an exercise price of $0.12 for a period of 36 months following the
closing date of the private placement. All iseemedia Shares and
Financing Warrants will be automatically tendered to the Offer upon
the exercise of the Subscription Receipts. iseemedia has engaged
Northern Securities Inc. to act as agent in connection with the
private placement on a best efforts basis, however, in the event
that less than $3,000,000 of the Offering is sold by Northern,
Northern Financial Corporation has agreed, subject to certain
conditions to purchase such number of Units that, when combined
with the Units sold under the Offering, equal $3,000,000 of
Subscription Receipts. The iseemedia Shares and Financing Warrants
issuable upon the exercise of the Subscription Receipts also form
part of the Offer. Synchronica has agreed to acquire each whole
Financing Warrant for 4.03 Synchronica Warrants and each
Synchronica Warrant will entitle the holder to acquire one ordinary
share of Synchronica and an exercise price of (pnds stlg)0.018 for
a period of 36 months from the closing of the private placement. If
all outstanding iseemedia Shares are tendered to the Offer,
Synchronica expects to issue approximately 311,305,160 of its
ordinary shares at a deemed value of approximately CDN $0.027 per
ordinary share for a total consideration having a deemed value of
approximately CDN $8.3 million or (pnds stlg)5.3million.
Additionally, if all iseemedia Shares are tendered to the Offer,
iseemedia shareholders will own approximately 25% of the issued and
outstanding ordinary shares of the combined company and Synchronica
shareholders will own 75% of the issued shares of the combined
company. Synchronica will apply to have all of its ordinary shares
listed for trading on the TSX Venture Exchange and will apply to
have all of its ordinary shares issued as consideration for the
iseemedia Shares taken up as part of the Offer listed on AIM.
Concurrently with the Offer, Synchronica is proposing to
consolidate its ordinary shares in issue at a 1:15 ratio.
Synchronica has currently 911.7 million ordinary shares issued
ordinary shares, and iseemedia has 73.1 million common shares
issued. Assuming the financing raises gross proceeds of CDN $5
million, the pro forma number of issued shares of Synchronica
following its acquisition of all of the shares and warrants of
iseemedia is expected to be 96.5 million shares, post consolidation
and post financing. Based on the existing market caps of iseemedia
and Synchronica, the implied market cap of the combined company is
expected to be approximately $43 million. The directors, officers
and certain shareholders of iseemedia have entered into lock-up
agreements to tender their iseemedia Shares in the Offer
representing a total of approximately 25% of the issued and
outstanding iseemedia Shares. In the event that the transaction is
not completed, in certain circumstances, iseemedia has agreed to
pay Synchronica a termination fee equal to $500,000. The Offer is
conditional upon the deposit to the Offer of at least 51% of the
outstanding iseemedia Shares (excluding iseemedia Shares issued on
the exercise of Subscription Receipts), the listing of
Synchronica's shares on the TSX Venture Exchange, all Synchronica
shares issued as consideration to iseemedia shareholders being
freely tradeable, the divestiture of iseemedia's entire interest in
its subsidiaries RealBiz 360 Inc. and isee Romania SRL as well as
receipt of any necessary regulatory approvals and the satisfaction
or waiver of other customary conditions. The Offer, unless
extended, will expire 35 days after it begins. Full details of the
offer will be included in the tender offer and take-over bid
circular (the "Tender Offer") which will be mailed to iseemedia
shareholders shortly and posted on both companies' web sites as
well as under iseemedia's profile at www.sedar.com. Northern
Securities, Iseemedia's financial advisors, have delivered an
opinion in draft form to the board of directors of iseemedia that
the consideration offered is fair, from a financial point of view,
to iseemedia's shareholders. iseemedia expects to receive a final
fairness opinion from Northern Securities shortly. Synchronica's
financial advisor is finnCap plc; its legal advisors are Ormston
List Frawley LLP and Clarkson, Wright and Jakes. Iseemedia's
financial advisors are Northern Securities Inc.; its legal advisors
are Ellison Law. About iseemedia Inc iseemedia Inc. is a mobile
software company focused on the commercialization of a Service
Delivery Platform (iseemail TM) for delivering push Email services
to the mass market and an advanced Content Delivery Platform
(iseedocs TM) for rich media adaptation and extremely
cost-efficient network delivery to mobile devices. The Company
maintains a broad portfolio of issued and pending patents that
cover content authoring, streaming and interactive viewing on
mobile devices. iseemedia was founded in March 2002 and has been
traded on the TSX V in Toronto since June 2005. For more
information, please visit: www.iseemedia.com. About Synchronica plc
Synchronica plc is a leading developer of next-generation mobile
messaging solutions based on open industry standards. The
award-winning product portfolio includes the flagship product
Mobile Gateway, providing push Email, synchronization, instant
messaging (IM), backup and restore, and mobile connectivity to
social networks. Synchronica's products are white-labeled and
offered by mobile operators and device manufacturers in emerging
and developed markets to provide mass market messaging services,
increasing data revenues and reducing churn. Synchronica Mobile
Gateway provides a unique multi-protocol gateway combining Push
IMAP, SyncML, ActiveSync, Email-to-MMS, and Email-to-SMS,
delivering messaging services to literally any mobile phone
currently in the market without requiring an additional client to
be downloaded. Expanding instant messaging to mobile devices,
Mobile Gateway establishes carrier-branded IM communities, using
the industry standard XMPP and provides gateways to popular
internet IM communities, connecting any IMPS-enabled handset.
Headquartered in England, Synchronica also maintains development
centres in Germany and the Philippines in addition to a regional
presence in the USA, Hong Kong, Madrid and Dubai. Synchronica plc
is a public company traded on the AIM list of the London Stock
Exchange (SYNC.L). For further information, please visit
www.synchronica.com. (C)2009 iseemedia Inc. All rights reserved.
iseemedia and iseedocs are either Registered Trademarks or
Trademarks of iseemedia Inc. in the United States and or Canada.
All other trademarks and trade names are the property of their
respective owners. Forward-Looking Statements This news release
includes certain forward-looking statements that are based upon
current expectations, which involve risks and uncertainties
associated with iseemedia's business and the environment in which
the business operates. Any statements contained herein that are not
statements of historical facts may be deemed to be forward-looking,
including those identified by the expressions "anticipate",
"believe", "plan", "estimate", "expect", "intend", and similar
expressions to the extent they relate to the Company or its
management. The forward-looking statements are not historical
facts, but reflect iseemedia's current expectations regarding
future results or events. These forward-looking statements are
subject to a number of risks and uncertainties that could cause
actual results or events to differ materially from current
expectations. iseemedia assumes no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those reflected in the forward-looking
statements. Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. %SEDAR: 00020202E David Berman, CFO,
iseemedia Inc., Tel: 905-761-5293, davidb@iseemedia.com
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