Proposed Acquisition of iseem

RNS Number : 5987P

Synchronica PLC

20 July 2010

 



20 July 2010

Synchronica plc

('Synchronica' or 'the Company')

Proposed acquisition of iseemedia Inc

('iseemedia').

Agreed takeover is next step towards market leadership in next-generation mobile messaging for emerging markets

Highlights:

·     Synchronica and iseemedia have entered into a definitive agreement, subject to shareholder approval and funding, scheduled to complete by 31^st August, 2010.

·     Synchronica offers to acquire 100% of outstanding iseemedia shares in a friendly take-over tender offer to iseemedia shareholders.

·     The acquisition will extend Synchronica's contracted addressable market of 40 mobile operators (representing 660m subscribers) by a further 193m from four contracts with large operators in India and South-East Asia, resulting in a total addressable market of 853 million subscribers.

·     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.

·     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 in addition apply for a listing on TSX-V, resulting in a dual listing on both markets and extending Synchronica's shareholder base to tech-savvy investors in the US and Canada.

LONDON, UK/ TORONTO, CANADA - 20^th July, 2010 - Synchronica plc (AIM: SYNC) and iseemedia (TSX-V: IEE) announced today that they have entered into a definitive agreement (the "Agreement") whereby Synchronica will offer to acquire 100% of the issued and outstanding common shares of iseemedia (the "Common Shares") by way of an all share tender offer (the "Transaction"). Subject to shareholder and regulatory approvals, the companies expect to complete the Transaction no later than 31^st August, 2010.

Details of the Proposed Transaction

·     Synchronica expects to issue 311,305,160 ordinary shares at approximately CDN $0.027 to existing iseemedia shareholders, a total consideration of approximately CDN $8.3 million or £5.3million. For each Common Share of iseemedia, Synchronica will offer 4.03 Synchronica ordinary shares.

·     Synchronica will apply for the new shares to be listed on AIM, in London, and for the new and existing shares to be listed on TSX-V, in Toronto.

Background

Synchronica and iseemedia are currently competing in the sector of mobile Email solutions for operators and share a strong focus on opportunities in emerging markets. Both Synchronica and iseemedia have built businesses by developing, marketing and selling mobile Email solutions targeted specifically at high-growth emerging markets. In these markets, characterised 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 Synchronica and iseemedia are offering client-less 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 focussed on entry-level services, Synchronica's flagship product Mobile Gateway also offers true push Email (IMAP) and synchronisation (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

Synchronica's and iseemedia'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. Synchronica and iseemedia expect that the proposed transaction will produce a number of strategic benefits for the combined entity and Synchronica shareholders including:

·     Enhanced market position in global mobile messaging with a combined addressable market of 853million 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 that will accelerate the transition of Synchronica's revenue profile to recurring revenue streams.

·     Expanded investor base and dual listing expected to result in additional liquidity in Synchronica's stock from investors in the US and Canada.

Commenting on the proposed transaction, Carsten Brinkschulte, CEO of Synchronica, said: "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 30^th June, 2010 Synchronica demonstrated accelerated market traction and revenue growth to £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™, a family of low-cost mobile devices, optimized for use with Mobile Gateway and secured three 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.

Anthony DeCristofaro, CEO and President of iseemedia, commented: "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 DeCristofaro will join the Synchronica board as a non-executive director.

The acquisition is conditional upon inter alia the approval of Synchronica shareholders, an associated fund raising of between approximately £1.95 million (CDN $3 million) and £4.54 million (CDN $7 million) and the completion of the disposal of a non-core element of iseemedia's business. Northern Securities Inc., the Toronto based Investment bank and advisor to iseemedia, intends to obtain a firm commitment from its parent company, Northern Financial Corporation for the minimum sum required to allow the acquisition to complete.

Shareholder Circulars

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. The offer will be open for acceptance for at least 35 days following the commencement of the offer and will be subject to acceptance of the offer by holders of at 51% of the outstanding iseemedia shareholders.

Synchronica will update shareholders in due course and expects to call a general meeting to be held during the week commencing 16^th August, 2010, by way of a circular expected to be posted prior to 31^st July, 2010.

Northern Securities Inc. in Toronto, Ontario, Canada and finnCap Ltd in London, UK are serving as financial advisors in the proposed business combination.

In conjunction with the proposed acquisition, the Directors of Synchronica intend to seek shareholder approval to consolidate the shares of Synchronica on a 15 for 1 basis.

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-labelled 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.

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.

Enquiries:

Synchronica plc www.synchronica.com	Carsten Brinkschulte, CEO Angus Dent, CFO Nicole Meissner, COO	[phone] [phone] [phone]
finnCap	Clive Carver , Nomad Charlotte Stranner, Corporate Finance Stephen Norcross, Corporate Broker	[phone] [phone] [phone]
Walbrook PR Ltd	Paul McManus	[phone] [phone] [e-mail]

© 2010 Synchronica plc. All Rights Reserved. All other trademarks and trade names are the property of their respective owners.

Forward-Looking Information
This news release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with Synchronica'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 Synchronica'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, including the matters discussed under "Risks and Uncertainties" in Filing Statements with the regulatory authorities. Synchronica 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.

 

END

 

 

ACQKKKDKABKKCOB