Deal strengthens Orchestream’s position as leader in activation and measurement of advanced IP services.
Not for release, publication or distribution in or into Australia or Japan.
London, England and Ottawa, Canada; 30 January 2001: Orchestream and CrossKeys announce that they have entered into a Merger Agreement, under which Orchestream, the leader in IP service activation software, will acquire CrossKeys, a leader in software for performance management and reporting. The consideration for the purchase of CrossKeys Common Shares and interests in Common Shares is to be satisfied by the issue of Orchestream Ordinary Shares and a cash payment for options as described under Principle Terms of the Merger Agreement, below and values CrossKeys at approximately CAN$54.1 million (GBP24.7 million) on a fully diluted basis.
Under the terms of the Merger Agreement each outstanding CrossKeys Common Share will be exchanged for 0.453 Orchestream Ordinary Shares. Based on a twenty day weighted average closing price of 270.5p for each Orchestream Ordinary Share, the Agreement values each CrossKeys Common Share at CAN$2.68, and represents a premium of approximately 42 per cent over the twenty day weighted average closing price on the Toronto Stock Exchange of CAN$1.89 for each CrossKeys Common Share. The Merger Agreement has the unanimous recommendation of the Boards of Orchestream, who have been advised by UBS Warburg, and CrossKeys, who have been advised by CIBC World Markets. In addition, certain major shareholders of CrossKeys, including Dr. Terence Matthews and certain of his associates, and Alcatel, representing approximately 36 per cent of the issued share capital of CrossKeys and 29 per cent of the eligible votes, have agreed to irrevocably vote their shares in favour of the Merger at the pending shareholders meeting of CrossKeys that will be called to approve the Merger.
The Merger of CrossKeys and Orchestream will enable the combined company to expand its product offering to bring an advanced software platform to telecom carriers and service providers that is capable of defining, activating, monitoring and reporting services on Internet Protocol networks. Bringing these two technologies together helps to address one of the fundamental challenges service providers face in simplifying purchasing and integration of the many discrete software components that comprise Operations Support Systems (OSS).
After a period of major infrastructure investment, service providers are looking to generate revenue from their networks, said Ashley Ward, CEO of Orchestream. To do this, they need software that harnesses the capability of their network to meet the demands of their customers. The proposed acquisition provides Orchestream with carrier class technology that will enable us to be first to bring to market a software platform that defines and activates services on IP networks and monitors their performance, enabling sophisticated Service Level Agreements (SLAs) to be implemented. This gives the service provider two means of achieving customer satisfaction: a way of activating services and a means of proving that these services have been delivered.
Orchestream and CrossKeys expect that in addition to the clear technology benefits this deal brings to customers, it will also result in a significant acceleration of Orchestream’s plans for developing its global presence. CrossKeys has an experienced sales force with Tier 1 customers in North America and Europe, including WorldCom, Verizon, Bell Canada and BT and a development team that has experience in scalable, carrier class technology. Orchestream attaches the utmost importance to the retention of key individuals and intends to ensure that such CrossKeys employees will remain with the combined business and share in the expected success of the enlarged group.
Orchestream and CrossKeys first became aware of the synergy of our products and complementary nature of our market focus when we began an integration project in early 2000, said Ian McLaren, CEO of CrossKeys. We quickly became aware of the additional benefits one another’s software could add to a customer offering, and began to explore ways of integrating more formally. We have enjoyed a marketing relationship for some time, and this Merger is a natural progression of our teams working together. This is a positive step forward toward providing what our customers have been asking for – integrated OSS software platforms.
The Merger Agreement, which will be effected by means of a Plan of Arrangement is subject to approval by CrossKeys shareholders, Canadian court approval and certain regulatory approvals.
