This acquisition represents another measured step in AremisSoft’s plan to consolidate key sectors of the enterprise application software market and position the Company for additional growth from next generation e-business systems.
With this acquisition, AremisSoft expands its enterprise-wide web-enabled ERP offerings and intends to more aggressively participate in the large Tier 3 market for integrated ERP solutions. In addition, the Company will deliver a proven comprehensive web-enabled e-business solution to market more quickly. The acquisition brings to AremisSoft approximately 1600 active customers in North America, Europe, the Mid-East, and Asia. Fourth Shift has approximately 460 employees and a complete worldwide business infrastructure, including a sales organization that numbers over 70 people. The acquisition expands AremisSoft’s customer base, market coverage, and sales presence in the US and other key markets, including China. AremisSoft plans to combine its UK based manufacturing software operations with Fourth Shift and expand its resource commitment to supporting both ERP systems and new e-business applications.
Roys Poyiadjis, Co-CEO and President of the US Group of AremisSoft, stated, The acquisition of Fourth Shift represents a defining step forward for AremisSoft and its continuing strategy to leverage its global talent pool of technology resources. Fourth Shift will enable us to create a meaningful business platform to deliver value-added products and services to the manufacturing marketplace. We believe we can add substantial-business value to our customers’ investments in the combined AremisSoft enterprise and e-business applications by virtue of our large India based development facilities and financial strength. Fourth Shift and AremisSoft Manufacturing have complimentary market focuses and both product lines have a well placed role in our expanded product offering.
Under the terms of the agreement, AremisSoft will acquire all of the outstanding common stock of Fourth Shift for $3.70 per share in cash for a consideration of approximately $40.5 million. The deal has been unanimously approved by the Board of Directors of both companies. Closing of the transaction is subject to approval by Fourth Shift shareholders at a meeting tentatively scheduled for May 2001 and other normal conditions.
AremisSoft projects the acquisition will add in over $30.0 million to revenue and $0.04 to pro forma earnings per share in 2001. For 2002, the Company projects the acquisition will add in over $70.0 million in revenue and pro forma earnings per share of $0.10. Pro forma net income and earnings per share for 2001 and 2002 exclude amortization of goodwill and purchased intangible assets, and non recurring operating expenses related to recent acquisitions.
Roys Poyiadjis continued, The market for ERP software has experienced turbulent times over the past several years which has created difficulty for many manufacturing software vendors as well as confusion for their customers. We believe that Fourth Shift has done an excellent job of extending its standard products with an advanced web interface and well thought-out e-business solutions, all on an industry standard Microsoft NT/SQL Server platform. Alternatively, AremisSoft has developed an extensible product line which supports more customizable configurations supporting UNIX/NT operating systems and the Oracle/Informix databases. Offering both product lines gives us greater market coverage and gives customers greater options.
