Under the terms of the acquisition agreement, unanimously approved by the Boards of Directors of both companies, 724 Solutions will issue 19 million shares, including shares issuable upon the exercise of TANTAU options that will be assumed by 724 Solutions. Upon completion of the transaction, 724 Solutions shareholders will own approximately 68 percent of the combined company and TANTAU shareholders will own approximately 32 percent, on a fully diluted basis. The transaction will be accounted for as a purchase and is expected to close during the first quarter of 2001.
Founded by a core team from Tandem’s High Performance Research Center with unique experience in building high-scale mission critical transaction based systems, TANTAU Software is a privately held company with a leading integrated platform enabling enterprises to conduct high volume, secure mobile transactions. TANTAU’s current customers are primarily blue chip financial services institutions, including Chase Manhattan Bank, Commerzbank, Credit Suisse Group, MeritaNordbanken, the New Zealand Stock Exchange, Rabobank International, and SE Banken. Headquartered in Austin, Texas, the company has a total of 175 employees in sales and development offices throughout Europe, the United States, Australia, and Japan, with significant engineering operations in Germany, Switzerland and Finland. Investors in TANTAU include Austin Ventures, Compaq, Chase Capital Partners and General Motors Investment Management.
Through this acquisition, 724 Solutions expects to enhance its position as a premier worldwide provider of highly scalable infrastructure and application software enabling secure mobile transactions through Internet-enabled wireless and consumer electronics devices. TANTAU’s established presence in Europe significantly complements 724 Solutions’ strong customer base in North America, which includes BBVA Bancomer, Bank of America, Bank of Montreal, ClarityBank.com, Citigroup, Hanvit Bank, Key Corp, Wachovia and Wells Fargo. The companies’ combined customers serve approximately 272 million consumers worldwide.
Greg Wolfond, founder, current chairman and chief executive officer of 724 Solutions, will continue to serve as chairman of the company. TANTAU co-founder, president and chief executive officer John Sims will serve as chief executive officer of 724 Solutions. Karen Basian, chief financial officer of 724 Solutions, will continue in her current position. As a part of the transaction, four directors will be added to 724 Solutions’ Board from TANTAU, including John Sims. 724 Solutions will maintain executive offices in Toronto, Canada and Austin, Texas.
724 Solutions and TANTAU are seeking to substantially improve their combined operating performance and add additional customers worldwide. Combined, the companies will have cash and equivalents in excess of $200 million, providing a strong platform for further growth.
By bringing together these two highly complementary companies we expect to significantly accelerate 724 Solutions’ business plan and path to profitability and position the company to drive and capitalize more rapidly on the increasing demand among financial institutions, merchants and other enterprises for scalable wireless infrastructure, said Wolfond. Together, we have a strong, global footprint, a high-caliber, complementary customer base, top industry talent, and the ability to offer superior solutions across a single, secure platform. We expect to play a significant role in the growth of mobile transactions – which analysts expect to grow to approximately $21 billion over the next four years in the United States alone, compared to an estimated $29 million in 2000.
