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.
- 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 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
- 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.
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.
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.
SOURCE ISEEMEDIA INC.
For further information: For further information: David Berman, CFO, iseemedia Inc., Tel: 905-761-5293, firstname.lastname@example.org