+++++++++++++++++++++++++ SOLUTION 6 ACQUISITION SECURES GLOBAL MARKET LEADERSHIP IN PROFESSIONAL SERVICES SOFTWARE
The Directors of Solution 6 Holdings Ltd are pleased to announce the proposed acquisition of US-based Novient Inc. The acquisition will result in clear worldwide leadership for Solution 6 in the market for specialist software solutions designed for professional services organizations. These include consulting firms, lawyers, accountants and IT services businesses.
The acquisition is consistent with Solution 6's strategic focus on the professional services software market and will strengthen Solution 6's product capability. Solution 6 will benefit from the addition of Novient's highly regarded technology, its high calibre management team, and its blue chip customer base in 48 countries. Most importantly, Solution 6 will increase its ability to compete and grow in the US - the world's largest professional services market.
PROPOSED MERGER TERMS
Under the proposed terms of the acquisition, consideration will comprise US$12.5 million of shares in Solution 6, and cash of $US150,000. In addition, an earn-out of US$1.8 million will be payable if agreed performance criteria are met. The earn out will be settled through a further issue of Solution 6 shares.
The merger proposal has been approved by Novient's major shareholders who will be issued the initial share consideration at between A$0.65 and A$0.75 per share. Based on current exchange rates, Novient's shareholders will emerge with between 12 and 13 per cent of Solution 6's issued capital.
The acquisition will be subject to approval by Solution 6 shareholders in a meeting to be scheduled for mid-July. Solution 6 will have a broad spread of shareholders, with the key shareholders continuing to be Telstra (13 per cent), CPH (7 per cent) and MEM, part of the Guinness Peat Group (7 per cent).
BENEFITS OF THE PROPOSED MERGER
Mr Neil Gamble, Chief Executive of Solution 6 Holdings, said: "Novient and the recently acquired Keystone Solutions will significantly enhance shareholder value over the next financial year, as they both introduce significant growth opportunities for our ongoing business in both market share and geographic reach through the US and Europe.
Novient will be a valuable addition to the Solution 6 Group as it has a wide range of blue-chip customers, including Acenture, Computer Sciences Corporation, Hewlett Packard, KPMG and SAP, with over 150,000 licensed users in 48 countries. We will be able to offer the most comprehensive set of software solutions for professional service organizations of any supplier in the world, providing a very solid foundation for revenue and earnings growth," he added.
Mr Gamble said: "It is a major seal of approval for Solution 6's corporate strategy that Novient's US venture capital shareholders have agreed to convert their shares to Solution 6 stock.
They recognize the underlying value of the Solution 6 software businesses and the determination of management and the board to generate strong earnings growth for shareholders through the rapid integration of Novient with our existing operations, where we will maximize cross-selling and new sales opportunities," he added.
Solution 6 is expected to move quickly to realize the benefits from the Novient acquisition, in a similar fashion to the recent addition of Keystone Solutions. Just two weeks following the completion of this acquisition, Solution 6 was able to announce that one of the world's largest legal firms, Clifford Chance, finalized contracts for the supply of a new Keystone global practice management system. In addition to expected new revenues of more than A$20 million from the Clifford Chance contract, integration plans have identified over A$3 million of annualized cost savings implementation of which will largely be completed by the end of June. Keystone management and staff are already making valuable contributions to the future success of the Solution 6 group.
Mr Gamble concluded, "The Novient acquisition represents the next logical step in the evolution of Solution 6 to become the world's leading supplier of professional services software - with substantial cash reserves, positive operational earnings and strong revenue growth opportunities."
UPDATE ON CURRENT TRADING
The Directors of SOH expect to announce in August the group's best annual result in five years, powered by a strong performance by the professional services software division. This division is expected to post revenues approaching a$160 million and meet its target EBITDA margin of 10 per cent (before corporate allocations) for the full year. The division has continued to improve its cash generation such that the group expects to close the year with robust operational cash reserves approaching A$35 million.
The Directors have determined that the IT Services division is not a core business of the group and confirm that discussions are at an advanced stage for the divestment of this business. In the meantime, this division is being managed as an autonomous business under the supervision of a separate Board sub-committee.
The group's IT Services and Enterprise Software operations have continued to experience difficult economic condition during the second half of the financial year, which has impacted the profitability of the group.
ABOUT NOVIENT
Novient is the pioneer of software solutions for the service economy. Novient provides visibility into resources and projects to allocate the right people to the right projects at the right time. With over 150,000 users in 48 countries, Novient's Service Process Optimization (SPO) solution is used by the world's largest organizations to optimize workforce performance. Customers include Accenture, Cingular, Compaq, Computer Sciences Corporation, DuPont, Nortel Networks, and SAP. Founded in 1995, Novient is privately funded by leading venture capital firms, including Hummer Winblad Venture Partners, LLR Partners, Mellon Ventures, Noro-Moseley Partners, Southeastern Technology Fund, and Wachovia Capital Partners. See www.novient.com for further details.
For further details visit our website www.solution6.com or telephone: Solution 6 - Neil Gamble/Iain Keddie - ph: +61 2 9278 0666 City Public Relations - Tim Allerton - ph: +61 2 9281 7272
SOH Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
