Announcement No. 13-2008
11 June 2008
Acquisition of Swiss GenevaLogic significantly strengthens Danware's position in
Education
Danware has signed an agreement with GenevaLogic to acquire all shares in the
company. GenevaLogic is a world leader in the development of computer-based
education tools. With the acquisition, Danware significantly strengthens its
position in the Education business area and will become a world-leading player
offering the most comprehensive product range in computer-based teaching. The
acquisition triggers an adjustment of the 2008 profit guidance to revenue in the
range of DKK 110-120 million and an unchanged EBITDA loss of DKK 10 million.
Danware acquires the Swiss company GenevaLogic AG, which is currently owned by a
number of Swiss shareholders. The transaction is expected to be completed with
effect at 1 July 2008.
GenevaLogic is a leading provider of computer-based education tools.
The purchase price for the shares is DKK 42.5 million, of which DKK 25 million
will be paid by way of new Danware shares. In addition, the three major
shareholders in GenevaLogic will be offered a DKK 5 million warrant program
under which warrants for subscription of new Danware shares will be exercisable
after 24 months of the transaction closing. Moreover, Danware will provide a
guarantee of up to DKK 10 million, which is dependent on the development of
Danware's share price over a 24-month period. Danware takes over a minor
operating debt.
Danware expects to achieve development, sales and administration synergies. With
the capabilities of the combined enterprise, Danware will be in a position to
offer its customers the most comprehensive product range in teaching software.
On a full-year basis, the acquisition is expected to contribute additional
revenue of approximately DKK 30 million. In 2008, the acquisition is expected to
contribute approximately DKK 15 million to Danware's revenue.
An extraordinary general meeting, to be held on 26 June 2008, will be called as
soon as possible in order to authorise the Board of Directors to increase the
share capital by a nominal amount of up to DKK 1,838,235 in a private placement
to the three current major shareholders of GenevaLogic: NewBorn Consulting
Network L.P., Mayya Partners Limited and Kirk Greiner. The issue is expected to
take place on 1 July 2008.
The profit guidance for 2008 is revised in connection with the acquisition of
GenevaLogic, and revenue is now expected to be in the range of DKK 110-120
million (previous forecast: DKK 100-110 million) and EBITDA is expected to be
unchanged at a loss of DKK 10 million.
Contact
Kurt Bager, CEO, tel. +45 4590 2525, email: kgb@danware.dk.
Acquisition of GenevaLogic
Danware has entered into an agreement with GenevaLogic to acquire all the
company's shares, which are held by a group of private shareholders.
The company is a leading international provider of software products for
computer-based teaching at schools, institutions of higher education and private
enterprises. The main product is Vision, which as a management tool for
classroom teaching used in more than 50,000 classrooms globally. Vision is a
product similar to NetOp School. The company's other products complement
Danware's existing products to a large extent.
GenevaLogic's products have been translated into nine languages and the company
has some 10,000 customers in over 30 countries.
GenevaLogic was established in 1996 and is headquartered in Langenthal,
Switzerland and Portland, Oregon in the USA.
GenevaLogic has 44 employees, 20 of which are employed in Switzerland, 20 in the
USA, 3 in Germany and one in the United Kingdom.
In 2007, GenevaLogic generated revenue of DKK 37.8 million and its EBITDA was
DKK 0.2 million. The profit for 2007 was impacted by extraordinary non-recurring
income. For 2008, the company forecasts revenue of around DKK 30 million and an
EBITDA of approximately DKK 1.0 million. In the past couple of years, the
company has implemented a growth strategy for its distribution and intensively
developed the future product platform. GenevaLogic has forecast a continued
positive trend in the company's activities for the coming financial year.
The acquisition is expected to take place at 1 July 2008. The agreement is
subject to normal terms, including that no regulatory approval of the
transaction is required.
Consideration and funding
The consideration for the shares is DKK 42.5 million, and Danware will take over
a minor net operating debt.
Of the purchase consideration, DKK 17.5 million is payable in cash and the
remaining DKK 25 million is payable in the form of shares in Danware A/S. A
lock-up agreement has been made, prohibiting the new owners from selling the
Danware shares within 24 months of the acquisition. Following the transaction
and the share increase, the new shareholders will hold up to 8.7% of the shares
in Danware A/S.
In addition, the three major shareholders in GenevaLogic will be offered a
warrant programme of up to 73,529 Danware shares, the warrants for new Danware
shares being exercisable during the period from 24 to 36 months after the
transaction closing. The exercise price of the warrants will be determined at
the market price at the date of grant of the warrents, corresponding to the
average quoted price of the company's shares during the last 10 business days
prior to the issue of the warrants.
Moreover, Danware will provide a guarantee of up to DKK 10 million, depending on
the development of Danware's share price after a 24-month period.
The acquisition of GenevaLogic is expected to be funded in part through a
capital increase in Danware (see below).
Reasons for the acquisition
For a number of years, Danware has developed and marketed market-leading
computer-based teaching products. However, Danware's size has made it difficult
to attain sufficient international market awareness of its products, optimise
sales of the products and thus obtain critical mass. The computer-based teaching
market is currently undergoing a rapid development, and market growth is strong.
Capitalising on this potential to strengthen the company's position in the
Education business area is part of Danware's strategy.
The acquisition of GenevaLogic means that the company will significantly expand
its resources in terms of development as well as sales and will be able to offer
customers even better and wider-ranging products.
Since the Company was established, GenevaLogic has worked exclusively on the
development of software products for computer-based teaching and possesses
strong capabilities in this field - both in terms of technology and in terms of
market knowledge. Danware's development resources will thus be strengthened
significantly.
Merging the activities of GenevaLogic and Danware will produce a world-leading
player in software solutions for classroom teaching and other teaching software
solutions. The company will be able to offer customers the most complete range
of computer-based teaching products, and Danware will in future be able to take
a leading position in the development of new, innovative products. Among other
things, GenevaLogic is currently working on developing a web-based classroom
teaching program which customers can download from the Internet and pay for
according to consumption. Expectations are high for this product, which is
expected to be launched towards the end of 2008.
The acquisition of GenevaLogic will also strengthen the distribution channels of
Danware's products in Education and improve local customer service. Like
Danware, GenevaLogic sells its products through business partners. The company's
position is particularly strong in the USA, Switzerland and Germany.
Integration of Danware and GenevaLogic
GenevaLogic will be fully integrated in Danware's existing group structure, and
a plan for the integration of the two companies is currently being prepared. The
plan is expected to be completed on 1 July 2008.
Future products will be based on the best of the two companies' technologies,
ensuring that the company can offer customers state-of-the-art teaching
products. The plan is to integrate the two main products, Vision and NetOp
School over a period of time. Also, the overall product portfolio will be
co-ordinated and adjusted to provide customers with better and wider-ranging
products.
Danware's Management will not change, and GenevaLogic's current CEO, Kirk
Greiner, will be responsible for the largest geographical market, the USA, and
will report to CEO Kurt Bager.
Effect on financial statements for 2008
The acquisition of GenevaLogic is expected to contribute approximately DKK 15
million to Danware's revenue in 2008. However, this depends on the progress of
the integration of distribution and the development of the USD exchange rate.
The EBITDA effect is expected to be close to nil in 2008 as the expected profit
of GenevaLogic largely balances out the expected integration costs.
The effect on cash flows from operating activities is expected to be neutral.
Outlook for 2008
As mentioned above, the acquisition of GenevaLogic is expected to contribute
approximately DKK 15 million to Danware's revenue in 2008. The revenue forecast
for 2008 is changed, and revenue is now expected to be in the range of DKK
110-120 million (previous forecast: DKK 100-110 million) and EBITDA is expected
to be unchanged at a loss of DKK 10 million.
Share issue
In order to complete the acquisition of GenevaLogic, the Board of Directors of
Danware A/S has resolved to call an extraordinary general meeting to request
authorisation for the Board of Directors to increase the company's share
capital.
Such authorisation will allow the Board of Directors to increase the company's
share capital by way of a private placement to the three existing major
shareholders of GenevaLogic: NewBorn Consulting Network L.P., Mayya Partners
Limited and Kirk Greiner, equalling a nominal increase of the company's existing
share capital of up to DKK 1,838,235. Following the capital increase, the
company's nominal share capital will be up to DKK 21,090,375, consisting of
4,218,075 shares of DKK 5 each.
The capital increase will be made without pre-emptive rights to the company's
existing shareholders.
The new shares will be subject to the same rules as those applicable to the
existing shares, which means that they will be issued to bearer but may be
registered in the name of the holder in the company's register of shareholders
and will be negotiable instruments. Moreover, the new shares will be subject to
the same rules on voting rights and redemption as those applicable to the
existing shares, see articles 3 and 10 of the Articles of Association. The new
shares give the owner entitlements in the company from the date, when the
capital increase is registered with the Danish Commerce and Companies Agency,
although the new shares only entitle to 50% dividend payment for the financial
year 2008.
The new shares will be subscribed by NewBorn Consulting Network L.P., Mayya
Partners Limited and Kirk Greiner on closing of the transaction, following which
the capital increase will be registered with the Danish Commerce and Companies
Agency. The company will apply for the new shares to be listed for trading on
the OMX Nordic Exchange Copenhagen as soon as possible after registration of the
capital increase with the Commerce and Companies Agency.
A lock-up agreement for 24 months has been entered into with the three sellers
of GenevaLogic.
As the capital increase does not exceed 10% of Danware's share capital, the
planned capital increase does not require the preparation of an offering
circular.
Subscription price
The subscription price of the new shares will equal the market price calculated
as the average quoted price of the company's shares during the last 10 business
days prior to the date of subscription. The subscription price will not, however
be able to fall below DKK 68 per share of DKK 5 nominal amount.
Proceeds and use of proceeds
The proceeds will be used as partial consideration for the acquisition of all
shares in GenevaLogic.
The costs of the capital increase are expected to amount to DKK 100,000,
including approximately DKK 75,000 in commissions/fees to auditors, legal
advisors etc. and approximately DKK 25,000 in other costs). The final costs of
the capital increase will be disclosed in the annual report for 2008.
Change in share capital
Following the capital increase, Danware's total share capital will consist of
4,218,075 shares with a nominal value of DKK 5 each, totalling a nominal value
of up to DKK 21,090,375.
The change in share capital appears from the chart below.
--------------------------------------------------------------------------------
| | Nominal share capital, | No. of shares of DKK |
| | DKK | 5 |
--------------------------------------------------------------------------------
| Share capital at 30 June | 19.252.140 | 3.850.428 |
| 2008 | | |
--------------------------------------------------------------------------------
| Private placement, expected | Up to 1,838,235 | Up to 367,647 |
| at 1 July 2008 | | |
--------------------------------------------------------------------------------
| Total | Up to 21,090,375 | Up to 4,218,075 |
--------------------------------------------------------------------------------
Preliminary timetable for the share issue
--------------------------------------------------------------------------------
| Extraordinary general meeting | 26 June 2008, 10.00 a.m. |
--------------------------------------------------------------------------------
| Anmeldelse til og registrering i Erhvervs- og | 26 June 2008 |
| Selskabsstyrelsen | |
--------------------------------------------------------------------------------
| Admission to and listing for trading on the | 1 July 2008 |
| OMX Nordic Exchange Copenhagen | |
--------------------------------------------------------------------------------
Taxation
The issued shares are subject to the tax rules applicable in the recipient's
home country, including rules governing taxation of dividends and capital gains.
Danware company information
Danware A/S, CVR No. 16 22 15 03
The company's financial year runs from 1 January to 31 December.
The securities identification code (ISIN) is DK0010288125.
The new shares will be sought listed under Danware's existing securities
identification code.
Danware's core business is to develop and market software products based on the
NetOp® core technology - a technology enabling swift, secure and seamless
transfer of screens, sound and data between two or more computers. The company's
two product areas are Desktop Management and Education. The core product in
Desktop Management, NetOp® Remote Control, enables remote control of one or more
distant computers. NetOp® School, the core product in Education, is a software
application for computer-based classroom teaching. All are plug ‘n play products
offering extensive functionality, flexibility and user-friendliness. Danware's
products are sold in more than 80 countries. In 2007, the company generated
revenue of about DKK 85m. Danware's shares are listed on the Copenhagen Stock
Exchange and are a component of the Small Cap+ index. Danware operates wholly
owned subsidiaries in the United States, the UK and Germany. For more
information, go to www.danware.com.
Translation In the event of any inconsistency between this document and the
Danish language version, the Danish language version shall be the governing
version.
Acquisition of Swiss GenevaLogic significantly strengthens Danware's position in Education
| Source: Netop Solution A/S
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