CMGI to acquire Open Channel Solutions
February 20 2008 - 8:00AM
Business Wire
CMGI�, Inc. (NASDAQ: CMGI), a global leader in supply chain
management services, and Open Channel Solutions, Inc. (OCS), a
leading global provider of entitlement and e-business management
solutions, today announced that they have entered into a definitive
agreement under which CMGI will acquire Open Channel Solutions,
Inc. The all cash transaction values OCS at $24.5 million, is
subject to customary closing conditions and is expected to close
during CMGI�s fiscal third quarter. CMGI will pay a net purchase
price of $11.0 million due to a minority interest in OCS and the
repayment of debt it currently holds. CMGI expects the transaction
to be neutral to earnings per share in fiscal 2008 and accretive
thereafter. OCS provides solutions that manage entitlements for
software licenses, maintenance and support subscriptions, hardware
features and rights-managed content. OCS� solutions, including its
Poetic� software product, will enhance the supply chain management
services provided by ModusLink�, CMGI�s supply chain services
business, by managing the entitlements associated with both
physical and electronic delivery of digital content. OCS will also
extend ModusLink�s e-commerce capabilities for digital content
distribution. The addition of these capabilities to ModusLink�s
service portfolio enables the company to offer efficient post-sale
electronic delivery of digital content such as software downloads,
electronic configuration and downloads of other audio, video and
data content for technology devices. �In today�s high-tech
marketplace, the lines between the physical and electronic supply
chain continue to blur,� said Joseph C. Lawler, chairman, president
and chief executive officer of CMGI. �Vendors and consumers expect
a seamless and customized delivery experience across hardware,
software, content and services. Today�s announcement is consistent
with our strategy to add capabilities and services that strengthen
the value proposition of our core supply chain management business.
OCS is well-established in the marketplace and brings new
technological capabilities that we look forward to adding to our
global supply chain solutions.� The combination of OCS and CMGI is
designed to meet the high-tech market�s need for a partner who can
support both physical and electronic distribution requirements
while managing the complexity of selling through traditional and
electronic channels efficiently. The integration of OCS�
capabilities, when applied to ModusLink�s large global footprint,
represents a strong commitment to meeting the evolving needs of the
market. �High-tech vendors need solutions that extend past the
traditional models,� said Ed Rose, president and chief executive
officer of Open Channel Solutions. �This new partnership represents
a real change in how technology and supply chain services can be
combined to address today�s business issues with a market-leading
solution. Being part of a larger organization will allow us to grow
our technology lead while integrating with the worldwide services
platform at ModusLink. Working with ModusLink provides our company
with access to global operations and a broad set of resources that
will enable us to accelerate our success in this high-growth
marketplace.� OCS has headquarters in Dedham, Massachusetts, and
offices in Utah, the Netherlands, Japan and Australia. OCS is
expected to operate as a wholly owned subsidiary of CMGI. OCS was
spun out of Modus Media International in 2001. Following CMGI�s
acquisition of Modus Media International in 2004, CMGI assumed a
minority interest in OCS, which is currently held by CMGI�s venture
capital business, @Ventures. Lawler continued, �Due to our past
involvement with OCS through @Ventures, we are very familiar with
the company�s operations, technology and market opportunities for
entitlement and e-business management solutions, and we expect a
smooth integration. Looking forward, we continue to consider
acquisitions that will further strengthen our supply chain offering
and contribute to our future financial performance.� About CMGI
CMGI, Inc. (NASDAQ: CMGI), through its subsidiary ModusLink,
provides industry-leading global supply chain management services
and solutions that help businesses market, sell and distribute
their products around the world. In addition, CMGI�s venture
capital business, @Ventures, invests in a variety of technology
ventures. For additional information, visit www.cmgi.com. About
Open Channel Solution Open Channel Solutions (OCS) is a leading
global provider of entitlement and e-business management solutions,
including its flagship Poetic� product. The company�s self-service
offerings help organizations increase software renewal revenues;
extend their reach and manage sales in the growing SMB market
through multi-tiered channels; effectively distribute electronic
software and content; and eliminate costly, inefficient e-business
IT processes. OCS is headquartered in Dedham, Massachusetts, and
has offices in Utah,�the Netherlands, Japan and Australia. For more
information, visit www.ocs.com. About ModusLink ModusLink
Corporation is a leading provider of global, end-to-end supply
chain management solutions. The company provides technology clients
in the software, computing, consumer electronics, storage and
communications markets with customized supply chain solutions that
improve time-to-market, productivity and customer satisfaction
while reducing risk and cost. ModusLink's services include
consulting and planning, sourcing and supply base management,
manufacturing and product configuration, fulfillment, logistics
management, e-commerce and the complete range of aftermarket
services. ModusLink has more than 30 facilities in 13 countries,
creating the largest global footprint in the industry. With
headquarters in Waltham, Massachusetts, the company is a subsidiary
of CMGI, Inc. (NASDAQ: CMGI). For additional information, visit
www.moduslink.com. This release contains forward-looking
statements, which address a variety of subjects including, for
example, the expected benefits of the transaction, the expected
financial contribution of OCS and the expansion of capabilities
expected to occur as a result of the transaction. The following
important factors and uncertainties, among others, could cause
actual results to differ materially from those described in these
forward-looking statements: The transaction is subject to the
satisfaction of closing conditions and events may occur which cause
the transaction not to be completed; There can be no assurance that
projected financial results will be attained; There can be no
assurance that other suitable acquisitions will be identified or
available on terms acceptable to CMGI; CMGI's success depends on
its ability to execute on its business strategy and the continued
and increased demand for and market acceptance of its solutions and
services; CMGI may not be able to expand its operations in
accordance with its business strategy; CMGI may experience
difficulties integrating technologies, operations and personnel in
accordance with its business strategy; CMGI derives a significant
portion of its revenue from a small number of customers and the
loss of any of those customers would significantly damage its
financial condition and results of operations; increased
competition and technological changes in the markets in which CMGI
competes; and risks associated with international operations.
ModusLink represents a significant percentage of CMGI's operations
and the occurrence of any of the foregoing factors with respect to
ModusLink�s business may have an adverse effect on CMGI�s results
of operations and financial results. For a detailed discussion of
cautionary statements that may affect CMGI's future results of
operations and financial results, please refer to CMGI's filings
with the Securities and Exchange Commission, including CMGI's most
recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q. Forward-looking statements represent management's current
expectations and are inherently uncertain. We do not undertake any
obligation to update forward-looking statements made by us. CMGI is
a registered trademark of CMGI, Inc. and ModusLink is a registered
trademark of ModusLink Corporation. All other company names and
products are trademarks or registered trademarks of their
respective companies.
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