Telelogic Announces Agreement to Acquire Continuus - Leading Challenger in Configuration Management Software
MALMÖ, Sweden, October 25, 2000 - <%=company%> (Stockholm Stock Exchange: TLOG), the world-leading supplier of solutions for real-time software development and requirements management, announced today that it has entered into a definitive merger agreement with Continuus (NASDAQ: CNSW), to acquire all of the outstanding shares of Continuus at a cash price of $3.46 per share. The transaction has a total value of approximately $42 million. The directors of both companies have approved the merger agreement. Shareholders representing 36% of the outstanding shares, on a fully diluted basis, have irrevocably committed to tender their shares in the tender offer.
Continuus, headquartered in Irvine, California is a leading supplier of configuration management software to the telecom industry and other real-time segments like aerospace, automotive and defense. Its customers include companies like Nokia, Lucent, BT, BMW, Raytheon and Lockheed Martin. In 1999, Continuus had revenues of $37.3 million.
"This is an important next step in our ambition to create a fully integrated state-of-the-art development environment. We are creating this by combining the best-of-breed products covering the full software development process." said Anders Lidbeck, President and CEO at Telelogic. "Continuus also has a strong market presence in the US, a very good understanding of our market and a solid technical background. These are all key for us in our ambition to be the partner of choice for companies and engineers developing advanced system and software."
"Strategically, this acquisition will give our configuration management solution the sales channels, marketing focus and critical mass we need." said John Wark, President and CEO at Continuus. "Telelogic has a leading brand, the products and the global network. The combined entities will create an even stronger organization that will benefit both our employees and customers."
Under the merger agreement, Telelogic will commence a tender offer for Continuus's outstanding shares, which will be subject to certain conditions, including at least 51% majority of Continuus's outstanding shares, on a fully diluted basis, being tendered without withdrawal prior to the expiration of the offer, and clearance of the transaction under applicable antitrust laws and other governmental agencies' regulations being obtained.
Strengthened market position
Continuus is a leading supplier of configuration management tools to the
telecom industry and other real-time segments like aerospace, automotive and
defense. Continuus' customer base includes companies like Nokia, Lucent,
NEC, BMW, Raytheon and Lockheed Martin.
With the acquisition of QSS in August this year, Telelogic opened up new opportunities in other segments for advanced software development than real-time. Continuus' solutions have successfully been used in a variety of advanced system development projects, including major wins in the business applications market. As a result, the acquisition provides a strengthened position within these new segments as well.
Complementary products
Telelogic develops and markets advanced software tools and components that
cover most phases of the development process: requirements, analysis,
design, implementation and testing.
One of the biggest challenges software developers face today, is managing rapid and constant change. Continuus develops and markets the Continuus CM Synergy, the leading task-based configuration management solution that delivers integrated configuration and change management functions that simplify the process of change. Continuus CM Synergy is designed to help development teams work faster and easier, bringing simplicity and efficiency to developers and managers alike. It accelerates the release management process, maximizes the efficiency of limited development resources that are always in demand, and brings together distributed development teams through Continuus Distributed Change Management (DCM).
The acquisition will make it possible to offer new and existing customers and partners a tightly integrated solution for configuration management, requirements management and software development tools for existing and emerging markets. The product offerings will provide a comprehensive and end-to-end solution for the software development process.
Increased U.S. presence
Based on this agreement, Telelogic, once again, more than doubles its U.S.
sales capacity. Continuus employs more than 170 people in the U.S. and
Canada, mainly involved in sales and professional services. The company also
has 83 employees in Europe, with sales and professional services companies
in UK, France and Germany, and 6 employees in Australia.
Synergy effects
Telelogic estimates that considerable synergy effects will arise, both
regarding revenue and costs. Examples of synergy effects are:
- Increased revenue from cross-selling of products and in geography
- Increased sales power by focusing on core business and core strengths
- Lower recruitment costs
- Lower overhead costs
Future strategy
Telelogic will continue to focus on the real-time market. Strengthened by
this acquisition, Telelogic can continue to actively build strategic
partnerships with new key customers in this segment. The acquisition also
creates increased opportunities in markets for advanced system development
outside the real-time industry. In these market segments, Telelogic will
lead with Continuus and DOORS and thereby create a platform for future
expansion with a robust combined offering.
Financial effects
Continuus' revenue for 1999 was $37.3 million. Telelogic anticipates the
consolidation of Continuus to be completed by December 1, 2000.
Telelogic's growth forecast of a 160% for year 2000 remains unchanged. The acquisition is expected to have a minor positive impact on Telelogic's full year results for 2000. The financing is being arranged by a leading investment bank. Telelogic will issue equity within three months that will dilute current shareholders by approximately 5% to fund the acquisition.