Redknee to acquire insolvent Orga Systems’ real-time monetisation assets and most staff for €38m in cash
Toronto, Canada. June 23, 2015 – Redknee Solutions Inc. (TSX: RKN), a leading provider of real-time monetisation and subscriber management software, has reached a definitive agreement to acquire privately held Orga Systems for a total cash consideration of €38 million.
Redknee says that Orga’s technology and expertise will enhance the fast-growing Canadian firm’s real-time monetisation and subscriber management platform for communication service providers (CSPs) and the Internet of Things (IoT). (Also see: Redknee acquires the Business Support Systems division of Nokia Siemens Networks.)
Orga Systems provides monetisation solutions to more than 45 customers in the communications, automotive, energy, and railway industries. (Also see: Orga Systems applies for insolvency as German court appoints administrator to save business and 650 jobs.)
Many of Orga’s skilled team of more than 500 employees across Europe, Middle East, and Africa (EMEA), the Americas, and Asia Pacific will join Redknee, further broadening its global reach, although some senior staff are not expected to make the move. Orga Systems’ 2014 revenue was approximately €60 million, with recurring revenue of greater than 45%. However, Orga Systems reported a net loss of €32.3 million on its balance sheet in 2013. The acquisition will be funded through Redknee’s available cash on hand.
According to Redknee, the acquisition of Orga Systems marks a milestone in the execution of the company’s long-term growth strategy by increasing Redknee’s market share with customers across telecom and non-telecom industries. Orga’s product suite addresses the need for innovative monetisation solutions for telco and non-telco customers. When integrated with Redknee’s real-time charging, policy, billing and customer care platform, the combined product suite will enable Redknee to accelerate and expand its reach into the growing market for IoT monetisation.
“We are excited to add and welcome Orga Systems employees, customers, partners and software portfolio to the Redknee family,” says Lucas Skoczkowski, CEO of Redknee. “This acquisition combines two of the leading real-time monetisation software companies. We are committed to ensuring the continued success of Orga’s customers, by delivering to them our market-leading technology and services capabilities.”
Mr. Skoczkowski adds: “As we move forward with the integration, we will leverage our combined product portfolio to expand and enhance our best-of-suite customer focused solutions. We will continue to focus on delivering innovative software solutions. We expect that this acquisition will be accretive and will advance Redknee’s strategy of being the largest independent provider of choice for real-time monetisation and subscriber management software. Moreover, we expect that this will help us accelerate Redknee’s expansion into new vertical markets. I look forward to updating the market on the acquisition over the coming months.”
Wolfgang Kroh, CEO of Orga Systems adds: “We are convinced that by joining forces with Redknee we have laid the foundation for future success and growth to the benefit of our customers, partners and employees.”
Since 1993, Orga’s portfolio of real-time software products and consulting services has been designed for living in a connected world. Telecommunications providers, energy suppliers, railway companies and car manufacturers such as BMW have relied on Orga Systems. Long term customers include America Moviles, Astelit, Avea, BMW, Telecom Italia Group and Meralco Philippines.
Commenting on the news VanillaPlus editor, George Malim says: “It’s surprising to see the value placed on Orga Systems by Redknee, which may lie partly in Orga’s outstanding debt. It’s quite a lot to pay for a bankrupt BSS company. Redknee is likely to have been attracted to the automotive and other vertical industry deals, and to the customer base in Europe and Latin America.”
The acquisition is anticipated to close in the fourth quarter of fiscal 2015. The acquisition is subject to final agreement on customary terms and conditions. The acquisition would be a significant acquisition for Redknee under applicable securities laws and, accordingly, Redknee will file a Business Acquisition Report within 75 days following the closing of the acquisition.
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