Synchronica to acquire instant messaging business and raise up to £4.8m

Synchronica (AIM: SYNC) has agreed the acquisition of IMPS instant messaging business Colibria AS in a structured deal totalling €750,000 in cash and approximately 128 million shares. Additionally, the company announced that it will conduct a placing and an equity-swap placing, raising up to £4.8 million.

“Colibria's proven, carrier-grade mobile IM technology and emerging markets-oriented customer base complement Synchronica's focus on open standards-based messaging solutions for mobile operators in developing economies”, Synchronica stated.

The company intends to incorporate Colibria's IMPS technology into the Mobile Gateway product and pre-install it on the MessagePhone low-cost device. The acquisition includes a number of significant benefits including the transfer of 13 carrier contracts, of which two large carrier groups have an addressable market of more than 320 million subscribers. The deal also sees the transfer of Colibria's related reseller agreements with Nokia Siemens Networks and Acision.

In terms of assets and operations, Synchronica will transfer certain Colibria employees, ensuring a continuous development of the products and support for transferred contracts. The company also gains Colibria's Instant Messaging and Presence Service (IMPS), Colibria's Windows Live Messenger Gateway, Colibria's Social Network Gateway and its dedicated SaaS (Software as a Service) App Centre.

In a note to investors, London-based stockbroker FinnCap highlighted that Synchronica is now placed to offer a complete next-generation messaging solution and its Mobile Gateway product will be enhanced with the proven and scalable IMPS instant messaging technology.
Company researcher, Equity Development (ED) described the acquisition as “the right deal, at the right time”, and said that the acquired business is very complementary to Synchronica‟s mobile email business, as both technologies are based on industry standards and each business leveraging in-built handset clients.

Under the terms of the cash and stock deal, Synchronica will pay €750,000 in cash and 54 million shares on the closing date - which is anticipated to be 21 April 2010. A further 72 million shares will be issued to the vendor six months after the closing date.

According to Synchronica, it plans to use the acquisition as a springboard for cross-selling and up-selling opportunities as it expands its market share in the rapidly expanding emerging markets.

Synchronica announced two separate equity-based fundraisings, firstly the company intends to issue 111.6 million shares placed at a price of 2.5p, raising gross proceeds of £2.8 million. The placing shares will represent approximately 13.2% of the enlarged share capital and they are expected to be admitted to trading on London’s AIM market on 22 April 2010.

Separately, the company has entered into a contract with an institutional investor, whereby Synchronica will issue 80 million new shares to an escrow agent and similarly the investor will lodge £2 million in government bonds into an escrow account.

Over a two year period the escrow agent will convert and release the funds to Synchronica, on a monthly basis. The conversion into capital will be calculated in relation to a reference price of 3.3333p per share and an average mid market share price (linked to the preceding month).

Each month for the next two years the escrow agent will release to Synchronica a sum calculated by reference to the average mid market share price on the five business days at the end of the preceding month.

The equity-swap shares are expected to be admitted on 7 April 2010.

http://www.proactiveinvestors.co.uk/companies/news/15102/synchronica-to-acquire-instant-messaging-business-and-raise-up-to-48m-15102.html