ATEC merges with Wareforce.
Stock Summary
• WRFC
• ATEC
ATEC Group Inc. and Wareforce.com Merge; Combined Entity to Have $300 Million In Revenue
May 4, 1999 11:32 AM EDT
HAUPPAUGE, N.Y.--(BUSINESS WIRE)--May 4, 1999--ATEC Group Inc. (Nasdaq: ATEC) Tuesday announced the company has signed a definitive agreement to merge with Wareforce.com Inc. (OTC BB:WFRC).
The deal joins Wareforce's leading position as a single-source provider of information technology systems and technical services as well as extensive e-commerce solutions, with ATEC's systems integration capabilities, software development, computer manufacturing and complementary vertical solutions.
Under the terms of the agreement, ATEC will issue .75 of a share of ATEC common stock for each share of Wareforce.com common stock outstanding.
The merger will be accounted for as a pooling of interests and is subject to certain conditions, including due diligence, accounting and regulatory approval and approval by shareholders. The merger is expected to be completed in the third quarter of 1999.
The transaction merges two regional companies, Wareforce on the West Coast and in the Midwest and ATEC on the East Coast, into one national powerhouse that broadens the line of services the combined companies can provide to clients.
"Wareforce has a fantastic customer base that is a natural for our NEXAR computer manufacturing division," said Surinder Rametra, chairman and chief executive officer, ATEC Group.
"With last year's revenues at almost $100 million, and this year's revenues anticipated to be almost $140 million, Wareforce is a perfect fit with ATEC. Plus with their strong e-commerce presence and our new ISP division, ATEC ONE, this merger makes us a real player in the fast-growing Internet business."
Wareforce brings to the merger an extensive customer list of Fortune 1000 and mid-sized companies, government agencies and higher education institutions, including TRW, Lockheed, Disney, Universal Studios, NBC and Southern California Edison.
In addition, Wareforce brings to the merger its long-standing relationships with major hardware and software manufacturers and distributors. The company holds numerous high-level technical service and engineering certifications with major hardware and software manufacturers including Cisco, Intel, 3COM, Fujitsu and Microsoft.
Wareforce is one of only 26 large account resellers for Microsoft (Nasdaq: MSFT) in the United States and holds an exclusive sales agent agreement for higher education with Apple Computer (Nasdaq: AAPL) in a five-state area including California, comprising more than one-third of the entire U.S. academic market.
Wareforce is an authorized reseller for 900 other software, hardware and peripherals manufacturers, representing a "virtual IT warehouse" of 140,000 different products.
"The move is a natural extension of our strategy to become the single-source solution of all aspects of information technology, e-commerce and telecommunications to our customers," said Orie Rechtman, chairman and CEO, Wareforce. "We expect that the combined purchasing power will not only improve product pricing, but will result in more effective national distribution for our customers."
Wareforce is leveraging its existing relationships with manufacturers, distributors and customers to launch uMember.com, of which Wareforce owns 70 percent.
uMember.com, a sales and auction Web site, provides free membership to a virtual community. Scheduled to go online in July, the site will serve potentially 3 million to 5 million users, a consumer market made up of employees from Wareforce's current customers. The number is expected to increase considerably as a result of the ATEC merger.
"We are very excited about this new distribution channel opportunity to transform the NEXAR computer brand into a nationally recognized name in a much shorter time line than previously anticipated through uMember," said Rametra.
The site also plans to provide consumer electronic products and appliances and travel and insurance services. In addition, the site expects to feature links to a range of financial, sports, home and auto financing Web sites. The company expects prices to be competitive with those of uBid (Nasdaq: UBID), Onsale (Nasdaq: ONSL) and other online suppliers.
The Web site is expected to be enhanced by a unique reverse-search-engine technology from The BOL (Bid On Line) Technology, which will seek out and gather prices for products and services based upon bids entered by the user. Wareforce signed a letter of intent to acquire approximately 20 percent of The BOL in March, subject to certain conditions.
Additionally, Wareforce owns two of only three companies in the United States authorized by the National Association of Counties and the U.S. Conference of Mayors to supply computer products to their member organizations.
These networks consist of more than 5,500 U.S. counties, additional municipalities and other governmental entities in all 50 states with a combined spending power of more than $275 million per year.
Wareforce's Technical Services business, where the company enjoys its highest gross margin, was significantly broadened through the recent acquisition of IMPRES Technology, and the purchase of the assets of Kennsco Inc., companies with substantial technical personnel and contracts throughout the United States.
It is expected that Wareforce's technical service customer base will expand further due to contracts acquired through the ATEC merger.
Other initiatives that have showcased Wareforce's e-commerce capabilities include a first-of-its-kind, Web-based procurement system for the County of Los Angeles.
The end-to-end system will enable county workers to locate, order, track, deploy and pay for computer hardware and software from Wareforce's catalog 24 hours a day, in real time. Due to the system's capability of being fully integrated with the customer's back-office system, Wareforce estimates that costs of the procurement process could be reduced by up to 80 percent.
Through its subsidiary Nexar Technologies, ATEC manufactures affordable desktop computers and servers which, due to a patented technology, can be upgraded more easily and at a lower cost than conventional systems, extending the computer's life and reducing total cost of ownership.
The companies believe that ATEC's manufacturing division expands marketing opportunities by providing a cost-effective line of computer products to existing customers in all sectors and can be marketed through the uMember auction site.
"We believe that our Nexar division will greatly enhance margins from PC sales currently generated by both ATEC and Wareforce," said Rametra.
ATEC also provides high-end graphics for entertainment, publishing, advertising, animation and multimedia markets through its Digital Arts division.
"We believe that the two companies fit together naturally," Rametra continued. "Each brings unique benefits to the table, which together work in synergy. We have manufacturing, software development, digital arts and telecommunications capabilities, which have been outside Wareforce's milieu.
"But because of its sizable customer base, technical service business and e-commerce initiatives, we believe Wareforce provides the marketing muscle we need to make those offerings even more successful."
Rechtman will serve as CEO of the combined corporation. Ashok "Tony" Rametra, current ATEC president, will continue as president of the combined company. Rechtman and current ATEC chairman Rametra will serve as co-chairmen.
About ATEC Group Inc.
Based in Hauppauge, ATEC Group is a leading systems integrator and provider of information technology products and services. Through its subsidiaries and divisions Logix Solutions, Nexar Technologies, ATEC One and Digital Arts, ATEC Group provides turnkey solutions for the computer needs of businesses, professionals, government agencies and educational institutions.
ATEC Group's offerings include Y2K solutions; computer hardware and software; connectivity devices; multimedia products; data transmission; graphic arts; and Internet and Intranet services.
The company has positioned itself for growth in telecommunications services, outsourcing of ITR professionals, e-commerce, ISP and offshore software development, to meet its clients' technological needs. ATEC Group is on the World Wide Web at www.atecgroup.com.
About Wareforce.com
Wareforce.com is a single-source provider of information technology and technical services for Fortune 1000, small and mid-sized companies, government agencies and educational institutions.
Through its ownership in IMPRES Technology, Kennsco, The BOL and uMember.com, the company believes its comprehensive technology offerings, together with its Internet-based, e-commerce purchasing solutions and auction site enable customers to reduce total cost of ownership while shortening delivery time and streamlining implementation processes. Wareforce is on the World Wide Web at www.wareforce.com.
This news release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Readers are cautioned to consider these risks and uncertainties and not to place undue reliance on forward-looking statements.
*T
Orie Rechtman
Chairman and CEO
Wareforce.com Inc.
Surinder Rametra
Chairman and CEO
ATEC Group Inc.
Invite you to participate in a conference call
announcing the ATEC-Wareforce merger
Wednesday, May 5, at 10:30 a.m. Pacific Daylight Time
(1:30 p.m. Eastern)
To participate, please call 800/967-7140
beginning at 10:15 a.m. PDT (1:15 p.m. EDT) on day of event
We also invite you to monitor the conference call live on the
World Wide Web at www.vcall.com.
(Please go to the Web site 15 minutes before the event to
register, download and install any necessary audio software.)
*T
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