(PR NEWSWIRE) Digital River and Tech Squared Announce Agreement for Digita
Digital River and Tech Squared Announce Agreement for Digital River to Acquire
Tech Squared Assets at a Discount
Exchange of Shares Will Reduce Digital River Shares Outstanding by 350,000
MINNEAPOLIS, July 11 /PRNewswire/ -- Digital River, Inc. (Nasdaq: DRIV)
today announced the execution of a definitive agreement for the acquisition of
the assets of Tech Squared Inc. (OTC Bulletin Board: TSQD) consisting
primarily of 3,000,000 shares of Digital River common stock in a tax-free
reorganization. Digital River will receive 3,000,000 shares of its own common
stock owned by Tech Squared and $1.2 million in cash, and in exchange will
issue 2,650,000 shares of Digital River common stock to Tech Squared. Tech
Squared intends to distribute the shares of Digital River common stock to Tech
Squared's shareholders after the closing of this share exchange and after
payment of Tech Squared's liabilities, as part of a plan of liquidation. All
of the operations of Tech Squared, including its catalog and distribution
businesses, are required to be sold or liquidated prior to the transaction
closing.
"This transaction represents a win-win for all parties involved," said
Perry Steiner, president of Digital River. "Digital River is buying back
3,000,000 shares of stock and receiving $1.2 million in cash in exchange for
the issuance of 2,650,000 shares of stock. Our shareholders will all share in
the benefits of reducing our shares outstanding by 350,000 shares through this
transaction. The Tech Squared shareholders will also benefit by becoming
direct shareholders of Digital River, thereby eliminating the inefficiencies
associated with the indirect ownership structure."
"Tech Squared's investment in Digital River is worth in excess of
$93 million based on the valuation of this transaction at Friday's closing
price of Digital River's common stock," said Chuck Reese, CEO and president of
Tech Squared. Tech Squared today exercised, on a cashless basis, its option
to acquire 3,000,000 shares of Digital River common stock from Joel Ronning.
Reese continued, "We are pleased that our shareholders will now have a more
effective means to realize the benefit of this investment by being direct
owners of Digital River stock."
The transaction is subject to approval by the shareholders of Tech
Squared, as well as other pre-closing conditions, including the sale or
liquidation of the operations of Tech Squared and receipt of customary
opinions of counsel and tax opinions. Tech Squared is currently pursuing
alternatives regarding the disposition of its operating business.
Digital River and Tech Squared also have certain rights to terminate the
transaction under certain circumstances. After closing of the transaction,
Tech Squared will begin proceedings to liquidate under a plan of liquidation.
Tech Squared will establish a liquidating trust, currently expected to be a
minimum of $7.2 million, to cover any potential liabilities of Tech Squared.
In addition, certain significant shareholders of Tech Squared, representing
approximately 44 percent of the ownership of the company, have agreed to a
lock-up on the shares of Digital River common stock that they will receive in
the transaction, and have also agreed to vote in favor of the transaction.
The transaction is expected to close in the fourth quarter of 1999.
SG Cowens Securities Corporation acted as financial advisor to the special
committee of the Tech Squared board of directors, and Broadview International
LLC acted as financial advisor to the special committee of the Digital River
board of directors.
Digital River and Tech Squared each expect to file a Form 8-K shortly that
will include the definitive agreement between the parties.
Digital River also announced that Chuck Reese has resigned from the
Digital River board of directors.
About Digital River
Digital River, Inc., based in Minneapolis, is the largest online source of
software and a leading outsource provider of Web-based commerce solutions.
The company provides more than 6,000 software publishers and online retailers
with its proprietary technology for Internet delivery of more than 100,000
digital products, including 30,000 software products and applications. For
more information, visit Digital River's Web site at
digitalriver.com .
About Tech Squared
Tech Squared Inc., also based in Minneapolis, is a national marketer and
distributor of mid- to high-end microcomputer hardware, software and
peripherals primarily to businesses in the desktop publishing, graphic arts
and pre-press industries, as well as an emerging customer base of Internet and
intranet site developers.
* Except for the historical information contained herein, this press
release contains forward-looking statements, including statements containing
the words, "believes," "anticipates," "expects" and similar words. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others: the Company's
limited operating history and variability of operating results; market
acceptance of electronic software delivery; the Company's ability to maintain
relationships with software publishers and online retailers; competition in
the electronic commerce market; and other risk factors referenced in the
Company's public filings with the Securities and Exchange Commission.
Contact:
Digital River, Inc.
Bob Strawman
Chief Financial Officer
612.253.1234
bstrawma@digitalriver.com
Tech Squared Inc.
Jeffrey F. Martin
Chief Financial Officer
612.832.5622
Swenson NHB Investor Relations
Tom Langenfeld
612.371.0000
langenfeld@nhb.pr.com
SOURCE Digital River, Inc.
-0- 07/11/99
/CONTACT: Bob Strawman, Chief Financial Officer of Digital River,
612-253-1234, or bstrawma@digitalriver.com; or Jeffrey F. Martin, Chief
Financial Officer of Tech Squared, 612-832-5622; or Tom Langenfeld of Swenson
NHB Investor Relations, 612-371-0000, or langenfeld@nhb.pr.com, for Digital
River/
/Web site: digitalriver.com
(DRIV TSQD)
CO: Digital River, Inc.; Tech Squared, Inc.
ST: Minnesota
IN: CPR MLM
SU: TNM PER
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