Kim, article that mentions FORS that was published yesterday.
Formula Restructures: Goldstein Organizes, Shamrock Finances
By Zvika Rubins
Formula general manager Dan Goldstein, who holds a controlling interest in the group, has been reorganizing during the past year. Anyone following the reorganization plan was not surprised by the Applicom subsidiary's announcement that it intends making a tender offer for FCT shares. Applicom holds an 80% stake in FCT.
Furthermore, it appears that the financial liquidity necessary for the reorganization is being provided by Disney's Shamrock investment fund, together with Discount and FIMI. Shamrock and Formula signed an agreement in July 1999, under which Shamrock committed to invest up to $25 million in Formula's subsidiaries. The agreement gave Shamrock an option to convert shares acquired in a subsidiary to shares in the parent company 27 months after any investment.
In response to a question by "Globes", Goldstein said that "Shamrock is a comfortable partner for us". Comfort is relative; in this case, where a company like Shamrock is financing the group's reorganization, "comfort" is a modest way of putting it. Formula signed agreements with Discount and FIMI similar to the one with Shamrock.
Goldstein does not rule out the idea: "We do have $160 million in cash, but we're keeping it for bargains in the market. In the interest of the reorganization, we prefer assistance from an external source".
Goldstein made clear several months ago his intention to change the face of Formula, reducing the company's holdings to five public companies, each with sales of over $50 million. Goldstein named three companies that will continue to be publicly owned: Magic, Applicom, and ForSoft. This being so, the fate of FCT, with a value of barely $20 million (having tripled its value since the beginning of the year), is sealed, and it is only a matter of time until it is disposed of. .
At the end of November, Shamrock, Discount, and the FIMI fund acquired 13.9% of Applicom for $7.4 million. The acquisition was part of Formula's agreement with the other three parties at interest. This week, with a full cash-box, Applicom set out on a shopping spree, proposing to fill its basket with the 20% of FCT's shares held by the public, which are estimated at a value of $4 million.
As part of the tender offer for FCT's shares, an offeree taking up the offer will receive one Applicom share for every two FCT shares, plus NIS 25. This means that the price of one FCT share, as grossed up in the offer, is NIS 31 as of this morning (Applicom's share price this morning was NIS 37). This price is 12% higher than this morning's opening price of FCT on the stock exchange.
Applicom, in which Formula has a 64% share, and which Goldstein declared that he does not intend to delist, continues to reinforce its status as one of the largest software companies in Israel. Six months ago, it swallowed the activity of the unprofitable US Internet company Net Quotient, better known as Q, for $3.3 million. This acquisition, which involved an additional investment of $2 million in working capital, emptied Applicom's coffers.
A month later, in mid-May 1999, the company acquired the shares of FCT from Formula in a share and cash transaction, which included payment of NIS 11 million and the transfer of 850,000 of its shares to Formula. Asked by "Globes" whether he intended delisting FCT, Goldstein said, "At this stage, we do not intend to delist FCT on the way to its complete assimilation within Applicom". That stage has apparently passed, and the Formula group is acting energetically to delist FCT . (This is apparently the reason why the company's shares have climbed over 200% since the beginning of the year).
FCT specializes in software products for customer relations management (CRM) and in infrastructure products for organizational computer systems. Applicom, its old/new parent company, specializes in providing software solutions for the database, data warehousing, and command and control systems markets.
Applicom general manager Eliezer Oren emphasizes Applicom's general vision, and explains the logic behind the merger and final absorption of FCT into the company. "We us some of the solutions Applicom tailors for its customers in FCT products constituting complementary products, so it is very logical to merge FCT into Applicom".
Applicom also engages in software development, provision of software and customer services and professional Internet services. Its relatively new Internet activity, which includes mostly e-commerce and adapting commercial company systems to the Internet, is mainly concentrated in US company Q. In this context, it should be mentioned that Q opened a new branch in London a month ago, on top of its four existing US branches in New York, Chicago, Boston, and Austin.
Applicom intends to turn Q into its overseas long arm. In 1998, Q's sales amounted to only $6 million, but this volume was achieved due to exclusive consulting and development for companies of "Fortune 500" size. The company sees its new office in London as its bridgehead into Europe.
Published by Israel's Business Arena on December 7, 1999
link:http://www.globes.co.il/cgi-bin/Serve_Arena/pages/English/1.3.1.1.3
BRea |
