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Gold/Mining/Energy : BCE Emergis - global e-commerce -- Ignore unavailable to you. Want to Upgrade?

To: sPD who wrote (129)	6/5/1998 10:13:00 PM
From: sPD	Respond to of 1341

Today's FP article on the deal - more perspectives. MPACT's Brian Edwards will become the CEO of the "new" Mpact. The Financial Post, Friday, June 5, 1998 by Kathryn Leger Montreal Bureau Chief Bell's MPACT deal aims to boost e-commerce effort BCE Inc. confirmed yesterday Bell Canada will take control of electronic commerce software and network services provider MPACT Immedia Corp. in a merger designed to boost Internet offerings for companies. Under the deal unveiled yesterday after two weeks of market speculation, Bell Canada will merge the electronic business solutions unit of its Bell Emergis division with MPACT and inject $54 million in cash. In return it will get a 65% controlling stake, created by issuing 48 million new MPACT shares. Base don yesterday's closing price of $12.25 for MPACT stock (IFM/TSE), down $1, Bell's shares would be worth $565 million. But executives from both companies said stock market valuation had nothing to do with the new ownership formula. The value being place on the Emergis unit is about $400 million, not including the cash infusion, they said. "We didn't do this deal based on share price," said MPACT chief executive Brian Edwards, who will also be chief executive of the new company. "We looked at relative value from a business point of view. "With this transaction, we will be come one of the largest electronic commerce companies in Canada and around the world." Right now the merged company would have had annual revenue of $75 million for the 12 months ended yesterday, with about $55 million coming from Emergis. But electronic commerce is growing at the rate of 50% a year and is expected to reach 100% in the next few years. The combination will enable them to produce an expanded suite of electronic commerce services, Edwards said. Jim Tobin, executive vice-president of Bell Canada and president of Bell Emergis, who will be chairman of the combined group, said the deal is designed to "unlock value" at MPACT and the fast growing Emergis unit, whose revenues were described as having tripled in the past 12 months. "If you're going to step out, you have to have a public market vehicle to pursue growth," said Tobin, adding acquisitions are planned in the fragmented North American market. If the deal closes as planned around Aug. 31 and shareholder and regulatory approvals are obtained, the merged entity would have working capital of about $100 million, including cash of $70 million to $75 million. Despite the huge market potential, the immediate profit picture was not clear. "Profitability will depend on how fast we want to grow," said Tobin, adding the new company will be operated with a "Bottom-line" focus like other publicly traded competitors in electronic commerce. MPACT was expected to break even or make a small profit during the current fiscal year, which ends Aug. 31. In the six months ended Feb.28, it had profit of $171,898 (1› a share) on revenue of $12.2 million. Shareholders who will immediately make a huge gain include Toronto financier Ned Goodman, now the controlling shareholder of Peelbrooke Capital Inc., formerly Marleau Lemire Inc. Money-losing Peelbrooke acquired 1.2 million common shares when the Marleau Lemire brokerage unit did underwriting for MPACT. Goodman also owns about 17% of MPACT shares through Dundee Bancorp. Inc.