NaviSite, Inc. (www.navisite.com)
(NASDAQ: NAVI), a leading provider of applications management and
managed hosting solutions, has entered into a definitive merger
agreement to acquire privately-owned applications management service
provider netASPx for $40.5 million, consisting of approximately $15.5
million in cash and $25.0 million in Convertible Preferred Stock. The
transaction is expected to close by the end of the business day today.
Headquartered in Herndon, VA, netASPx is a leading provider of
applications management services with a focus on Lawson Enterprise
Resource Planning (ERP) and Kronos Workforce Management and Business
Intelligence Applications. In addition, netASPx maintains the
infrastructure necessary to support these applications within its 18,000
square foot data center in Minneapolis.
The acquisition brings Lawson and Kronos solutions to NaviSite and
broadens its existing portfolio of applications management expertise,
which already includes the Oracle product family (Oracle E-Business,
PeopleSoft, Siebel, JD Edwards and Fusion), Microsoft Dynamics, and
Exchange. By acquiring netASPx, NaviSite also expands its customer base,
creating new up-sell and cross-sell opportunities for both its current
clients and those of netASPx. Finally, the addition of the netASPx data
center in Minneapolis bolsters NaviSite’s
presence in the Midwest with significant available capacity.
"Priced at better than five times expected
synergistic annual EBITDA and two times the recorded application
management revenues, we are pleased with the addition of this fine
company, its talented professionals and capabilities to our portfolio.
NetASPx will contribute Lawson and Kronos expertise and customers that
will significantly enhance our market position as a leading provider of
application management services. The netASPx monthly ARPU (Average
Revenue Per User) of approximately $19,000 and revenue per square foot
of over $8,000 illustrate the value being provided to their customers,"
said Arthur Becker, Chief Executive Officer of NaviSite. "We
also expect that the current NaviSite portfolio of application and
hosting related competencies will offer new service opportunities to
these new customers.”
The acquisition was financed through a $20 million addition to NaviSite’s
current Senior Term Facility and the issuance of $25.0 million of Series
A Convertible Preferred Stock. The Senior Term loan interest rate has
been reset to LIBOR plus 4%. The Convertible Preferred is redeemable,
has an 8% PIK (non cash) coupon that increases to 12% on the 18 month
anniversary of the closing date and is convertible at the price of $8.00
per share 18 months from the closing date.
The company plans to update its Fiscal 2008 guidance when it reports
fourth quarter and full year 2007 results on September 25, 2007.
About netASPx
Headquartered in Herndon, Virginia, netASPx is a leading provider of
Managed Application Services, or "MAS”
and focuses on Enterprise Resource Planning (Lawson) and Work Force
Management (Kronos) solutions that automate critical business functions
for mid-market companies. The company maintains the facilities and
infrastructure necessary to support customer back-office applications,
including Finance, Human Resources, Accounting, Payroll and Supply Chain
Management, using primarily Kronos and Lawson Software. For more
information, please visit www.netaspx.com About NaviSite
NaviSite is a leading provider of applications management and managed
hosting solutions. Customers depend on NaviSite for application
development, implementation and management on its web infrastructure
platforms in 15 state-of-the art data centers supported by more than 600
professionals. NaviSite provides customized and scalable solutions
leveraging its broad range of application development capabilities,
packaged software implementation expertise, deep portfolio of best in
class technologies and a full suite of web-hosting and internet
infrastructure options. For more information, please visit www.navisite.com This release contains forward-looking statements, which address a
variety of subjects including the expected benefits of the acquisition,
future selling opportunities, the enhancement of NaviSite’s
market position as a leading provider of applications management
services, expected synergistic EBITDA, success and performance of
NaviSite’s product and service offerings, and
NaviSite’s strategic business plans for
growing its customer base and increasing sales. All statements other
than statements of historical fact, including without limitation those
with respect to NaviSite’s goals, plans and
strategies set forth herein, are forward-looking statements. The
following important factors and uncertainties, among others, could cause
actual results to differ materially from those described in these
forward-looking statements: NaviSite’s
success, including its ability to improve its gross profit, improve its
cash flows, expand its operations and revenue, and reach and sustain
profitability, depends on its ability to execute on its business
strategy and the continued and increased demand for and market
acceptance of its products and services; the possibility that financial
forecasts of the Company may not be achieved, including those as to
expected EBITDA and revenue, or an inability to realize expected
synergies or take advantage of selling opportunities, or make expected
future investments in NaviSite' businesses, or NaviSite may be unable to
raise the necessary funds to meet its payment obligations to CIBC World
Markets Corp. and other creditors; NaviSite’s
management may face strain on managerial and operational resources as
they try to oversee the expanded operations; NaviSite may not be able to
expand its operations in accordance with its business strategy; NaviSite
may experience difficulties integrating technologies, operations and
personnel in accordance with its business strategy; NaviSite’s
acquisition of companies and businesses may not produce expected cost
savings, operational efficiencies, revenue or profitability, and
NaviSite may have difficulty integrating its recent acquisitions of
netASPx, Jupiter Hosting and Alabanza, or the integration of these
companies may be more costly than NaviSite currently expects; NaviSite’s
products, technologies, and resources may not successfully operate with
the technology, resources and/or applications of third parties; and
increased competition and technological changes in the markets in which
NaviSite’s competes. For a detailed
discussion of cautionary statements that may affect NaviSite’s
future results of operations and financial results, please refer to
NaviSite’s filings with the Securities and
Exchange Commission, including NaviSite’s
most recent Annual Report on Form 10-K and its Quarterly Reports on Form
10-Q. Forward-looking statements represent management’s
current expectations and are inherently uncertain. We do not undertake
any obligation to update forward-looking statements made by us. All
logos, company and product names may be trademarks or registered
trademarks of their respective owners.
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