Today,
BluePhoenix Solutions announced its entry into a definitive merger agreement
with Sophisticated Business Systems. One of BluePhoenix Solutions’ wholly owned
subsidiaries will be merging with Sophisticated Business Systems to form a new
company branded as “Modern Systems”.
The
agreement is an all-stock transaction, where BluePhoenix will issue
approximately 6.2 million shares to Sophisticated Business Systems shareholders
and in turn receive 100 percent of Sophisticated Business Systems’ shares. On a
pro-forma basis, the revenue for the combined entities in 2013 would have been
$14.3 million. Sophisticated Business Systems’ Operating Loss in 2013 was
nearly break-even at ($264K). Operational efficiencies and savings are
anticipated to be realized through the merger as the new combined entity
continues to progress towards break-even cash flow.
“We’ll
empower customers to make the best choice for where they are in the legacy
lifecycle,” BluePhoenix President and CEO, and incoming Modern Systems CEO Matt
Bell said. “From incremental solutions to broad-based portfolio modernization,
we’ll leverage our technology and partner ecosystem to deliver modernized
applications in a modern way- scalable, cost-effective, and fully managed.”
Modern
Systems will focus on deliver the widest range of solutions for transitioning
legacy systems to modern platforms. It is anticipated Modern Systems will serve
over 200 enterprise customers in the insurance, financial, and retail
industries from offices in North America, Western Europe, Eastern Europe, and
the Middle East. Furthermore, the newly-formed company will provide services
for government entities in the United States, United Kingdom, Canada,
Singapore, and the Netherlands.
“For the
last 15 years, BluePhoenix and Sophisticated Business Systems have been at the
forefront of innovation in our niche. This merger accelerates the pace of that
innovation,” said Sophisticated Business Systems President and CEO, and
incoming Modern Systems Board Member Scott Miller. “Combining our teams and new
capabilities will make us more appealing to both customers and partners. With
options ranging from rehosting to data replication to automated conversion, we
have the most diverse range of services on the market, supported by the most experienced
modernization resources in the world.”
The merger
agreement between both companies is subject to typical customary conditions,
including shareholder approval and regulatory review. It is expected to close
Q4 2014.
For more
information, visit: www.bphx.com
