Tumbleweed buys Valicert for $14.3 M in stock

By siliconindia   |   Thursday, 06 March 2003, 20:30 IST
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Tumbleweed Communications Corp. (Nasdaq:TMWD) and Valicert Inc. (Nasdaq:VLCT) Thursday announced the signing of a definitive merger agreement to acquire all outstanding shares of Valicert in a stock-for-stock transaction.

REDWOOD CITY: As approved by the Boards of Directors of each company, the merger calls for each share of Valicert common stock to be exchanged for 0.385 shares of Tumbleweed common stock, or approximately 9.8 million shares, which will represent approximately 24% of Tumbleweed's outstanding stock post merger. The market value of the transaction is approximately $14.3 million. Tumbleweed will also expand its current Board of Directors to add a Valicert-selected Director. The purchase transaction is expected to close in the second or third quarter, depending upon regulatory review, and to be accretive to pro forma earnings by the end of Tumbleweed's fiscal year. "Both Tumbleweed and Valicert deliver solutions that allow businesses and government agencies to automate and move their business processes online," said Jeff Smith, Chairman and CEO of Tumbleweed Communications. "Our companies have attained deep domain expertise in adjacent and complementary application areas: Tumbleweed is a leading provider of secure messaging; Valicert is a leading provider of secure data transfer and certificate validation. We expect that the combination will be formidable force in the marketplace, and will expand our total available market without dramatically increasing the cost of sales," Smith continued. "We are excited to join forces with Tumbleweed," said John Vigouroux, President and Chief Executive Officer of Valicert. "Having established ourselves as the premier provider of secure data transfer and certificate validation, merging with Tumbleweed will bring an even more robust set of solutions to our mutual customers. Our complementary offerings serve a similar customer set in the Finance, Healthcare, and Government sectors. Our customers, partners, employees and shareholders will all benefit from the experienced management team that Tumbleweed has assembled, and the stability that will come from the stronger financial position we expect from our combined company. We remain committed to supporting our customers and partners around the world. We believe that by merging with Tumbleweed, we can achieve the critical mass that accrues to the best-of-breed suppliers of mission-critical enterprise solutions," Vigouroux added. After the merger is concluded, John Vigouroux will join Tumbleweed's executive staff as Senior Vice President and General Manager of the Valicert division of Tumbleweed. Vigouroux will report to Doug Sabella, President and Chief Operating Officer of Tumbleweed Communications. Current Valicert employees will continue to report to Vigouroux in the new division. "We expect to achieve operating profitability on a combined basis in the fourth quarter of this year," said Doug Sabella, President and Chief Operating Officer of Tumbleweed Communications. "We see strong synergies between our products, markets, customers and organizations. The larger corporate size and stronger finances of the combined company will offer the increased market share, product breadth and financial stability that customers are seeking. The combined revenue of both companies will complement anticipated synergies on the cost side, such as improved sales efficiencies, reduced public-company reporting costs, and additional potential savings from the elimination of redundant infrastructure, including leased office space. Finally, since our headquarters are only a few miles apart, consolidation is anticipated to be quick and frugal," Sabella concluded.