OTI Signs Strategic Acquisition

Tuesday 21 September 2004 17:27 CET | News

On Track Innovations (OTI) has entered into two agreements in furtherance of its previously-announced strategic focus on the vertical markets of Payment, Petroleum and Smart ID solutions.

Both agreements are subject to certain closing conditions. These transactions will strengthen OTIs position in these markets, enabling the Company to provide end-to-end solutions with local technical support and maintain its focus on higher margin products in the growing European emerging markets. The transactions are expected to improve the Companys long-term profitability with some decrease in revenues in the short term by adding a profitable company with higher margins and recurring revenue businesses and by selling an existing division with high operating expenses due to a mix of revenues originating from a large number of limited size projects and products with relatively low margins. The first agreement contemplates OTIs purchase of ASEC Spolka Akcyjna (ASEC) from Nextel Spolka Akcyjna (Nextel S.A.), headquartered in Krakow, Poland. ASEC is a software company that provides complementary solutions to OTI in the form of software and back office systems for mass transit ticketing and Payment solutions. The acquisition of ASEC, a profitable company, which is already working with OTI on various programs in Poland, will enable OTI to provide the required local support service for programs in the emerging European markets and will better position OTI to also provide complete solutions in these markets for its Petroleum and SmartID solutions. The second agreement provides for the sale of OTIs wholly-owned German subsidiary, InterCard Kartensysteme GmbH. This subsidiary is engaged in the sale and support of closed campus systems, which is considered to be a highly competitive market with relatively low margins and high operating expenses. OTI will retain its profitable InterCard Systemelectronic GmbH subsidiary, which provides OEM and electronics manufacturing services. In exchange for all of the outstanding shares of the capital stock of ASEC, OTI will issue to Nextel S.A. OTI ordinary shares having an aggregate market value of between $1.6 million and $1.95 million. The exact amount will depend upon the level of EBITDA achieved by ASEC during 2004 and 2005. OTI has undertaken to register the shares it will issue to Nextel S.A. under the U.S. Securities Act of 1933. The proceeds payable to OTI for the outstanding shares of InterCard Kartensysteme are expected to be approximately $2.5 million.

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Categories: Payments & Commerce | Cards
Countries: World
This article is part of category

Payments & Commerce