724 Solutions to Acquire Tantau Software
Combination Creates Premier Global Provider of Infrastructure and Application Software For Financial Institutions, Enabling Secure Mobile Transactions
Toronto, Canada and Austin, Texas, (November 29, 2000)- 724 Solutions Inc. (NASDAQ: SVNX and TSE: SVN), a leading provider of Internet infrastructure software enabling clients to offer secure online banking, brokerage and e-commerce services across Internet-enabled wireless devices, and TANTAU Software, Inc., a provider of software platforms that enable enterprises to conduct high-volume, secure, mobile transactions, jointly announced today that they have entered into a definitive agreement under which 724 Solutions will acquire TANTAU in an all-stock transaction currently valued at approximately $375 million on a fully diluted basis, based on 724 Solutions' closing stock price on November 28, 2000.
Under the terms of the acquisition agreement, unanimously approved by the Boards of Directors of both companies, 724 Solutions will issue 19 million shares, including shares issuable upon the exercise of TANTAU options that will be assumed by 724 Solutions. Upon completion of the transaction, 724 Solutions shareholders will own approximately 68 percent of the combined company and TANTAU shareholders will own approximately 32 percent, on a fully diluted basis. The transaction will be accounted for as a purchase and is expected to close during the first quarter of 2001.
Founded by a core team from Tandem's High Performance Research Center with unique experience in building high-scale mission critical transaction based systems, TANTAU Software is a privately held company with a leading integrated platform enabling enterprises to conduct high volume, secure mobile transactions. TANTAU's current customers are primarily blue chip financial services institutions, including Chase Manhattan Bank, Commerzbank, Credit Suisse Group, MeritaNordbanken, the New Zealand Stock Exchange, Rabobank International, and SE Banken. Headquartered in Austin, Texas, the company has a total of 175 employees in sales and development offices throughout Europe, the United States, Australia, and Japan, with significant engineering operations in Germany, Switzerland and Finland. Investors in TANTAU include Austin Ventures, Compaq, Chase Capital Partners and General Motors Investment Management.
Through this acquisition, 724 Solutions expects to enhance its position as a premier worldwide provider of highly scalable infrastructure and application software enabling secure mobile transactions through Internet-enabled wireless and consumer electronics devices. TANTAU's established presence in Europe significantly complements 724 Solutions' strong customer base in North America, which includes BBVA Bancomer, Bank of America, Bank of Montreal, ClarityBank.com, Citigroup, Hanvit Bank, Key Corp, Wachovia and Wells Fargo. The companies' combined customers serve approximately 272 million consumers worldwide.
Greg Wolfond, founder, current chairman and chief executive officer of 724 Solutions, will continue to serve as chairman of the company. TANTAU co-founder, president and chief executive officer John Sims will serve as chief executive officer of 724 Solutions. Karen Basian, chief financial officer of 724 Solutions, will continue in her current position. As a part of the transaction, four directors will be added to 724 Solutions' Board from TANTAU, including John Sims. 724 Solutions will maintain executive offices in Toronto, Canada and Austin, Texas.
724 Solutions and TANTAU are seeking to substantially improve their combined operating performance and add additional customers worldwide. Combined, the companies will have cash and equivalents in excess of $200 million, providing a strong platform for further growth.
"By bringing together these two highly complementary companies we expect to significantly accelerate 724 Solutions' business plan and path to profitability and position the company to drive and capitalize more rapidly on the increasing demand among financial institutions, merchants and other enterprises for scalable wireless infrastructure," said Wolfond. "Together, we have a strong, global footprint, a high-caliber, complementary customer base, top industry talent, and the ability to offer superior solutions across a single, secure platform. We expect to play a significant role in the growth of mobile transactions - which analysts expect to grow to approximately $21 billion over the next four years in the United States alone, compared to an estimated $29 million in 2000."
"This combination brings together two leading providers of applications and infrastructure for secure mobile transactions into one strongly positioned global company poised to monetize the mobile Internet," said Sims. "With very little overlap between our companies, we expect a seamless integration, and we expect to begin capitalizing quickly on our combined strengths. Together, our customer base clearly distinguishes us as the leading provider of end-to-end wireless transaction solutions in the financial services sector - a major driver behind the adoption of wireless Internet technology - and provides tremendous opportunities as we continue to build aggressively on our position in this sector. We plan to leverage the combined size and scale of the businesses and our strategic OEM and reseller relationships to drive the growth of mobile transactions into additional vertical applications."
Sims has 23 years of experience in the telecommunications and software industries. Prior to founding TANTAU in February of 1999, he served as chief operating officer of SCC Communications Corp., a provider of advanced telecommunications, where he was instrumental in managing the company's growth, resulting in a successful initial public offering in mid-1998. Before joining SCC in 1995, Sims spent ten years with Tandem Computers, Inc. where he held various executive level positions including vice president and general manager of Tandem's worldwide telecommunications business. He served on the board of directors of various Tandem subsidiaries and joint venture companies including software company joint ventures in Singapore and China.
Commenting on the appointment of Sims as CEO of 724 Solutions, Wolfond said, "John brings a tremendous track record for driving growth and generating profitability in the software solutions business. He is clearly the ideal choice to lead our team as we take our combined company to the next level."
The transaction is subject to customary closing conditions including compliance with the Hart-Scott Rodino Antitrust Improvements Act, and the registration of the new shares to be issued by 724 Solutions at the closing. The parties expect that approximately 17 million shares of the 19 million total shares subject to the merger will be issued at the closing. The remainder will be subject to options assumed by 724 Solutions.
724 Solutions will host a conference call to discuss the acquisition of TANTAU Software today at 4:30 p.m. (EST). The conference call will be accessible via the World Wide Web at http://www.724.com.
About TANTAU
TANTAU Software Inc. is a global provider of software and professional services that enable enterprises to conduct high-volume, secure, mobile ecommerce transactions while maintaining direct access to their customer. Headquartered in Austin, Texas, TANTAU is a global company with development and sales offices around the world, including Australia, Finland, Germany, Japan, the Netherlands, Switzerland, the United Kingdom and the United States. More information can be found on TANTAU's Web site at www.tantau.com.
About 724 Solutions Inc.
724 Solutions is the premier Internet infrastructure solutions provider to financial institutions, enabling them to offer personalized and secure mobile banking, investment, and commerce services across a wide range of Internet-enabled wireless and consumer electronic devices. The company provides end-to-end customer support through its global application hosting and contact center services. 724 Solutions' customers comprise world-class financial institutions whose combined customer bases total more than 180 million consumers. 724 Solutions' common shares are listed on the NASDAQ National Market (SVNX) and The Toronto Stock Exchange (SVN). Headquartered in Toronto, Canada, the company has offices in London, Paris, San Francisco, Santa Clara, Sydney, and Tokyo. Its subsidiary Spyonit.com is based in Chicago. For additional information visit www.724.com.
THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER OR SALE OF SECURITIES. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROSPECTUS REGARDING THE BUSINESS COMBINATION TRANSACTION REFERENCED HEREIN, WHEN IT IS FILED BY 724 SOLUTIONS INC. AND BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. INVESTORS AND SECURITY HOLDERS WILL BE ABLE TO OBTAIN A FREE COPY OF THE PROSPECTUS AND OTHER DOCUMENTS FILED BY 724 SOLUTIONS AND TANTAU SOFTWARE WHEN THEY BECOME AVAILABLE WITH THE SECURITIES EXCHANGE COMMISSION AT THE COMMISSION'S WEB SITE AT WWW.SEC.GOV. THE PROSPECTUS AND SUCH OTHER DOCUMENTS MAY ALSO BE OBTAINED WITHOUT CHARGE FROM 724 SOLUTIONS BY DIRECTING YOUR REQUEST TO: MONICA ZAIED AT MZAIED@724.COM
This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements include the statements herein regarding: the services and products that will be offered by 724 Solutions and Sonera SmartTrust, the benefits that businesses will obtain from these services and products and future demand for these services and products. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including the risk that 724 Solutions will be unable to deploy the solutions and products stated herein, the risk that the demand for the solutions and products will not increase as presently anticipated and other risks described in 724 Solutions' SEC filings. These risks are also described in 724 Solutions' filings with the Canadian Securities Administrators. 724 Solutions does not undertake any obligation to update this forward-looking information, except as required under applicable law.
For more information, contact:
Avichai Levy, VP Marketing Mobixell Networks
Tel: +972 544 666 785
Avichai.levy@mobixell.com
Kirsten Scott and Kim Smith, éclat Marketing
Tel: +44 (0)1276 486000
mobixell@eclat.co.uk
