Irish software company Twelve Horses is set to be bought out by the US software group MindArrow Systems in an all-share deal that values Twelve Horses at just under $30 million (€32 million). The acquisition is subject to the completion of due diligence but this is seen as little more than a formality.
The main beneficiaries of the takeover are Twelve Horses' chief executive Mr David Malone, chief financial officer Mr Johnny Fortune, entrepreneur Mr Denis O'Brien and a group of institutional investors who provided second round finance for the group last year. The exact shareholdings have not been divulged, but Mr Malone is thought to be the largest shareholder.
Twelve Horses' shareholders will end up with around 29 per cent of the enlarged MindArrow share capital when allowance is made for the convertible stock and warrants that may be exercised by MindArrow's existing shareholders.
Mr Malone is to become executive chairman of MindArrow while Mr Fortune, who is a former chief financial officer of SmartForce, will also join the company's board as a non-executive director.
Twelve Horses deals in business to business communications developing Web-based applications. Its main product is the MessageMaker message management product. MindArrow is also involved in providing Web-based solutions that allow companies to replace printed brochures and direct mail with electronic multimedia messages.
The US group's customer base includes Hwelett-Packard, Lucent, Oracle, Viacom and Toyota.
MindArrow shares rose 50 US cents to $5 in morning trading on Nasdaq following the announcement. The shares have been extraordinarily volatile over the past year trading as high as $55 in March 2000 to a low of $1.37 in early December, after it switched from an over-the-counter listing to Nasdaq, before recovering to the current level around $5.
Industry sources said the company was now trading at a more appropriate level, given sales of just $1.6 million in the year to September 30th.
