Synchronica plc (LSE-AIM: SYNC; TSX-V: SYN) has concluded the acquisition of the Operator Branded Messaging (OBM) business of Nokia Corporation (NYSE: NOK; Helsinki: NOK1V).
The total consideration payable to Nokia is US $25 million with US $4 million paid in cash at closing. The balance will be paid quarterly in arrears at a rate of 22% of the revenue earned by Synchronica from the assets acquired. It is anticipated that the deferred consideration will be paid in full by the end 2014.
Synchronica has also issued Nokia warrants exercisable for 18,333,333 ordinary shares at an exercise price of £0.16 per ordinary share. These warrants have a term of three years but during the first six months following issuance they may only be exercised under certain limited conditions.
Clarkson Wright & Jakes Ltd. and Ormston List Frawley LLP acted legal counsel to Synchronica.
Nokia’s OBM business, which came to Nokia as a part of the acquisition of a Canadian messaging vendor in 2008, provides white-label mobile Email and Instant Messaging services across a wide range of devices to operators in North America. Nokia has since used the acquired assets and developed Nokia Messaging Services (NMS), bundled with Nokia’s Series 40 and Symbian handsets.
Under the agreement, approximately 150 Nokia employees, externals and contractors will transfer to Synchronica. Nokia plans to continue providing the NMS offering for Nokia handsets, with support and development being provided by Synchronica under a professional services contract including the transfer of approximately 100 further Nokia employees, externals and contractors.
The OBM customer base includes 10 operator contracts, including Tier-1 mobile operators across the United States of America and Canada. As part of the transaction, Nokia is to assign operator contracts with AT&T, Sprint, Verizon, T-Mobile, Bell Mobility, Rogers Wireless and others to Synchronica.
In November 2008, Nokia acquired venture-backed OZ Communications Inc., a consumer mobile messaging solution provider, for approximately €Subscriber content million. OZ had approximately 220 employees at the time of acquisition.
The selling price represents less than 1/10th of the OZ acquisition price.
