Digi International® Inc. (NASDAQ: DGII) announced the acquisition of Sarian Systems, Limited. a privately held U.K. based corporation and a leader in the European wireless router market. The acquisition is a cash transaction for approximately $30.5 million for all the outstanding ordinary shares of Sarian. The purchase price of $30.5 million takes into account cash on Sarian’s balance sheet as of the acquisition date, estimated to be $2.5 million.
Sarian Systems designs, develops and manufactures advanced wireless/cellular IP Routing equipment for mission critical applications. Having developed its own comprehensive IP operating system and software, Sarian delivers customers technical excellence, flexibility and rapid customization. With a vertical market focus and deep protocol knowledge, Sarian has developed a strong customer base in ATM connectivity; retail and payment systems connectivity; remote monitoring or telemetry; lottery terminal connectivity; and wireless backup of wired broadband connections. This vertical focus is highly complementary to Digi’s market approach.
“As we got to know the Sarian team and business, it quickly became apparent that this acquisition was a great fit on many levels,” said Joe Dunsmore, Chairman, President and CEO of Digi. “We’re acquiring a high-growth, profitable wireless business that can be expanded from Europe into other parts of the world. We have very similar corporate cultures and vertical go-to-market strategies, so integration will be straightforward. And with Sarian’s strong European engineering and sales presence, we’re immediately increasing the international content and capabilities of our business.”
“With the great cultural and technical fit we see Digi as the ideal partner to take the fast growing business that we have in Europe, Scandinavia and Southern Africa into many other geographic regions,” said Andrew Hood, Managing and Technical Director of Sarian. “Digi’s market-leading Drop-in Networking technology and our flexible wired and wireless IP routing capability create a powerful global combination.”
Digi expects Sarian to contribute in excess of $2.5 million in revenue for the third fiscal quarter of 2008, from date of acquisition, and in a range of approximately $3.5 to $5.5 million in revenue for the fourth fiscal quarter of 2008. Digi anticipates Sarian will contribute revenue in a range of $23 million to $27 million for fiscal year 2009.
Digi anticipates that in-process research and development and other acquisition-related expenses will reduce earnings per diluted share by $0.08 to $0.10 for the third fiscal quarter of 2008. Digi expects the Sarian acquisition will be $0.06 to $0.08 accretive per diluted share for fiscal 2009, and that Sarian earnings per diluted share will be breakeven or slightly accretive beginning in the fourth quarter of fiscal 2008.
Pursuant to the terms of the share purchase agreement, Sarian became a wholly owned subsidiary of Digi International Ltd., located in the United Kingdom, a second tier subsidiary of Digi International Inc. Digi will retain the Sarian office in Ilkley, West Yorkshire, England.
Second Fiscal Quarter 2008 and Sarian Acquisition Conference Call Details
Digi invites all those interested in hearing management’s discussion of its quarter and the Sarian acquisition, on Monday, April 28, 2008 after market close at 5:00 p.m. EDT (4:00 p.m. CT), to join the call by dialing (800) 237-9752 and entering passcode 17264102. International participants may access the call by dialing (617) 847-8706 and entering passcode 17264102. A replay will be available two hours after the completion of the call, and for one week following the call, by dialing (888) 286-8010 for domestic participants or (617) 801-6888 for international participants and entering access code 44427522 when prompted. Participants may also access a live webcast of the conference call through the investor relations section of Digi’s website.
About Digi International
Digi International, the leader in device networking for business, develops reliable products and technologies to connect and securely manage local or remote electronic devices over the network or via the web. Digi offers the highest levels of performance, flexibility and quality, and markets its products through a global network of distributors and resellers, systems integrators and original equipment manufacturers (OEMs).
About Sarian Systems
Sarian Systems manufacturers advanced wired and wireless IP routers designed for mission critical communications. Founded in 1999, Sarian is a privately owned company backed by funds managed by YFM Private Equity and based in Ilkley, Yorkshire. Sarian primarily targets businesses in the retail, lottery, finance, telemetry and remote access markets. Its broadband and wireless routers are used for a wide variety of purposes, including broadband backup, network performance monitoring and EPOS transactions. Sarian sells products in more than 40 countries, to blue chip companies including American Express, Travelex and BP Oil. Major telecommunications operators such as T-Mobile, and ATM operators also rely on Sarian products for day to day operation of their businesses.