Mobile software consolidation as Esmertec buys Purple Labs - Embedded.com

Mobile software consolidation as Esmertec buys Purple Labs

LONDON — A major consolidation of the mobile device software arena will see Esmertec AG buy Purple Labs SA in a all-share deal with the combined business will be called Myriad Group AG.

Purple Labs (Chambéry, France) has recorded rapid growth since mid-2008, when it acquired the browser business of Openwave Systems and its customer list includes all of the top five phone manufacturers.

Purple Labs then acquired the complete mobile applications portfolio of the phone manufacturer Sagem Wireless, and in December closed a €52million (about $67million) contract to provide software and services to Sagem over three years. At the same time Esmertec (Zurich, Switzerland) acquired the mobile software platform activities of Sagem Mobiles.

During the Sagem sell-off it was announced that Purple Labs and Esmertec would worked with Sagem Wireless for the development of its software platforms. Purple Labs develops mobile browsers and messaging,and this complements Esmertec’s development of Java engines, Android platforms and unstructured supplementary service data (USSD) mobile services. The Purple Labs browser is the second best selling mobile software product of all time, having shipped in 1.8 billion phones as of mid-2008.

Myriad will have a combined 2009 revenue of approximately $125 million, and 800 software engineers in Europe, Asia and America.

The business combination is anticipated to yield annual operating cost savings of approximately $13 million, to be achieved once the two companies are fully integrated in early 2010. Savings are expected in research and development, sales and marketing, information systems and administrative functions.

Purple Labs is privately held, funded European venture capital firms, Sofinnova Partners, Earlybird Venture Capital and Partners Group.

Esmertec is acquiring 100 percent of Purple Labs shares in exchange for 19,681,842 Esmertec shares. The agreement also includes an earn-out clause that would provide Purple Labs shareholders a further 4,373,743 Esmertec shares if specified targets for 2009 revenue and gross margin are achieved.

In addition, the Purple Labs management options scheme will be converted to 1,434,287 Esmertec options. This would grow by a further 318,730 Esmertec options if the earn-out is achieved.

Simon Wilkinson, currently chief executive officer of Purple Labs, will become CEO of Myriad. Following the completion of the acquisition, Thomas Hornung, currently CEO of Esmertec, will leave the company and act as advisor for the executive team.

The acquisition has been approved by the board of directors of each company and was reviewed favourably by the Swiss Takeover Board. It remains subject to customary closing conditions, including approval of new share capital by Esmertec shareholders. The companies anticipate that the closing will occur before the end of March.

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