HONG KONG and ATLANTA, Ga., Sept. 4 /PRNewswire-FirstCall/ -- Ross Systems, Inc. (Nasdaq: ROSS), a global provider of enterprise software for manufacturers, and CDC Software Holdings Inc, a wholly owned subsidiary of chinadotcom corporation (Nasdaq: CHINA), an integrated enterprise solution and software company, announced today that they have signed a definitive agreement whereby CDC Software will acquire Ross Systems in a merger valued at approximately US$68.9 million.
Under the terms of the merger agreement, stockholders of Ross Systems will receive $5.00 in cash and $14.00 worth of chinadotcom common shares for each share of Ross Systems common stock. chinadotcom shares will be valued at the higher of $8.50 per share or the average closing price of chinadotcom stock (not to exceed $10.50 per share) for the 10 trading days preceding the second trading day before the closing date, subject to certain exceptions. It is expected that chinadotcom's total shares outstanding would undergo dilution ranging between 3.9% and 5.0%, assuming a combined use of newly issued and treasury shares, upon completion of the transaction. Following the merger, Ross Systems would operate under chinadotcom's CDC Software unit.
chinadotcom believes that the acquisition of Ross Systems, a profitable company with solid margins and recurring revenue streams, represents an attractive and earnings-accretive transaction. Ross Systems expects that its results for the fiscal year ended June 30, 2003 will reflect revenues of US$48.1 million, an operating profit of US$4.8 million and a net profit of US$4.1 million.
Ross Systems, with its strong presence in the U.S. and Europe and 25 distributors worldwide, has an active customer base of over 1,000 companies implementing its flagship enterprise business solution, iRenaissance suite. The iRenaissance suite is designed specifically for process manufacturing that requires a comprehensive application development environment from supply chain management to financials, manufacturing, distribution, maintenance management and decision support knowledge management.
"As China becomes an increasingly important manufacturing base for multinationals and domestic exporters since its accession into the WTO, the combination of Ross Systems and CDC Software is a timely and exciting development for both companies," said Peter Yip, Chief Executive Officer of chinadotcom corporation. "Ross Systems' vertical strength in process manufacturing and its breadth of enterprise solutions will allow us to provide effective software solutions in the fast growing manufacturing export space as well as broaden our software product offerings in the ERP (enterprise resource planning) and SCM (supply chain management) market sectors."
In addition, CDC Software has been a master distributor of Ross Systems' enterprise business solution, iRenaissance suite, in the Greater China region. "We are delighted to see a further strengthened relationship established with Ross Systems through this merger. Ross Systems is expected to achieve certain cost savings and synergies by outsourcing to our low cost software development center in Shanghai and developing synergies in various aspects including cross selling within the chinadotcom group of companies," Yip continued.
chinadotcom's CDC Software unit currently operates a CMM (Capability Maturity Model) Level 3 certified software development center in Shanghai which offers its software development capabilities as an outsourcing conduit for low-cost, high-quality software development for internationally established software companies. It offers software solutions, both developed in-house and supplied by global vendors, to multinational and domestic customers located in China. Select customers include ACNeilsen, Hangzhou Bayer (formerly Aventis), Microsoft (China) Co. Ltd., Polyma Tech (Shanghai) Co., Ltd., Carrefour, Shenzhen Airlines, Legend Computer and Swire Beverages.
Through this merger, Ross Systems expects to have access to additional capital to pursue opportunities in the ERP and SCM markets, as well as the additional technical and distribution resources of CDC Software and other companies in the chinadotcom group in mainland China and internationally to expand on its strong position in providing integrated enterprise solutions to mid-tier manufacturers worldwide.
"CDC Software has already proven to be a trusted partner with valuable regional experience. We share a vision of Ross Systems becoming a significant player in the global mid-tier manufacturing space," commented J. Patrick Tinley, Ross Systems' Chairman and CEO. "The synergies of this business combination will accelerate the introduction of the iRenaissance products into the Greater China region and provide Ross Systems with economies of scale in our software development process that we believe will significantly enhance our competitive position. Today's announcement is exciting news for customers, shareholders, employees and business partners of both organizations," said Tinley.
The merger agreement has been unanimously approved by the Board of Directors of Ross Systems. Certain stockholders and officers of Ross Systems holding approximately 23% of the outstanding shares of Ross Systems common stock (after the conversion of preferred stock held by a Ross Systems stockholder) have agreed to vote their shares in favor of the transaction.
The transaction is expected to close no later than the first quarter of calendar year 2004 subject to approval by Ross Systems' stockholders, certain regulatory approvals and customary closing conditions. The financial impact on chinadotcom's earnings will be determined based on the timing of the closing of the transaction. Ross Systems and chinadotcom have agreed to use their reasonable best efforts to determine whether the stock exchange portion of the transaction can be tax free to Ross Systems stockholders, but there can be no assurance that such treatment can be obtained.
chinadotcom and Ross Systems intend to file a proxy statement/prospectus with the Securities and Exchange Commission in connection with the transaction. Ross Systems expects to mail the proxy statement/prospectus to shareholders of Ross Systems. These documents contain important information about the transaction, and investors and security holders are urged to read these documents carefully when they are available because they will contain important information about chinadotcom and Ross Systems. Investors and security holders will be able to obtain free copies of the proxy statement/prospectus and other relevant materials (when they become available), and any other documents filed by chinadotcom or Ross Systems through the website maintained by the Securities and Exchange Commission at http://www.sec.gov . Investors and security holders of Ross Systems are urged to read the proxy statement/prospectus and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed merger.