Hale Capital portfolio company LocationLogic has sold to TeleCommunication Systems Inc. for $25 million just two months after the New York-based firm purchased it for an undisclosed amount.
TeleCommunication Systems, Inc. (TCS) (NASDAQ: TSYS), a global leader in mission-critical wireless communications technology, has acquired the assets of privately-held LocationLogic LLC, a leading provider of infrastructure, applications, content provisioning, and integration services for deploying and maintaining innovative location-based services (LBS).
TeleCommunication Systems acquired LocationLogic in a transaction structured as an asset purchase for approximately $25 million, comprised of $15 million paid in cash and $10 million, or approximately 1.4 million shares, in TCS Class A common stock, valued using the volume weighted average stock price for 10 days prior to close. LocationLogic assets were acquired by private equity investors Hale Capital Partners and Hale Global from Autodesk earlier in 2009.
Substantially all of the LocationLogic revenue stream is recurring service revenue from hosted infrastructure software and location-based applications, providing high visibility to future revenues. Based on 2009 run rate revenues of $18 million and EBITDA of $5 million from customers which include two leading US wireless carriers, TCS expects the acquisition to be immediately accretive in 2009.
The U.S. consumer LBS space is one of the most dynamic areas of mobility and continues to transform the mobile Internet experience. In a January 2009 Frost & Sullivan report on LBS companies, TCS was shown to offer the most complete LBS solution, followed by LocationLogic. Carriers who have added a location component to popular services — like messaging, mapping, mobile search, emergency assistance services, games, or premium information — have experienced rapid, increased customer usage. Both IDC and Gartner believe wireless carriers incorporating location information with contextual data will find significant new opportunities for capturing revenue. IDC anticipates total annual U.S. consumer LBS revenue to increase from $270 million in 2007 to $2.1 billion in 2012, or a 50% compounded annual growth rate.
“The addition of LocationLogic assets strengthens TCS in four significant ways,” said Maurice B. Tosé, TCS chairman and CEO. “First, it enhances our LBS infrastructure platform, providing key authentication and privacy technology to better position us to win new carrier business. Second, LocationLogic expands our LBS application portfolio beyond navigation, traffic, and points of interest by adding family locator, mobile resource management, and phone recovery and security applications. Third, it deepens our longstanding relationships with two of the largest North American carriers and leaders in LBS. And fourth, the acquisition adds about 10 patents and 12 patent applications that are complementary to our existing patent portfolio. Overall, we expect this acquisition to further solidify our LBS leadership in an industry which is at the early stages of what is widely viewed as a long term, high growth market.”
TCS was advised by Wedbush Morgan Securities in this transaction.
TCS will hold a conference call later today at 1:15 p.m. Eastern time, May 19, 2009 to discuss the details of the LocationLogic acquisition and an update to fiscal 2009 guidance. The company’s chairman, president and CEO, Maurice B. Tosé, and senior vice president and CFO, Tom Brandt, will host the call. A question and answer session will follow management’s presentation.
To participate in the call, dial the appropriate number 5-10 minutes prior to the start time, ask for the TeleCommunication Systems conference call and provide the conference ID:
Dial-In Number: 1-800-895-0231
Conference ID#: 7TELECOM
The conference call will be broadcasted simultaneously on the company’s Web site at www.telecomsys.com.
For the webcast, please go to the Web site at least 15 minutes early to register, download, and install any necessary audio software. If you have any difficulty connecting with the conference call or webcast, please contact the Liolios Group at 949-574-3860.
A replay of the call will be available after 4:00 p.m. Eastern time on the same day and until June 19, 2009:
Toll-free replay number: 1-800-753-4652
International replay number: 1-402-220-4235
(No passcode required)
LocationLogic, formerly Autodesk’s Location Services Business, is a leading provider of infrastructure, applications, content provisioning, and integration services for deploying and maintaining innovative location-based services (LBS). The company’s business and consumer applications and platform software provide location-enabling services and tools to deploy reliable, high-performance applications that deliver personalized, location relevant information for wireless users. LocationLogic personnel and facilities are in the San Francisco Bay area, Overland Park, Kansas, and Calgary, Alberta Canada. For more information, go to www.locationlogic.com.
About TeleCommunication Systems
TeleCommunication Systems, Inc. (TCS) (NASDAQ: TSYS) engineers and delivers highly reliable wireless communications technology. TCS is a leader in wireless text messaging and location-based technology, including E9-1-1 services and commercial applications like navigation that use the precise location of a wireless device, and secure satellite-based communications systems and services. Customers include leading wireless and VoIP carriers around the world, cable MSOs, automotive telematics vendors, and agencies of the U.S. Departments of Defense, State, and Homeland Security. TCS is one of six primary vendors on a $5 billion Army Worldwide Satellite Systems Contract vehicle. For more information, visit www.telecomsys.com.
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These statements are based upon TCS’ current expectations and assumptions that are subject to a number of risks and uncertainties that would cause actual results to differ materially from those anticipated. The words, “believe,” “expect,” “intend,” “anticipate,” and variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Statements in this announcement that are forward-looking include, but are not limited to statements that (a) estimated 2009 annual revenues of $18 million and EBITDA of $5 million, (b) TCS anticipates the acquisition will be immediately accretive, (c) better positions us to win new carrier business, and (d) further solidify our industry leadership.
Additional risks and uncertainties are described in the company’s filings with the Securities and Exchange Commission (SEC). These include without limitation risks and uncertainties relating to the company’s financial results and the ability of the Company to (i) sustain profitability, (ii) continue to rely on its customers and other third parties to provide additional products and services that create a demand for its products and services, (iii) conduct its business in foreign countries, (iv) develop software and provide services without any errors or defects, (vii) protect its intellectual property rights, and (viii) implement its sales and marketing strategy. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to update or revise the information in this press release, whether as a result of new information, future events or circumstances, or otherwise.