Today, BluePhoenix Solutions announced the execution of a definitive agreement to sell its AppBuilder business to Magic Software Enterprise Ltd (NASDAQ: MGIC) for $17 million. Magic Software provides mobile and cloud-enabled application and business integration platforms to businesses across the globe. BluePhoenix expects to close on the sale in November 2011 (subject to the fulfillment of conditions defined in the acquisition agreement).
After deducting deferred revenues and other expenses, BluePhoenix anticipates that the net proceeds from the sale will range anywhere from $14.0 million to $14.5 million. BluePhoenix will place $2 million of that amount in an indemnification escrow for up to two years. The company will hire an accounting firm to evaluate the non-cash decrease of its intangible assets as a result of the sale.
BluePhoenix Chairman, Eric Green, remarked, “This transaction will significantly improve the financial condition of the company, while allowing us to more diligently focus our efforts on core competencies that will provide us the best long term opportunities for growth and enhanced shareholder value.”
“BluePhoenix was built around its world-class, automated software tools for migrating legacy mainframe applications onto modernized platforms written in languages such as Java and C#, and we intend to continue investing in this critical part of our business,” he continued. “We will soon be announcing an innovative new Cobol-to-Java software product targeted at System Integrators that we believe will further extend our technology leadership in this area.”
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