Three-way Merger Signals E-biz Contraction

Rival e-business software firms SynQuest , Viewlocity and Tilion on Monday announced a complicated three-way merger deal that includes up to $30 million in new funding to the combined entity.

The deal, which signals a trend towards contraction in the e-business services space, first calls for SynQuest to acquire Viewlocitys supply chain event management businesses. After that deal is completed, SynQuest would absorb Tilion, a transaction that brings about $13 million in cash to the table.

SynQuest, which has seen its stock value nosedive in recent months, will remain as the surviving legal entity. Viewlocity chief executive officer Jeffrey Simpson will serve as chairman and chief executive officer of the merged company.

In addition to the $13 million cash that comes with the Tilion transaction, the SynQuest has also scored an equity funding deal with venture capital firms Battery Ventures and Warburg Pincus. SynQuest said it would issue between $14.5 million and $17 million of new shares of stock at $2.50 per share, in exchange for additional cash investments by existing shareholders.

A portion of that additional investment may consist of conversion of up to $7 million of debt that may be outstanding prior to closing, the company said, adding that the new funding would be used for working capital and general corporate purposes. All of the transactions are conditional on each other and are expected to close by December 31, 2002.

SynQuest client roster includes the likes of Ford Motor Company, Nissan North America, HON Industries, Simmons Company, Penske Logistics and Honda Express and once the merger clears, it would add the likes of Dell, DHL and DSC Logistics, which are among Viewlocitys customers.

Following the merger, the company plans to sell and service all existing products and will initially focus on the automotive, consumer durables, industrial, high tech, printed packaging, retail/CPG and 3PL markets.