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Solution 6, Sausage Merger To Form $3.5 Billion ePlayer

"Sausage's core offerings perfectly fit with Solution 6's e-Business platform," read Solution 6's (SOH) release announcing its intention to merge with Australian Internet software pioneer Sausage Software (SAS) in a 6 for 10 stock swap Monday morning. News of the Aus $3.5 billion deal sent stock in both companies skyrocketing. At 1430 AET, Solution 6 stock was up 18.85% at $11.35 while Sausage added 12% to $6.50.

Board members of the new entity emphasized the complementary nature of the deal. "Sausage has well established distribution channels and good global reach, which is important for Solution 6 as we grow our business in overseas markets," said Chris Tyler, CEO of Solution 6. "Sausage also provides access to over 800 SMEs (small and medium enterprises) around the world, into which Solution 6 can market our e-Business platform. On the flip side, Solution 6 will be able to market Sausage ecommerce and ERP solutions via our 10,000 accounting firms to their clients - the SMEs. I see that we will get a tremendous amount of synergy from this merger."

Solution 6 added Sausage will also bring to the combined entity: Strategic relationships with Intel, America Online/Netscape, Looksmart, Broadvision, Sun Microsystems, St George Bank and Telstra and over 1,100 IT professionals (that figure includes staff from SMS Consulting which Sausage is in the process of acquiring).

Ted Pretty, managing director of Telstra's convergent business division, joined the Solution 6 board and has been offered the position of chairman at the new look Solution 6. Sausage CEO Wayne Bos will also join the board and has been offer the position of director.

The deal values Sausage at $1.6 billion on a fully diluted basis.

Solution 6 also announced it will purchase Telstra Corp.'s (TLS) eConnect business assets, Telstra's stake in Asia-Pacific joint venture PlesTel and rights to Telstra Financial Management Services for scrip worth Aus $237 million. After it injects a further $50 million, Telstra will own approximately 40% of Solution 6 and is entitled to a similar portion of Sausage.

To further complicate matters, Telstra will receive 50% of the equity in Iguana, Solution 6's the financial information services vehicle. Iguana will power both the Telstra.com and Solution 6's e-ccountancy.com with financial information from both New Zealand and Australian stock exchanges.