RealTime IT News

Tucows, Infonautics Unite

Tucows, a privately owned e-business services provider, plans to buyInfonautics Inc., a provider of oline information services.

As part of the deal, the King of Prussia, Pa.-based company will issue approximately 50 million shares of Class A common stock to the Tucows shareholders who will own roughly 80 percent of the merged company at closing.

Although he declined to put a dollar amount on the deal, Elliott Noss, president of Toronto-based Tucows, estimates that the value of the deal is about four times the value of Infonautics.

With a network of more than 5,000 resellers in more than 100 countries around the world, Tucows brings much to the table, according to Van Morris, president and CEO of Infonautics. He specifically applauded Tucows' business model, growth opportunities and value to shareholders.

"In seeking partners, we evaluated companies on growth and future potential," he said. "Tucows met our combined criteria of growth, cash investment profile, content synergies and future potential. It has a low-cost distribution model and it is the kind of business that will make money in any market.

"Tucows is a significant player in the supply chain of digital goods. Its distribution strategy resulted in year 2000 increase of sales bookings to over $28 million from $4 million the previous year, and they entered 2001 with approximately $16 million in deferred revenue," Morris said. "This sales momentum coupled with Tucows' low-cost distribution platform positions the combined company to be a significant player in a rapidly consolidating market."

Infonautics' portfolio of Web properties includes Company Sleuth, Sports Sleuth, Job Sleuth and Entertainment Sleuth, which combined have 1.3 million registered users. The company also has 105,000 paying subscribers to Electric Library as well as holdings in bigchalk.com, an Internet-based education company.

The combination is win-win for all involved, Noss said.

"To date, Tucows has demonstrated its ability to be a market leader in domain registrations, software distribution and understanding the needs of ISPs and Web hosting companies," he said. "We are uniquely positioned to benefit from the introduction of additional digital products, such as Web certificates and messaging, to our distribution platform. This sets the stage for further growth."

Completion of the deal, which is subject to shareholder approval, is expected in the third quarter. At that time it is anticipated that Infonautics will remain a public company and will adopt the Tucows name.

At press time, shares of Infonautics were trading at $.75, up by 41.2 percent.