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.
