NaviSite, Inc., a provider of applications management and managed hosting solutions, has entered into a definitive merger agreement to acquire privately-owned applications management service provider netASPx for $40.5 million, consisting of approximately $15.5 million in cash and $25.0 million in Convertible Preferred Stock.
The transaction is expected to close by the end of the business day today.
Headquartered in Herndon, VA, netASPx is a provider of applications management services with a focus on Lawson Enterprise Resource Planning (ERP) and Kronos Workforce Management and Business Intelligence Applications. In addition, netASPx maintains the infrastructure necessary to support these applications within its 18,000 square foot data center in Minneapolis.
The acquisition brings Lawson and Kronos solutions to NaviSite and broadens its existing portfolio of applications management expertise, which already includes the Oracle product family (Oracle E-Business, PeopleSoft, Siebel, JD Edwards and Fusion), Microsoft Dynamics, and Exchange. By acquiring netASPx, NaviSite also expands its customer base, creating new up-sell and cross-sell opportunities for both its current clients and those of netASPx. Finally, the addition of the netASPx data center in Minneapolis bolsters NaviSite's presence in the Midwest with significant available capacity.
The acquisition was financed through a $20 million addition to NaviSite's current Senior Term Facility and the issuance of $25.0 million of Series A Convertible Preferred Stock. The Senior Term loan interest rate has been reset to LIBOR plus 4%. The Convertible Preferred is redeemable, has an 8% PIK (non cash) coupon that increases to 12% on the 18 month anniversary of the closing date and is convertible at the price of $8.00 per share 18 months from the closing date.
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