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Case Studies

Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail [email protected] with your contact information.

Archives > Transaction Case Study #3

Safeguard Scientifics Acquiring Acsis, Inc.

Dear Colleague,

Today's case study looks at Safeguard Scientifics November 9th announcement that it will acquire Acsis, Inc. The transaction is expected to close at year-end.

Safeguard Scientifics is a $180 million revenue, US based company (trading symbol, SFE) that acquires and invests in information technology and life sciences companies.

Acsis, Inc. is a 90 employee enterprise data collection software and services company. Acsis' software enables manufacturers to automate their plant and warehouse operations and implement emerging technologies such as radio frequency identification (RFID). The company generated revenues of more than $20 million in 2004, and in the first nine months of 2005 had revenues of approximately $17 million.

Following the announcement on November 9th, Safeguard's ending share price through November 15th increased by 5.3%. With the bounce from the acquisition, SFE's share price is at its highest point since January 7, 2005.

Safeguard Scientifics paid $26 million in cash for Acsis. This represents 1.3x 2004’s revenues. EBITDA appears to be minimal and the companies are banking on future growth to drive earnings.

This is the first acquisition under new CEO Peter Boni's tenure. "Acsis is a strong competitor with deep domain expertise and a high quality customer base. Today's announcement reflects our commitment to partnering with high growth, entrepreneurial companies."

Acsis' growth in 2005 extrapolates to about 10%, and Safeguard is banking on the company being able to accelerate this by grabbing market share in the rapidly growing RFID market.

Spending on enterprise data collection software and services has been growing significantly, currently exceeding $700 million annually. Recent mandates from major national retailers as well as government agencies have prompted manufacturers to upgrade their existing data collection infrastructure with RFID technology.

Steven Selfridge, President and Chief Executive Officer of Acsis, said, "With Safeguard's support, we are dedicated to meeting the growing demand for device integration and enterprise data collection."

We hope that you find this new feature from Sokoloff & Co. interesting, informative and useful. We welcome your comments and suggestions.

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