Myriad Closes $38M Synchronica Takeover
Synchronica has closed the page on its costly buy of Nokia's messaging business.
The U.K.-based mobile software company has finalized its $37.7 million takeover by Swiss competitor Myriad Group.
Myriad targeted Synchronica for acquisition after its purchase of Nokia's messaging business last summer drained its cash reserves and left it unable to make payments on the transaction.
"This deal will create a powerhouse in the rapidly growing sector of mobile-social convergence," Myriad CEO Simon Wilkinson said in a statement.
The combined companies will have more than 100 carrier customers including AT&T, Verizon, T-Mobile, Orange and Vodafone. The purchase will allow Myriad to get into the operator side of the messaging business. Myriad's current focus skews heavily toward smartphones; it says its software is installed on more than 2.5 billion smartphones, including every Android device.
The merger comes after a series of financial setbacks stemming from the Nokia transaction that left Synchronica vulnerable to takeover.
Synchronica purchased the assets from Nokia for $25 million in June 2011. The acquisition was a huge one for Synchronica, amounting to more than its own $19 million market capitalization.
Despite generous terms offered by Nokia, Synchronica was unable to profitably integrate the two businesses and soon ran into crippling cash flow problems. It still owes Nokia about $20 million for the business and must pay off the hefty balance by 2015.
Synchronica's weakened financial position attracted the attention of Myriad, which offered to buy out the company late last year. Myriad told shareholders it "does not believe that Synchronica, given its current financial position and future prospect, will be able to repay the Nokia debt and would also question Synchronica's ability to meet the current repayment schedule in the short term."
Synchronica rejected two offers for being insufficient, but the declining state of its finances prompted it to accept a more substantial offer from Myriad submitted in March. Shareholder approval sealed the deal, and the companies closed on the merger today.