Minneapolis, Minnesota – (The Hosting News) – December 1, 2005 – Global e-commerce outsourcing company, Digital River, Inc., has signed an
agreement to acquire Commerce5, Inc., a leader in enterprise class outsourced
e-commerce solutions for high-tech manufacturing and consumer electronics
Upon the closing of the acquisition, Commerce5 will become a
wholly-owned subsidiary of Digital River.
Joel Ronning, Digital River’s CEO commented on the news, ”The acquisition of Commerce5 presents an exciting opportunity for Digital River. We already have demonstrated success growing online businesses for industry-leading manufacturers of high-tech products in markets that are closely aligned with the software publishing space. Now, we intend to leverage that success through the acquisition of Commerce5 to further extend our reach and accelerate our growth in the broader high-tech marketplace.”
Through the agreement, Digital River will acquire approximately 40 Commerce5 client contracts. These clients include ATI Technologies, Inc., Fujitsu Computer Products of America, Gateway, Inc., Lexmark International, Inc., Sharp Electronics, Corp., Sony Electronics, Inc. and Western Digital Corporation.
To help manufacturers maximize their online presence and sales, Commerce5 enables them to sell their products through their direct online stores or through other third-party e-commerce sites, as well as sell an expanded catalog of complementary products from other high-tech manufacturers. Commerce5’s expanded online product catalog houses a wide range of products, including personal computers, handhelds, digital cameras, computer components and accessories as well as imaging, gaming and storage devices. As part of the ongoing strategy, Digital River plans to externalize this catalog of more than 100,000 products through its oneNetwork online retail and affiliate partners.
Mr. Ronning added, ”Through this acquisition, we can offer clients and consumers a more complete package of high-tech products from highly complementary markets. Moving forward, we plan to leverage the natural affinities in our product lines to enhance third-party selling opportunities in Digital River’s online reseller channel, expand relationships with leading distribution partners, and accelerate our growth in 2006 and beyond.”
For high-tech manufacturers requiring an end-to-end e-commerce solution, Commerce5’s platform is one of the most robust on the market today. Its core e-commerce system provides pre-built integrations with major distribution and logistics partners, including Ingram Micro and Tech Data, as well as with leading back-office financial and ERP applications. Commerce5’s platform, which manages orders from multiple channels, is known for its ability to support complex product catalogs with thousands of different product combinations and unique price books based on personalized logins.
Rob Hagen, Commerce5’s CEO stated, ”By combining our companies, we can offer clients expanded e-commerce capabilities that cross physical and digital boundaries as well as incremental growth opportunities in international markets and online reseller channels. Together, we intend to create a powerful environment for online sales and set a new standard of service excellence in delivering comprehensive outsourced e-commerce solutions.”
Under the terms of the agreement, Digital River acquired Commerce5 for approximately $45 million in cash, composed of payments to stockholders of $32.4 million plus payment of $12.6 million in liabilities. In addition, pursuant to the terms of an Inducement Equity Incentive Plan established for Commerce5 executives who will join Digital River as a result of the acquisition, a total of 87,500 restricted shares of Digital River stock will be issued to retain their services following the acquisition. These shares will vest based upon Commerce5 meeting certain performance goals.
The acquisition, which is subject to certain conditions of closing, is expected to close in December 2005.
To learn more, please visit: www.digitalriver.com.