Openwave Systems Inc. announced it will acquire messaging software provider Magic4 for a sizable $82.6 million in cash and stock. The deal marks Openwave’s further moves to expand its handset software business beyond WAP browsers.
“With Magic4, Openwave will become the No. 1 open standards-based software provider for data-phone manufacturers,” said Don Listwin, the company’s president and chief executive officer. “Browsing and messaging are the core engines that power advanced mobile data services today. The acquisition of Magic4 is part of our overall growth strategy and serves to deepen Openwave’s relevance on the phone while ensuring that manufacturers can deliver a seamless user experience as operator service requirements evolve.”
Under the terms of the agreement, Openwave will pay a mixture of cash and stock for all of the outstanding shares of privately held Magic4. Openwave did not provide exact cash and stock numbers, but said it would pay for at least 40 percent of the price in cash. Openwave said the deal is expected to close in July, and Magic4’s business would contribute between $9 million and $11 million in revenues in the second half of this year and a total of $35 million in revenues next year.
Magic4 is one of the leaders in the messaging software market. The company sells software that powers the text messaging, multimedia messaging and instant messaging services on mobile phones. It counts Motorola Inc., Sony Ericsson Mobile Communications, Samsung Electronics Co. Ltd., Siemens AG and others as customers. For Openwave, the deal significantly expands the company’s customer list and software offerings. Openwave’s handset business primarily centers on sales of its WAP browser to mobile-phone makers, although last year the company introduced a software platform that combines a browser with messaging software, application download technology, location services and other features. The Magic4 acquisition gives Openwave a further opportunity for software sales and could put it ahead of rivals like Access Co. Ltd. and others.
In other news, Openwave announced it will sell IBM Corp.’s Java virtual machine-dubbed WebSphere Everyplace Micro Environment-in its Phone Suite Version 7 software platform.
Magic4 is Openwave’s latest acquisition; the company last year acquired location-services company SignalSoft Corp. and Java vendor Ellipsus Systems.
