M&A Update

Tumbleweed, Valicert link; MAPICS completes Frontstep acquisition

Tempe, AZ  February 19, 2003  Connectivity solution providers Tumbleweed Communications and Valicert announced merger plans this week, while enterprise resource planning (ERP) provider MAPICS completed its acquisition of fellow software company Frontstep.

Tumbleweed, based in Redwood City, Calif., provides secure messaging applications for businesses and government agencies using the Internet. Mountain View, Calif.-based Valicert offers software to securely connect companies with their customers, suppliers and partners across the financial value chain.

Pending shareholder and regulatory approvals, Tumbleweed will acquire all outstanding shares of Valicert in a stock-for-stock transaction. As approved by the companies' boards of directors, the merger calls for each share of Valicert common stock to be exchanged for 0.385 shares of Tumbleweed common stock.

Based on yesterday's closing price for Tumbleweed's stock, the market value of the transaction is approximately $14.3 million. The purchase transaction is expected to close in the second or third quarter, depending upon regulatory review.

John Vigouroux, president and CEO of Valicert said the companies' solutions were complementary and that the merged entity would continue to support Valicert customers.

After the merger is concluded, Vigouroux will join Tumbleweed's executive staff as senior vice president and general manager of the Valicert division of Tumbleweed. Vigouroux will report to Doug Sabella, president and chief operating officer of Tumbleweed. Current Valicert employees will continue to report to Vigouroux in the new division. Tumbleweed also will expand its current board of directors to add a Valicert-selected director.

MAPICS Completes Frontstep Acquisition

Meanwhile, Atlanta-based ERP vendor MAPICS this week said it had completed its previously announced acquisition of fellow software company Frontstep to create what MAPICS touted as the largest global ERP solutions provider committed exclusively to manufacturers.

The closing occurred following approval of the acquisition yesterday by shareholders of each company at special meetings held to consider the transaction. The companies initially announced their merger plans last November.

Terms of the acquisition included the exchange of 4.2 million shares of MAPICS' common stock for all the outstanding shares of Columbus, Ohio-based Frontstep and the assumption by MAPICS of approximately $20.1 million of Frontstep's debt. Related to the acquisition, MAPICS announced it has completed a new $30 million credit facility and has used $21.7 million of this facility to repay the debt assumed from Frontstep and certain other transaction-related costs.

Dick Cook, MAPICS' president and CEO, called the acquisition a "defining moment" for his company. "With this acquisition, MAPICS is now the largest global provider of extended ERP, [customer relationship management] and [supply chain management] solutions committed exclusively to solving the unique challenges of manufacturers," he said.

In a statement, MAPICS said it intends to continue investing in future solutions on both the IBM iSeries and Microsoft platforms, and that it will support existing customers on earlier releases as it has traditionally done. The company expects to migrate its Microsoft platform solutions over time into a common offering utilizing Microsoft .NET technology and Web services.

Cook said the company had completed its integration plans for combining operations of the two entities, and he anticipated $5 million to $7 million in charges over the next four quarters to cover restructuring costs. Those plans include cutting about 250 personnel from the companies' combined total workforce of almost 1,100 at the time the acquisition was announced.

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