Acquires the Largest European E-Commerce Outsource Provider for Software Publishers - Significantly Adds to Company's Software Publisher Client Base - Strengthens Position in Rapidly Growing International Markets
Digital River, Inc. (NASDAQ: DRIV), a global leader in e-commerce outsourcing, today announced that it signed a definitive agreement to acquire privately-held element 5 AG. Under the terms of the agreement, Digital River paid $120 million in cash. Digital River also may pay up to an additional $2.5 million in cash based on element 5's operating performance over the first 24 months subsequent to the acquisition. As part of the transaction, Digital River established a $45 million secured line of credit with Harris Trust and Savings Bank.
“The acquisition of element 5 is an important step in Digital River's international growth strategy,” said Joel Ronning, CEO of Digital River. “This acquisition significantly adds to our market presence in Europe, enhances our ability to compete in the fast-growing international markets and is expected to increase the financial returns to our shareholders. This acquisition combines Digital River's proven strengths in e-commerce outsourcing with element 5's network of international software publishers. By leveraging these two complementary companies, we expect to accelerate Digital River's growth in 2004 and beyond.”
Founded in 1996, element 5 is the leading, privately-held provider of outsourced e-commerce solutions for software publishers in over 150 countries. With a significant presence in Europe, element 5 is the second largest worldwide e-commerce outsource provider to software publishers. The company processes over two million transactions annually for more than 10,000 clients. As a result of the acquisition, element 5 becomes a wholly-owned subsidiary of Digital River and its operations remain in Cologne, Germany.
“element 5 shares Digital River's commitment to outsourced e-commerce for the software publisher market worldwide,” said Gerrit Schumann, CEO and co-founder of element 5. “We have been successful growing our business and joining Digital River gives us an even greater opportunity to scale going forward. Together, we believe Digital River and element 5 will have the world's largest library of software titles and network of channel partners, which will increase our value to publishers and retailers.”
Digital River also announced that it has established a secured revolving credit facility with Harris Trust and Savings Bank. The Company may borrow up to $45 million under the facility through May 28, 2004, and up to $30 million thereafter through the scheduled maturity of June 30, 2005. The facility also is secured by cash and receivables.
The Company will discuss its acquisition of element 5 after market close on Monday, April 19, 2004. The conference call will be held at 4:45 p.m. Eastern Daylight Time, with remarks from Joel Ronning, Digital River's chief executive officer, and Carter Hicks, Digital River's chief financial officer.
A live broadcast of the conference call may be heard inside the United States or Canada by dialing 877-422-0170, internationally by calling 706-679-5647, or via Webcast, which can be accessed on the Investor Relations section of Digital River's corporate Web site. A replay of the call will be available for two weeks beginning at 7:45 p.m. EDT on April 19, 2004, and can be accessed inside the United States or Canada by dialing 800-642-1687 or internationally by calling 706-645-9291, reservation number 6914701. Additionally, a Webcast replay of the call will be archived on the company's corporate Web site.
About Digital River
Digital River, Inc., a global leader in e-commerce outsourcing, builds and manages online businesses for nearly 35,000 companies worldwide. Its e-commerce solution and infrastructure are designed to help companies of all sizes maximize online revenues as well as cut the costs and reduce the risks associated with running an e-commerce operation. The Digital River ® international e-commerce suite includes site development and hosting, order management, fraud prevention, site merchandising, reporting and analytics, product fulfillment, e-marketing and multi-lingual customer service. Digital River's clients include 3M, ACT!, Autodesk, H&R Block, Motorola, Novell, Staples.com and Symantec.
Founded in 1994, Digital River is headquartered in Minneapolis with offices throughout the United States and in Europe. For more details about Digital River, visit the corporate Web site at www.digitalriver.com or call 952-253-1234.
Digital River is a registered trademark of Digital River, Inc. All other company and product names are trademarks, registrations or copyrights of their respective owners.
In addition to the historical information contained herein, this press release contains forward-looking statements, including statements regarding the Company's, and the combined companies, anticipated future growth and financial performance as all well as statements containing the words, “believes,” “anticipates,” “expects,” and similar words. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: the Company's limited operating history and variability of operating results; competition in the electronic commerce market; and other risk factors referenced in the Company's public filings with the Securities and Exchange Commission.
Viant Capital LLC provided a fairness opinion to the Board of Directors of Digital River in connection with this transaction.