Agilysys is making good on its promise to rapidly grow its reseller business to more than $1 billion in two years with its first major acquisition -- New Jersey-based Innovativ, Sun Microsystem's largest storage partner.
The $100 million cash deal, announced today, is expected to close July 1. In addition, Innovativ will receive $2 for every dollar of earnings after taxes greater than $50 million during the first two years of the closing. The total deal could be worth up to $190 million, according to the companies.
"The acquisition of Innovativ will establish a new and significant relationship between Sun and Agilysys," said Arthur Rhein, chairman, president and CEO of Agilysys, in a statement.
Agilysys ranked 92 on the 2006 VARBusiness 500 with revenue of approximately $500 million. At the time, the larger part of the company's business was distribution, from which it earned approximately $1 billion.
In January, Agilysys sold its KeyLink Systems Group to Arrow Electronics for $485 million, effectively divesting itself from the distribution business. After restructuring costs and a stock buyback, the sale gave Agilysys nearly $400 million to invest in its enterprise reseller efforts.
Innovativ, which ranked 132 on the 2006 VARBusiness 500, had 2005 revenue of $263 million and profits of approximately $20 million. The company earned the VARBusiness 500 Top Revenue Generator Award in the $200 million to $499 million range after growing 67 percent over 2004.
Both companies are listed on the upcoming 2007 VARBusiness 500 list, which will be published June 11. For this year's rankings, Agilysys reported an 11 percent increase in its reseller revenue, while Innovativ posted a 2.3 percent decline.
Innovativ CEO Tony Mellina will become senior vice president of Agilysys' new Sun Technology Solutions unit.
Together with its April acquisition of Stack Computer, Agilysys estimates its 2007 revenue will top $800 million. Ultimately, Agilysys is aiming for $1.5 billion in revenue with 20 percent operating margins within three years.
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