OnX Enterprise Solutions announced it has signed a definitive agreement to acquire the Technology Solutions Group (TSG) from Agilysys Inc., (Nasdaq: AGYS)for $64 million in cash.
Agilysys is a Cleveland, Ohio-based provider of enterprise-class IT solutions and TSG contributed $474 million in revenue of about 70 per cent of the company’s revenue. Agilysys’ motivation for off loading TSG is so it can focus exclusively on its hospitality and retail solutions businesses, which they said provided higher margins. Another possible reason is that Agilysys will have in excess of $120 million in cash on hand after the transaction closes and will be debt-free.
Un-related to this deal is that Martin Ellis, Agilysys president and CEO, will step down and board member James Dennedy will assume control of the company.
Sheldon Pollack, co-founder and director of OnX said the combination of ONX and TSG create’s one of North America’s top IT solutions providers focused solely on providing mission-critical, multi-vendor data centre solutions to medium and large enterprises.
“The combined organization will have annual revenues in excess of $700 million and will be ideally positioned to serve clients with requirements on both sides of the border,” he added.
The increased scale will allow ONX also to better serve its global clients across hardware, software, server, networking, consulting, hosting, cloud and digital/application development services.
The newly appointed president and CEO of Agilysys, Dennedy said ONX recognizes the intrinsic value of TSG. The combination provides a great opportunity for TSG to accelerate its transformation into a multi-vendor, client-focused solutions provider.
Ed Vos, president of ONX, said the two businesses are highly complementary. “This is a tremendously exciting time for ONX as we enhance our ability to add value to the world’s leading technology vendors in order to better serve our mutual customers.”
The transaction is subject to approval by Agilysys shareholders and is expected to close in the company’s fiscal 2012 second quarter, which ends September 30, 2011. The merged company will operate under the ONX brand.
Agilysys will also file a proxy statement with the Securities and Exchange Commission (SEC) because of this deal. Agilsys noted that investors are urged to read the proxy statement when it becomes available on www.sec.gov because it has important information about this deal and the company.