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On October 1, 2018, Origo hf. ("Origo") notified the Iceland Stock Exchange that Origo had agreed to enter into exclusive discussions with Diversis Capital ("Diversis"), a Los Angeles-based investment company that focuses on investments in software and IT companies, regarding the sale of a 55% stake in Tempo ehf. ("Tempo") to Diversis.
Today, the boards of directors of Origo and Diversis signed a binding agreement for the sale of a 55% stake in Tempo to Diversis.
The deal values Tempo ehf. at USD 62.5 million, with Diversis acquiring 55% of the share capital in Tempo at closing. Diversis will pay Origo USD 34.5 million in cash, and the two companies will provide Tempo with funds for further growth, totalling USD 2 million, to be paid in proportion to ownership. In addition, both owners are committed to support the internal and external growth of Tempo in the coming years, as opportunities arise.
Origo's estimated sale profit from the deal is around three billion krónur. Furthermore, it is estimated that around two billion krónur will be recognised as income in the form of a fair value adjustment of Origor's 45% stake in Tempo, in accordance with international accounting standards.
Thus, the deal's total positive impact on Origo's fourth quarter results is expected to be around five billion krónur.
"The acquisition by Diversis of a stake in Tempo is very good news, both for Origo and Tempo. This sale of just over half of Tempo is a testament to the terrific work done by the staff of Tempo and Origo in recent years. It also reaffirms the value represented by Icelandic ingenuity, which recently has been receiving increased attention and support from the government, which is to be celebrated.
Tempo has seen success and rapid growth in recent years, and is now a very strong business. The company's current annual revenue is more than USD 20 million and it boasts over 12,000 customers in 120 countries, serviced by a dedicated staff in Reykjavik and Montreal. We are particularly pleased to partner with Diversis on the further growth of Tempo, as their expertise in the fields of technology, software development and marketing will help to strengthen product development and further boost revenue growth in the coming years.
With the combined support of Diversis and Origo, we expect Tempo to enter into a new phase of development and revenue growth and would not be surprised to see the value of the company rising substantially in the near future. In view of this, we have stressed the importance of Origo maintaining a significant stake in the company, for the benefit of Origo shareholders."
Origo hf. (NASDAQ OMX: Origo.IC) is a group of companies in the IT sector. Origo is a service provider which aims to help customers achieve improvements in their operations through IT technology, the expertise of our staff and flexible service. The group has around 550 employees. Origo's subsidiaries include TEMPO ehf. and Applicon AB. Origo hf. shares are listed on the Iceland Stock Exchange. For further information please visit our website, www.origo.is.
Forward-looking statements contained in this presentation may be based on management’s current estimates and expectations, and not on facts that may be verified after its publication. Such statements are inherently uncertain. We therefore caution the reader that there are a variety of factors that could cause business conditions and results to differ materially from what is contained in our forward-looking statements, and that we do not undertake to update any forward-looking statements. These forward-looking statements speak only as of the date of this presentation and are qualified in their entirety by this cautionary statement.