Synchronica boosted by Myriad bid
Wed Jan 4, 2012 8:36am EST
(Reuters) - Shares in mobile messaging firm Synchronica Plc (DAU.L) jumped further on Wednesday after wireless software maker Myriad Group AG (MYRN.S) confirmed it has made an offer for it to expand offering and clientele under growing pressure from new rivals.
The two firms, which are working on messaging, social networking and Internet browsing software for mobile platforms, have been under growing pressure since smartphone market exploded following Apple's (AAPL.O) 2007 launch of the iPhone.
Smartphones come with free competing products, enabling their operator clients' to put pressure on prices.
Loss-making Synchronica -- which gets most of its sales from operator-branded messaging business bought from Nokia (NOK1V.HE) last year -- said on Tuesday it had rejected initial approach of Myriad, which it expected to come back with a revised offer, sending its shares more than 50 percent higher.
Neither side unveiled the price offered for Synchronica shares, which were trading 9.5 percent higher at 13 pence by 1325 GMT, valuing the company at 20.63 million pounds. The stock is up 68 percent over two sessions.
"Companies such as Myriad and Synchronica ... are consolidating to provide better global reach in the face of a growing number of over-the-top competitors such as Facebook and Whatsapp," said Martin Garner, analyst at CCS Insight.
"There is an opportunity for suppliers serving mobile carriers with messaging systems and services as the carriers fight back against losing messaging revenue to over-the-top players," he said.
Myriad said Synchronica's complementary technology added to its portfolio would provide an additional opportunity for the combined organization to drive growth. The deal would give it direct access to dozens of Synchronica's operator clients.
"Sychronica appears to make a good fit with Myriad, complementing its existing device and network messaging technologies," said Nick Dillon, analyst at technology research firm Ovum.
"With the purchase, Myriad would be able to offer a more complete solution to operators, providing white label messaging, sync and social networking solutions for both smartphones and feature phones," Dillon said.
Revenues of Synchronica, which agreed to buy Nokia's operator-branded messaging business for $25 million in June 2011, are expected to have reached 18 million pounds last year, more than doubling from a year earlier, and to grow to 29 million this year, according to Thomson Reuters data.
Synchronica paid to Nokia $4 million last July and is due to start quarterly payments, which last until 2015, this quarter.
Nokia also got warrants to purchase 18.3 million Synchronica ordinary shares -- more than 10 percent of the stock -- for 16 pence each at any time until 2014.
($1 = 0.6396 British pounds)
(Reporting By Tarmo Virki; Editing by Hans-Juergen Peters)