Sep. 7, 2006

Software developer Sybase Inc. will acquire wireless messaging company Mobile 365 in a deal valued at about $400 million.

Sybase, which provides large-scale database software and other cross-platform business applications, generated more than $800 million in sales last year.

The firm will pay roughly $425 million in cash for the Chantilly, Va.-based messaging company, subject to an adjustment based on Mobile 365’s working capital at closing.

Mobile 365 powers multimedia messaging service offerings for Cingular Wireless L.L.C., Verizon Wireless and other carriers in the United States and Europe. The company emerged from the 2004 merger of InphoMatch, a U.S.-based messaging company, and Mobileway, a U.K.-based content provider.

Sybase Chief Executive Officer John Chen said the acquisition is an effort to tap the worldwide market for multimedia messaging, which is predicted to boom as media companies and marketing firms move to cash in on the “third screen.”

Analysts say the U.S. market is set for particularly strong growth of person-to-person multimedia messaging as the major carriers have finally become MMS-interoperable.

“The mobile messaging market in the U.S. alone is expected to grow to $7.5 billion by 2008,” Chen said in a prepared statement. “Getting closer to this exploding mobile market through carriers is a key extension of our strategy.”

Key to the deal is Mobile 365’s relationships with nearly 700 wireless network operators around the world. The company claims to deliver more than 3 billion messages per month, and it generated more than $800 million in the year ending March 31.

Mobile 365 will become a wholly-owned subsidiary, following the close of deal, which is expected in the fourth quarter of 2006. Shares of Sybase tumbled on the news, however, sliding $1.06, or nearly 5 percent, to $22.08.

Source: RCR News