EFJ, Inc. Acquires 3e Technologies International
3eTI also develops and sells secure wireless infrastructure that meet Federal Information Processing Standards, FIPS 140-2 validated 802.11i-compliant wireless networking standards.
3eTI was founded in 1995 and currently has 95 employees located in U.S. and Taiwan. For the 12-month period ended May 31, 2006, 3eTI had revenues of approximately $24 million. 3eTI also provides security solutions for wireless sensor networks, radio frequency identification (RFID), wireless video surveillance, and location-based context-aware solutions based on its wireless application middleware.
"We are pleased to announce the acquisition of 3eTI," stated Michael E. Jalbert, EFJ, Inc. chairman and chief executive officer. "3eTI is a strong fit for EFJ, Inc. This acquisition adds to our portfolio of secure wireless products for public safety and public service. 3eTI brings secure wireless data capability to our private wireless business and strengthens the market position of our secured communications segment with digital data security," Jalbert added.
"We believe the market opportunity for 3eTI's products and technologies is significant. To take advantage of this growth opportunity, 3eTI has developed a strong partnership with Cisco Systems. We look forward to continuing that partnership," said Jalbert.
"We anticipate this transaction being accretive to our earnings per share in 2007," Jalbert stated.
"3e Technologies has been, and will continue to be an important wireless security solutions partner for Cisco," said Brett Galloway, Vice President and General Manager, Wireless Networking Business Unit at Cisco Systems, Inc. "We look forward to continuing our successful relationship solution-selling EFJ offerings with our Unified Wireless Network products."
Commenting on the acquisition, Chih-Hsiang Li, chairman & chief executive officer of 3eTI, said, "This is an exciting time for 3eTI to join with EFJ, Inc. The floodgates of secure WLAN business have opened, and the combination of the EFJ and 3eTI teams will allow us to grow at an accelerated pace."
Steven Chen, founder, Executive VP/GM for Wireless Products, said, "The recent DOD 8100.2 Commercial WLAN Update requires FIPS 140-2 validation, WPA-2 certification and IEEE 802.11i compliance. 3eTI is the first company to achieve FIPS 140-2 validation and WPA-2 certification with its mesh WLAN access points. 3eTI has focused on interoperable security solutions based on open standards. This transaction will strengthen 3eTI's commitment to our partners."
EFJ, Inc. acquired 3eTI for cash of $36 million. The purchase price includes approximately $5.0 million to satisfy certain liabilities of 3eTI and approximately $3.6 million being held in escrow for potential indemnification claims. Certain 3eTI employees are eligible to participate in bonus programs with payments to be earned based on achievement of performance objectives and continued employment. EFJ, Inc. is financing the transaction with $21 million of cash and a $15 million term loan. The $15 million term loan is payable over 4 years and will be effected through an amendment and increase to EFJ's existing line of credit facilities with Bank of America. The merger documents have been signed and delivered and the closing will be effective upon confirmation of the filing of the articles of merger with the Secretary of State of Maryland.
3eTI was an Intel Capital portfolio company prior to this acquisition. 3e Technologies International, Inc. was being represented in this transaction by BB&T Capital Markets / Windsor Group, a division of Scott & Stringfellow, Inc.
Conference Call and Web Cast
The Company will hold an investor conference call Tuesday, July 11, 2006, at 9:00 a.m. Eastern Time. The call will be available via 800-310-1961. Participants are urged to call in to the conference call at least 10 minutes prior to the start time. Replays of the call will be available starting at 12:00 pm EDT on July 11, 2006 and continuing until 12:00 Midnight July 14, 2006. The replay number is 888-203-1112, and the reservation number is 4611336. The call will be accessible via webcast at http://www.vcall.com by clicking EFJI under "Today's VCalls." Investors are advised to go to the website at least 15 minutes prior to the call to register, download and install any necessary audio software. The call will be archived for 30 days.