ATLANTA -- Atlanta-based InComm, a leading technology provider and distributor of prepaid products, signed a definitive agreement to acquire all of the outstanding shares of DataWave Systems Inc., the leading provider of prepaid and stored-value delivery systems in Canada with operations in the United States, for a total consideration of approximately $36 million.
DataWave will bring more than 10,000 retail locations located in Canada and the United States into InComm's existing retail distribution network, allowing InComm to provide its industry-leading [image-nocss] product suite to more customers than ever before. The acquisition will increase InComm's retail footprint to 145,000 locations in the U.S., Canada, Puerto Rico and the United Kingdom.
Upon consummation of the transaction, DataWave's retail base and prepaid consumers will be able to use the product suites, as well as InComm's technology, full category management and marketing expertise. The combined entity will continue focusing on consumers and allow their needs to drive InComm's future technology innovations and new product introductions.
Under the terms of the agreement, InComm will pay approximately $0.62 in cash for each outstanding share of DataWave stock, based on approximately 57.9 million fully diluted shares outstanding, which calculates the exercise of options using the treasury method. The transaction has been approved by the boards of directors of both companies and is subject to shareholder and regulatory approval and other customary closing conditions. The cash consideration payable to DataWave shareholders is subject to working capital adjustments and indemnification holdback. The transaction is expected to close in the fourth quarter of 2006.
Upon closing, DataWave will become a wholly owned subsidiary of InComm. Josh Emanuel, DataWave chairman and CEO, will remain as president of the InComm subsidiary.
The addition of DataWave allows us to extend our product and service offerings to an even larger customer base, said Brooks Smith, InComm president and CEO. Bringing DataWave's technology and management team into the InComm family will add more industry expertise and additional resources that we can dedicate toward emerging technologies. As an industry leader, it is important to us to continue to find new and better ways to streamline the buying process for our product providers, retail partners and consumers.
This transaction is the right move at the right time for both our shareholders and employees, said Emanuel. It maximizes value for our shareholders by providing them with a mechanism to benefit from the forces of consolidation shaping the prepaid card industry. In addition, DataWave will now be able to take advantage of InComm's larger platform and broader retail location footprint. We look forward to becoming part of InComm and to contributing to InComm's continued strong growth and market leadership.
InComm is an innovator in prepaid products and point-of-sale technology specializing in retail prepaid services, subscriber services and payment solutions that are changing the way consumers purchase. InComm provides a product portfolio including wireless airtime, financial debit cards, gift cards, music downloads, ring tones, games, long-distance cards, online games, broadband, digital television as well as bill payment solutions.
DataWave has been an innovator and developer of prepaid and stored-value programs and merchandising solutions since it was founded in 1994. DataWave pioneered systems that allow for point-of-sale activation of high value, high shrinkage products, such as cash cards, prepaid phone cards and prepaid wireless time. These systems work equally well over the Internet, through intelligent freestanding vending machines and POSA terminals, or with various card activation devices, including cash registers.
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