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DRS Data and Research Services plc Acquisition of Peladon Software Inc
The Board of DRS is pleased to announce that it has entered into an agreement to acquire Peladon Software Inc for a total consideration of $4,865,000 (£2,748,000).
DRS has been a market leader in the data capture arena for more than 35 years. Its expertise in high volume and specialist data capture projects has been established through the design and manufacturing of scanning equipment, forms printing, and software services. The acquisition of Peladon brings ownership of the DocXP range of software products and introduces a wealth of new expertise to the company in the areas of ICR (intelligent character recognition) and automated document processing. These products and services not only complement existing DRS markets but extend its capabilities into new business markets such as financial services and banking where significant sales opportunities have already been created in the U.S.
Peladon’s intellectual property in the field of automated form and document processing is particularly relevant to organisations in insurance, financial services, marketing, banking, government and many other businesses where large quantities of printed and electronic documents are processed on a regular basis. The company’s business solutions enable organisations to reduce operating costs, increase processing speed and obtain higher accuracy for their transactions. The size of the worldwide market for data processing software of this kind was estimated to be in excess of £1billion in 2005.
Peladon’s strength comes from its people as well as its highly developed products and services. Joint teams in the UK and US have many years of experience in the document processing environment and provide a professional services group (PSG) to understand customers’ requirements and implement solutions. These teams will significantly enhance the ability of DRS to provide solutions for its varied international markets.
The three principal vendors who held 93.5% of the share capital of Peladon Software Inc have agreed to remain with the business as directors and officers on the Board of Peladon Software Inc.
Peladon software Inc, has its offices in San Diego, California and has a fully owned UK subsidiary, Peladon Software Limited, with offices in Andover, Hants. The consideration of $4,865,000 (£2,748,000) is payable in cash, $4,250,000 (£2,401,000) is payable on completion and the balance of $615,000 (£347,000) is subject to an earn-out arrangement based on a share of the Peladon Group’s operating profit in the post acquisition period to 31 December 2007.
In the year ended 31 December 2005, the Peladon Group’s provisional unaudited management accounts reported a loss of $9,000 (£5,000) on turnover of $1,848,000 (£1,074,000) with gross assets of $644,000 (£374,000) as at 31 December 2005.
Peladon Software Inc was established in January 2005, when it acquired Peladon Software Limited, established in 1998 to create highly efficient data and document capture software. Having successfully developed products in the UK, the American market potential for them was identified and Peladon Software Inc was set up to embark on expanding its sales in the US. With the aid of financing from DRS, the Peladon Group has opportunities to expand in 2006 and 2007.