US group pays £58m to buy Irish software technology firm Euristix
One of the jewels in Ireland's software crown, Euristix, has been sold to a Nasdaq-quoted US company for $81 million (#73.63 million or £58 million), representing the biggest acquisition yet of an Irish technology company.
Euristix, which currently employs 150 people at its Dun Laoghaire offices, has been acquired by Fore Systems, a US-based equipment supplier to telecommunications and network service providers. According to Mr Jim Mountjoy, chief executive officer of Euristix, the deal will bring Euristix technology to Fore's portfolio of large and successful Internet service provider and carrier network customers. The Euristix operation will integrate completely into that of Fore and the reporting lines within the company will now extend to Fore's headquarters in Pittsburgh, Pennsylvania. Mr Mountjoy told the The Irish Times it had not been Euristix's intention to sell the company. "Our rate of growth was not sufficient to satisfy the ambitions of an expectant and talented staff, so we started looking at all the options that would help us to achieve faster growth.
"Through this deal, there are very good career and skills development opportunities for the employees. They also become option holders and shareholders in a public company."
Fore approached Euristix executives in early November with a view to purchasing the company.
The deal has already been officially ratified and has received the approval of Fore shareholders. Euristix has basic registration formalities to fulfil in the US before official trading can begin.
Mr Mountjoy has said there will be no changes made at management level in Euristix following the acquisition. Euristix, which had sales of £9 million last year, has recorded annual growth of 75 per cent each year for the past five years.
It will now operate as a wholly-owned subsidiary of Fore but remains committed to its Irish operation which plans to expand employment to 180 people this year.
Engaging in much the same activities as before, it will operate as a research and development arm of Fore in the area of network management and telephony communications systems.
Euristix already supplies its equipment to Fore's manufacturing facility in Swords, Co Dublin, where 80 people are employed in the production of telecommunications and data-communications asynchronous transfer mode (ATM) technology.
Fore recorded net profits last year of around $65 million, and is currently achieving annual growth of 35 per cent. Its primary products are ATM switching devices, but this and other recent acquisitions signal a move to build other products around its core offering.
Fore has a stock market value of $1.6 billion, but its shares fell 15 per cent yesterday after the Euristix announcement, indicating some Wall Street unease over the acquisition.
According to Mr Bob Musslewhite, senior vice-president of corporate development at Fore: "We are in the business of building communications equipment and we expect to continue doing that either through our own internal capabilities, or externally, through partnerships and acquisitions."
Euristix has been widely acclaimed for its products which help traditional telecommunications service providers bridge the technology gap to meet the specialist requirements of the Internet. One analyst says it owns a lot of engineering expertise which would not be widely available. He compares its unique offering to that of another Irish software company working in a different market - Iona Technologies. The acquisition is expected to fit well with Fore's development strategy to date. It has been working vigorously to offer a range of technologies to emerging Internet backbone providers. Last year it bought Berkeley Networks, an industry leader in Ethernet technology, for $200 million.
According to one industry analyst: "There are only 80 or 90 companies operating in Euristix's area and there is still a lot of growth in the marketplace. Traditionally Fore's customer base has been big corporates; now this will help it develop its network carrier business."