Flash Networks Buys Agile Equity Client Adjungo in Share Swap Deal

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Herzelia, Israel
September 29, 2003
Uri Rabin, Globes (online)

Sources inform “Globes” that Flash Networks has acquired Adjungo Networks, formerly Commagine, in a share swap. The Adjungo shareholders will gain an estimated 20% of the merged company. Flash Networks develops systems for data communications on wireless networks. Adjungo develops systems for linking wireless local area networks with mobile telephone networks. Flash Networks has also completed a $2.5 million financing round from Evergreen Partners at an estimated value of $15 million, before money. Evergreen apparently made the investment in order to preserve its status as a major shareholder in Flash Networks.

Flash Network’s cash situation was already good before this deal; in January 2003, the company raised $6 million. For its part, Adjungo brings to the merger its cooperation agreement with Alcatel (NYSE: ALA), which guarantees $750,000 per year in revenue. The merged company’s revenue is expected to reach an annual $8-9 million, with no loss.

It was reported in 2002 that the two companies, which were not connected at the time, were about to embark upon huge financing rounds. Flash Networks was said to be about to raise $14 million, while a $12 million round was mentioned for Adjungo. In addition, Flash Networks held merger negotiations with two companies in its field: Schema and Speedwise; Orsus Solutions recently acquired the latter.

Benny De-Kalo, managing director of the De-Kalo Ben-Yehuda Investment Bank, which accompanied the two complementary transactions, said that Adjungo had “had a number of options, both in Israel and overseas, and the company board decided in favor of Flash Networks, because it would be culturally easier to combine with an Israeli company than with a US or Indian company.” DeKalo also expects the financing round to expand. “Following the merger, a number of venture capital funds have called, and we are considering them,” he said.

The merged company will employ a staff of 70; only half of Adjungo’s 20 employee will join Flash Networks. The main investors in Flash Networks are Giza Venture Capital, Vertex Management Israel, Concorde, Challenge Fund Etgar, T-Mobile’s investment fund, and Bell Mobility. The main investors in Adjungo are Evergreen and the Shalom Equity Fund.

Published by Globes [online] – www.globes.co.il