OAKDALE, Minn--(BUSINESS WIRE)--Imation Corp. (NYSE:IMN) (“Imation” or the “Company”) today announced that Bob Fernander, an existing member of the Company’s Board of Directors (the “Board”), has been appointed as Interim CEO, effective immediately. Additionally, the Company announced it has acquired substantially all of the equity of Connected Data, Inc. (“Connected Data”), an emerging enterprise-class, private cloud sync and share company, in a transaction valued at approximately $7.5 million at closing. The Company intends to complete the acquisition of Connected Data through a short-form merger as soon as practicable. Connected Data’s founder, CEO and current member of Imation’s Board, Geoff Barrall, will join the Company’s executive leadership team as Chief Technology Officer. Separately, Interim President Barry Kasoff has assumed the role of Chief Restructuring Officer and will continue to work with Mr. Fernander to execute Imation’s restructuring plan.
“As an experienced professional with an established track record of building technology-based businesses, Bob is the right interim leader for Imation. He is deeply involved in the execution of the Company-wide restructuring plan and has the skill set necessary to maximize the value of our storage businesses, which includes Nexsan, IronKey and now Connected Data,” said Joseph A. De Perio, non-executive Chairman of the Board. “Connected Data puts the Company’s product roadmap on trend and boosts the enterprise value potential of all of Imation’s storage businesses. Geoff is an exceptional business builder, technologist and inventor, and Imation is fortunate to bring him on as an executive overseeing all of our storage strategies and development.”
Founded in 2012, Connected Data produces Transporter, an enterprise-class, private cloud sync and share line of appliances that offer a secure, on premise and cost efficient alternative to Dropbox. Connected Data’s patented technology creates a mobile data infrastructure that delivers public cloud features without the expense or security compromises of cloud services. Transporter solutions allow corporations to use existing storage infrastructure to achieve high performance cloud functionality. Transporter can be scaled and integrated with existing Imation product lines, and the acquisition augments Imation’s vision in delivering a comprehensive and secure storage, backup and collaboration ecosystem.
“Connected Data is a pioneering company and a significant acquisition for Imation that will place us at the forefront of the one of the fastest growing and most important sectors of technology. The Connected Data product line will be able to leverage the existing Nexsan sales infrastructure and channel relationships to boost sales and create a more comprehensive product offering,” said Mr. Fernander. “We are witnessing an increasing global demand for cost efficient, secure file synchronization to mobile devices, and Connected Data’s alignment with Imation’s SDMA (Secure Data Movement Architecture) will allow us to deliver industry leading private cloud solutions.”
Under the terms of the transaction, subject to certain adjustments, approximately $4.4 million of consideration will be paid in Imation common stock at an issue price of $2.75 per share, approximately $0.5 million will be paid in cash, and approximately $2.6 million in debt will be paid off by the Company. Up to $5 million in cash and shares in earn outs are possible based upon Connected Data’s performance through 2016 and the first half of 2017. Connected Data is projected to have over $7 million in standalone revenue in 2016, and the transaction will be immediately accretive to Imation.
Geoff Barrall, Chief Technology Officer, commented, “We are proud of what we have built at Connected Data. Our innovative product line represents a major disruption in the field of file sync and share as customers look for cost effectiveness and maximum security. Coming under the Imation umbrella is a logical extension of our evolution and will drive significant synergies and efficiencies across the organization.”
The transaction was approved by the Company’s Audit Committee pursuant to the Board’s Related Party Transaction Policy and by the disinterested directors, after receiving a fairness opinion that the transaction was fair, from a financial point of view, to the Company.
Imation’s Board and executive team will also continue to work closely with its advisors to drive change within the Company and explore strategic alternatives to maximize shareholder value, including, but not limited to, divestitures of its non-core and non-operating assets. To that end, the Strategic Alternatives Committee was formed in August 2015 to work with management and make recommendations to the Board. The Strategic Alternatives Committee has also been tasked with (i) examining opportunities to invest the Company’s excess cash and (ii) formulating strategies to maximize the value of the Company’s investments and assets, such as its owned common stock in Sphere3D Corporation. As of September 30, 2015, Imation’s total cash balance is expected to be at least $85 million, and the corporate-wide restructuring plan is expected to be mainly completed by January 1, 2016.
The Company has enclosed a brief slide presentation related to its current initiatives in the Form 8-K filed today with the SEC.
Webcast and Replay Information
A teleconference to discuss this release is scheduled for today October 14, 2015 at 4:00 PM Central Time and will be available on the Internet on a listen-only basis at www.ir.Imation.com or www.streetevents.com.
A taped replay of the teleconference will be available beginning at 8:00 PM Central Time on October 14, 2015, until 7:30 PM Central Time on October 20, 2015, by dialing 855-859-2056 or 404-537-3406 (conference ID 59169709). All remarks made during the teleconference will be current at the time of the teleconference, and the replay will not be updated to reflect any subsequent developments.
Imation (NYSE: IMN) is a global data storage and information security company. Our products and solutions help organizations and individuals store, manage and protect digital content. Imation’s storage and security portfolio includes Nexsan high-density, archive and solid-state optimized unified hybrid storage solutions; IronKey™ mobile security solutions that address the needs of professionals for secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the Imation, Memorex and TDK Life on Record brands. Imation reaches customers in more than 100 countries through a powerful global distribution network. For more information, visit www.imation.com.
Risk and Uncertainties
Certain information contained in this press release which does not relate to historical financial information may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause our actual results in the future to differ materially from our historical results and those presently anticipated or projected. We wish to caution investors not to place undue reliance on any such forward-looking statements. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. Risk factors include various factors set forth from time to time in our filings with the Securities and Exchange Commission including the following: Our ability to successfully implement our strategy; our ability to grow our business in new products with profitable margins and the rate of revenue decline for certain existing products; our ability to meet future revenue growth, gross margin and earnings targets; the ability to quickly develop, source, introduce and deliver differentiated and innovative products; our potential dependence on third parties for new product introductions or technologies in order to introduce our own new products; our ability to successfully implement restructuring plans; foreign currency fluctuations; the ready availability and price of energy and key raw materials or critical components including the effects of natural disasters and our ability to pass along raw materials price increases to our customers; continuing uncertainty in global and regional economic conditions; our ability to identify, value, integrate and realize the expected benefits from any acquisition which has occurred or may occur in connection with our strategy; the possibility that our goodwill and intangible assets or any goodwill or intangible assets that we acquire may become impaired; the ability of our security products to withstand cyber-attacks; the loss of a major customer, partner or reseller; changes in European law or practice related to the imposition or collectability of optical levies; the seasonality and volatility of the markets in which we operate; significant changes in discount rates and other assumptions used in the valuation of our pension plans; changes in tax laws, regulations and results of inspections by various tax authorities; our ability to successfully defend our intellectual property rights and the ability or willingness of our suppliers to provide adequate protection against third party intellectual property or product liability claims; the outcome of any pending or future litigation and patent disputes; our ability to access financing to achieve strategic objectives and growth due to changes in the capital and credit markets; limitations in our operations that could arise from compliance with the debt covenants in our credit facilities; our ability to retain key employees; increased compliance with changing laws and regulations potentially affecting our operating results; failure to adequately protect our information systems from cyber-attacks; the effect of the announcement of our review of strategic alternatives; and the volatility of our stock price due to our results or market trends.