Alanco Technologies Inc (NASDAQ: ALAN) and ORBCOMM Inc (NASDAQ: ORBC) have entered into a purchase agreement for the sale of Alanco’s subsidiary StarTrak Systems LLC, a provider of tracking, monitoring, and control services for refrigerated transportation.
Total acquisition value is about $19.7 million, consisting of cash, ORBCOMM stock, and assumed debt, including a potential earn out of up to $1.2 million. The transaction is expected to close early in second quarter 2011, subject to customary closing conditions. These conditions include Alanco shareholder approval, which will be solicited via proxy at the company’s annual meeting, tentatively set for April 27, 2011.
Robert R Kauffman, Alanco chairman and chief executive officer, said, “This ORBCOMM sale provides our shareholders a very favorable, risk-adjusted valuation for our StarTrak business, as well as resulting in Alanco receiving a significant shareholding in ORBCOMM, which we believe will be an excellent long-term investment. A combined ORBCOMM/StarTrak, through operating scale and reduced SG&A expenses, should boost StarTrak profitability, providing a significant contribution to ORBCOMM’s future earnings and share value.
“The ORBCOMM transaction will also facilitate a capital restructuring of Alanco, resulting in elimination of all interest-bearing debt, retirement of both our Series D and E preferred stock, and retirement of approximately 1.2 million common shares, reducing the total outstanding common stock to about 4.4 million shares,” he said. “The resulting post-transaction Alanco will feature a relatively ‘clean’ balance sheet with $7-8 million of current assets consisting of cash and ORBCOMM stock. We are now actively pursuing new opportunities to create shareholder value by leveraging Alanco’s public listing, attractive balance sheet, and potentially valuable tax-loss carry forwards through a strategic merger or acquisition.”
Alanco was advised on the transaction by Oberon Securities LLC, a New York City-based investment bank.
ORBCOMM is a global satellite data communications company focused on machine-to-machine (M2M) communications. Headquartered in Fort Lee NJ, it has its network control center in Dulles VA. Access www.orbcomm.com for more details.