Digi Doubles Size In Europe With Two Acquisitions

Computergram International, July 6, 1998

Local Area Network communications hardware and software provider Digi International Inc, is to acquire two privately held companies to double its size in Europe and move into voice over IP with ITK's products. The Minneapolis, Minnesota-based firm will pay $25m for Dortmund, Germany-based provider of remote access open systems ITK International, and $18m for Champaign, Illinois serial port remote access firm, Central Data Corp.

There will be some job losses as a result of the purchases, particularly in the ISDN market, which both Digi and ITK compete in. Digi, which employs 500 staff, is unsure as to how many people will be affected. Under the terms of the deal both companies will be consolidated into Digi's operations: ITK in Europe and Central Data in the US. ITK was established in 1991, employs 150 people, and has annual revenues of $150m. It has offices in the UK, France, Sweden and Chelmsford, Massachusetts as well as its headquarters in Germany. Central Data has 44 staff, generating annual revenues of $15m. The board of directors of both of the acquisition subjects have approved the sales, and the ITK deal is expected to close within the 45 days, and Central Data in the next 10. Under the terms of the agreement with ITK, Digi will exchange 615,00 of its shares valued at $12.5m, and another $12.5m in cash. Central Data will receive 220,000 Digi shares valued at $4.5m and $13.5m in cash. Digi says both companies fit into its future growth strategy and have synergistic product offerings. ITK and Central Data will now trade under the Digi International name.