Advertisement

FutureLink to Buy N.Y. Firm for $57 Million

Share via
From Times staff and wire reports

FutureLink Corp., which performs computing services for businesses through the Internet, continued its buying spree Wednesday, agreeing to acquire Madison Technology Group for $57.5 million in cash, stock and notes to expand into the northeastern U.S.

Over the last six months, Irvine-based FutureLink has bought five providers of Citrix Systems software, which modifies applications so they can be used over the Internet, cell phones, personal digital assistants such as 3Com Corp.’s Palm Pilot, and in other hand-held digital devices.

Businesses using FutureLink don’t have to install and upgrade software on individual employees’ personal computers.

Advertisement

FutureLink said it will pay $43.8 million in stock, $6.5 million in cash and $7.25 million in short-term notes for closely held Madison and two sister companies, Madison Consulting Resources Inc. and Madison Consulting Resources of New Jersey.

New York-based Madison, a leading reseller of Citrix Systems Inc. software, sells technology training, consulting, installation and maintenance. It had revenue of $16.6 million for the first nine months of 1999.

This latest acquisition will add at least $20 million in revenue this year, said Bill Dering, an analyst with C.E. Unterberg, Towbin, who rates FutureLink a “buy.”

Advertisement

On Tuesday, the company completed its acquisition of another closely held company, Maryland-based VSI Technology Solutions, for $26.5 million in cash and stock, gaining clients in the mid-Atlantic region.

Last month, a New York investment bank, SmallCaps Online Group LLC, slapped FutureLink with a lawsuit contending that SmallCaps had not been paid for helping line up financing for some of the acquisitions. FutureLink said the lawsuit was without merit.

The company’s stock, which surged last year, has experienced strong swings in the last three months, losing 33% of its value so far this year.

Advertisement

The shares, which traded as low as $1.30 early in April, moved above $35 in November in the over-the-counter market. The stock, which began trading early last month on the Nasdaq National Market, closed Wednesday at $17.31, down $2.13.

The Madison acquisition is expected to be completed by Feb. 29.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Ups and Downs

FutureLink Corp.’s stock has declined after more than doubling from Nov. 2-18. Closing daily prices:

Nov. 99: $14.75

Feb. 00: $17.31

Source: Bloomberg News

Advertisement