MediaDNA Decides To Seek Out a Buyer
It might have been the worst possible time to hold an initial public offering, but the folks at SureBeam Corp., a spinoff from San Diego’s Titan Corp., went ahead with it anyway.
On March 16, in the midst of one of the steepest falling markets ever, about 6.7 million shares of SureBeam were issued at $10 per share, resulting in total capital infusion of $67 million less the cost of the underwriting.
The capital will be used to build systems and service centers, expand manufacturing capacity and increase its marketing, according to the firm’s S-1 filing with the Securities and Exchange Commission.
At the close of trading March 16, the Nasdaq stock stood at $8.59, which isn’t bad considering the market has been rolling downhill for most of the past two weeks, and occurred on a “triple witching day,” a day when many futures and options expire and usually provoke more shares to be exchanged.
The stock may have benefited from the ongoing news concerning the spread of foot and mouth disease in Great Britain and other parts of the world, even though the SureBeam technology doesn’t have anything to do with it.
Its technology irradiates meat and produce using electron beams that kill such pathogens as E.coli and salmonella. The company’s main center is in Sioux City, Iowa, but most of its 70 employees are in La Jolla.
The firm, which had its beginnings in 1997, originally planned its IPO last August, saying its share price was between $14.50 and $16.50, yielding some $95 million. But those prospects clearly had to be adjusted in the wake of the stock market restructuring that began last March and gathered steam in the second half of 2000.
Titan also planned to spin off another wholly owned subsidiary, Cayenta, an Internet software firm, but that IPO was withdrawn last year.
According to SureBeam’s filing, the firm had a net loss of $1.8 million on revenues of $29.4 million for the last fiscal year, compared to a net profit of $205,000 on revenues of $14.3 million for the previous year.
The company also disclosed it had an accumulated deficit of $18 million for the year.
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MediaDNA For Sale:
Maybe SureBeam felt confident it could do its IPO, but the folks at MediaDNA took the exact opposite tack when they decided to seek out a buyer. The 4-year-old company based in La Jolla makes encryption software that provides enhanced security to data transmitted over the Internet.
The company has retained Software Equity Group, a San Diego firm specializing in selling small- to medium-sized tech firms, and hopes to line up an acquirer later this year.
CEO Ralph Koehrer said the move to sell was made in the realization the firm needs to raise capital, and “there is no IPO market anymore.”
“Frankly, the only exit for the shareholders is to sell the company,” said Koehrer, who was hired in November. Before taking his current position, Koehrer was CEO at Poway-based Anacomp Inc. for 3 & #733; years.
Koehrer said since its founding in 1997, MediaDNA has attracted about $10 million in VC funding, including a $9.2 million investment in 1999 led by Adams Capital Management.
The 40-person company has some big-name customers in McGraw-Hill, Hoover’s and Factiva.
Leap Buys D.C. Companies:
San Diego’s Leap Wireless International said it has acquired Washington, D.C.-based Spotcast Communications, and agreed to buy Backwire, an Alexandria, Va.-based e-marketing firm for an undisclosed price. The Backwire acquisition is expected to close in April.
The purchases are intended to give Leap the technology to deliver personalized mobile media delivery service to cell phone users via voice as well as text. The service allows users to listen to news, sports scores and other information in quick voice clips as they are making their phone calls.
Leap said the mix of voice clips will contain “fun, informative and personalized content,” and be supported by advertising. The firm expects to roll out the service in selected markets during the first half of 2001.
“Our mobile media strategy is to turn wireless service into a true information medium like newspapers, radio, television and most recently, the Internet,” said Doug Hutcheson, Leap senior vice president.
The two acquisitions entail the addition of 60 employees, including 45 people at Backwire and 15 people at Spotcast, and brings the total employment at Leap to about 1,000, including 200 employees in San Diego. The employees at the two Washington area companies are Internet content editors, technical experts, software developers, marketing specialists, and executives.
Leap’s flat-rate Cricket wireless service, now in 13 markets and at about 190,000 customers at the end of last year, said it expects to reach about 1 million customers by the end of this year.
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Tandom Medical Gets Funding:
Tandom Medical Inc., a San Diego maker of automated drug delivery systems, completed a VC investment round of $13 million led by Sofinov, based in Montreal and Pacific Horizon Ventures of Seattle. The company said it will use the funds to launch an automated drug infusion product that delivers drugs intravenously.
Send tech-related finance news to mallen@sdbj.com.
