Private Equity Buys Gemcom Software for $180M

May 12, 2008

Gemcom Software International has signed a definitive agreement to be acquired by JMI Equity and The Carlyle Group, in an all cash transaction valued at approximately $180 million. Under the terms of the agreement, Gemcom shareholders will receive $2.90 in cash for each share of Gemcom common stock, representing a 16% premium over Gemcom’s weighted average closing price for the last forty-five trading days.

“We are pleased to announce this transaction, which represents the culmination of a thorough review of our standalone plan and strategic alternatives,” stated Burke Corbet, chairman of the Gemcom Board of Directors. “The Board of Directors has concluded that this transaction is in the best interests of our shareholders, allowing them to realise the value of their investments at an all time high price. This acquisition represents a resounding endorsement of the results we have achieved through our strategy, market leadership position and strong management team.”

JMI Equity is a private equity firm exclusively focused on investments in growing software and business services companies throughout North America with approximately $1.3 billion of committed capital under management. The Carlyle Group is a global private equity firm with $81.1 billion under management and operations in 21 countries. Carlyle’s U.S. growth capital team invests in growth buyout transactions, expansion-stage growth equity and selected early-stage venture capital opportunities.

“Our strategy at JMI is to focus on software and business services companies with proven business models and to partner with their management teams to build exceptional companies," said Bob Smith, general partner of JMI Equity. “We are particularly attracted to Gemcom because of its proven leadership team and the execution capabilities of its global staff. We believe that through continued investment in its technology, people and deep customer relationships, Gemcom will continue to build on its market leadership position in the mining market. This is a unique and exciting opportunity to be part of Gemcom’s vision to solve their customers’ business issues through technology that will transform the mining industry.”

“Gemcom is an ideal fit with our investment strategy – it is a high-growth company with leading market share, providing compelling solutions to the global mining sector,” stated Brooke B. Coburn, managing director and head of Carlyle Venture & Growth Partners, the U.S. venture and growth capital arm of The Carlyle Group. “We look forward to working with the Gemcom management team to support expansion of their market-leading mining software solutions to existing and future customers in all major global markets.”

Gemcom has a portfolio of award-winning software and service solutions and is a clear leader in mining productivity solutions. The Company has a global reach and local presence in all major mining centres, servicing clients in more than 90 countries from 19 locations.

“For more than 22 years, Gemcom has been delivering innovative solutions to improve mining productivity, which has enabled us to attain our leadership position,” said Rick Moignard, president and CEO of Gemcom Software. “JMI and Carlyle have a strong track record of growing technology companies and I look forward to working with them in accelerating our vision to improve how the mining industry uses software and best practises to address their key challenges.”

Gemcom’s Board of Directors has approved the agreement and has unanimously resolved to recommend that Gemcom’s shareholders vote in favour of the transaction, which is to be carried out by way of a statutory plan of arrangement. In that regard, Gemcom’s Board received an opinion from its financial advisor, The Catalyst Group, that the consideration to be received by shareholders in connection with the transaction is fair, from a financial point of view, to such shareholders. In addition, each of Gemcom’s Directors and the CEO, CTO and CFO, have entered into voting agreements pursuant to which each party has agreed to vote in favour of the transaction. Shareholders will be receiving an information circular outlining the next steps and the voting process. Pending the receipt of shareholder approval, the transaction is expected to be completed in July.