Wind River Systems (Nasdaq: WIND) plans to buy its main rival for about 20.8 million shares of stock.
After market close Thursday, the maker of software for designing embedded systems applications announced plans to buy competitor Integrated Systems Inc. (Nasdaq: INTS) in an all-stock deal. Under the agreement, Wind River would exchange .92 shares of stock for every Integrated Systems share. ISI has roughly 22.6 million shares outstanding.
The deal values ISI at more than $417 million, a premium of roughly 74 percent to the company's price of 10 9/16 at the close of regular trading Thursday. As a stock-for-stock deal, the transaction would be accounted for as a tax-free pooling of interests.
Integrated Systems stands as the closest rival to Wind River, which claims more than 40 percent of the market for embedded systems software development tools. Wind saw revenue of about $39.6 million in its latest quarter reported, compared to $35 million for Integrated Systems. ISI has been on a steady growth track in 1999 after a slew of problems in prior years.
Executives from both companies touted Thursday's proposal as a way to speed up development cycles.
"Time-to-market pressures are driving our customers to increasingly demand both broader and more in-depth embedded computing technology," said Tom St. Dennis, CEO of Wind River. "The combined experience of more than 500 development engineers and over 200 technical service engineers -- including consultants, tech support, and training -- resulting from this transaction will enable us to meet these needs and bring better products to market faster."
St. Dennis would be CEO of the new company, under the merger agreement. Naren Gupta, chairman and founder of ISI, will be vice-chairman, while Wind River founder Jerry Fiddler would be chairman. ISI's current president and CEO, Charles Boesenberg, plans to retire from his post.>