Brokat buys Blaze, GemStone for $831.7 million

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Blaze Software sizzled Tuesday after German company Brokat Infosystems AG announced it would buy the company.

Brokat, a provider of software platforms for e-business, also bought privately held GemStone Systems, Inc. The two deals are valued at about $831.7 million, and will strengthen Brokat's core product, the e-Services platform Brokat Twister, which enables companies and institutions to become electronic services providers.

Blaze shares were up 3 15/16 to 19 7/16. The company had a cool reception in its March IPO.

In connection with the acquisition of Blaze, Brokat intends to apply for the quotation of American Depositary Shares (ADSs) representing its underlying ordinary shares on the Nasdaq National Market. Under the terms of the agreement Blaze stockholders will receive the ADS equivalent of 0.1826 of a Brokat ordinary share in exchange for each share of Blaze common stock.

To acquire Blaze, Brokat will issue 4.9 million ordinary shares in the form of ADSs in exchange for all outstanding shares of Blaze. Based on Brokat's closing price of Euros 119.80 on the Neuer Markt on June 19, the acquisition is valued at $560.5 million.

Blaze provides infrastructure software for enterprise-scale applications, and GemStone provides Java-based application server software for business-to-business transactions. Both companies' products will initially continue to be produced under their existing brand names.

Upon completion of the two transactions, Brokat will have about 1,100 employees worldwide.

To acquire GemStone, Brokat will issue approximately 2.4 million of its shares, valuing the deal at about $271.2 million.

The companies anticipate that the closing will occur at the end of September.

Both transactions will be accounted for under US generally accepted accounting principles as purchases and are expected to be tax free to Blaze and GemStone stockholders.