If I wandered into work at ConeXus World this morning, and a colleague let me know the company just got acquired by Creative Realities, I’d probably head for whatever local bar was open that early, to order a very stiff drink.
And it wouldn’t be a celebratory drink, since everything my new masters touch seems to turn red.
Creative Realities, Inc. has announced today that it has done a definitive merger agreement with ConeXus World Global, LLC, in which ConeXus becomes a wholly-owned subsidiary of CRI for stock consideration equal to approximately 23.6% of the Company.
The deal is on a fully-diluted, as-converted basis, through the issuance of a combination of the Company’s common and preferred stock at a price (or conversion price) of $.28 per share. I have almost zero idea what that means, but someone does. Maybe.
Richard Mills, President and CEO of ConeXus, is CEO of the combined company at the closing of the merger and John Walpuck, who was CRI’s Interim CEO, takes on Chief Operating Officer and Chief Financial Officer nameplates.
The deal has a condition to getting closed. CRI must round up people willing to put yet more money into the company – in this case an aggregate of $1.5 million in principal amount of senior convertible notes.
Upon consummation of the merger, says a news release this morning, the board of directors of the combined company will include the existing Company board and two new members – Richard Mills and a designee of the new investor.
“The acquisition of ConeXus provides a critical missing link, significantly enhancing our offering of end-to-end solutions for our current and future customers,” says Alec Machiels, CRI’s Chairman. “ConeXus has a very strong reputation in designing, installing and servicing high-end audio-visual networks for clients both domestically and internationally. With offices across North America and installations in over 45 countries, we are well positioned to service a diverse portfolio of luxury brands, DOOH companies, advertising networks, and global retailers. The board is also extremely pleased to be naming Rick as CEO of the combined company. He has over 20 years of experience in this field and significant public company experience.”
Should closing conditions get met, like raising that extra cash, the merger is expected to be consummated in the latter part of next month.
Wow. Just wow.
CRI was its own entity until last year when it went into a merger deal with the people behind Wireless Ronin and Broadcast International, a pair of signage software and solutions companies that had collectively generated enough red ink to fill a 50-metre swimming pool.
In the the months since that merger the combined entity had continued to lose a pile of money, staff headcounts kept shrinking, CRI’s respected CEO Paul Price got outta dodge, and rumors swirled about the state of some critical, whale-sized accounts. One of CRI’s biggest accounts – a digital OOH network – dropped them last week.
The last financials from the company made it reasonable to wonder if the doors would be open for much longer.
So now they merge with a deployment firm based out of Louisville, Kentucky that has, from some clients I know, a strong service delivery reputation. Problem is, they work with other software companies like YCD and ComQi, and I’m not sure how this blended entity that has its own (Ronin) software will be greeted, and trusted.
On the positive side, deployment and management services are some of those elements of this business that are not easily commoditized or stripped out of budgets. It’s probably a way better business to be in than trying to make money off software that keeps dropping in price, or low margin hardware.