EXHIBIT 99.1
CONTACT:
Digital River, Inc. Tech Squared Inc. Xxxxxxx NHB Investor Relations
Xxx Xxxxxxxx Xxxxxxx X. Xxxxxx Xxx Xxxxxxxxxx
Chief Financial Officer Chief Financial Officer 612.371.0000
612.253.1234 612.832.5622 xxxxxxxxxx@xxxxx.xxx
xxxxxxxx@xxxxxxxxxxxx.xxx
FOR IMMEDIATE RELEASE
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DIGITAL RIVER AND TECH SQUARED ANNOUNCE AGREEMENT
FOR DIGITAL RIVER TO ACQUIRE TECH SQUARED ASSETS AT A DISCOUNT
EXCHANGE OF SHARES WILL REDUCE DIGITAL RIVER SHARES OUTSTANDING BY 350,000
MINNEAPOLIS, July 11 - Digital River, Inc. (Nasdaq:DRIV), today
announced the execution of a definitive agreement for the acquisition of the
assets of Tech Squared Inc. (OTC Bulletin Board:TSQD) consisting primarily of
3,000,000 shares of Digital River common stock in a tax-free reorganization.
Digital River will receive 3,000,000 shares of its own common stock owned by
Tech Squared and $1.2 million in cash, and in exchange will issue 2,650,000
shares of Digital River common stock to Tech Squared. Tech Squared intends to
distribute the shares of Digital River common stock to Tech Squared's
shareholders after the closing of this share exchange and after payment of Tech
Squared's liabilities, as part of a plan of liquidation. All of the operations
of Tech Squared, including its catalog and distribution businesses, are required
to be sold or liquidated prior to the transaction closing.
"This transaction represents a win-win for all parties involved," said
Xxxxx Xxxxxxx, president of Digital River. "Digital River is buying back
3,000,000 shares of stock and receiving $1.2 million in cash in exchange for the
issuance of 2,650,000 shares of stock. Our shareholders will all share in the
benefits of reducing our shares outstanding by 350,000 shares through this
transaction. The Tech Squared shareholders will also benefit by becoming direct
shareholders of Digital River, thereby eliminating the inefficiencies associated
with the indirect ownership structure."
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"Tech Squared's investment in Digital River is worth in excess of $93
million based on the valuation of this transaction at Friday's closing price of
Digital River's common stock," said Xxxxx Xxxxx, CEO and president of Tech
Squared. Tech Squared today exercised, on a cashless basis, its option to
acquire 3,000,000 shares of Digital River common stock from Xxxx Xxxxxxx. Xxxxx
continued,"We are pleased that our shareholders will now have a more effective
means to realize the benefit of this investment by being direct owners of
Digital River stock."
The transaction is subject to approval by the shareholders of Tech
Squared, as well as other pre-closing conditions, including the sale or
liquidation of the operations of Tech Squared and receipt of customary opinions
of counsel and tax opinions. Tech Squared is currently pursuing alternatives
regarding the disposition of its operating business. Digital River and Tech
Squared also have certain rights to terminate the transaction under certain
circumstances. After closing of the transaction, Tech Squared will begin
proceedings to liquidate under a plan of liquidation. Tech Squared will
establish a liquidating trust, currently expected to be a minimum of $7.2
million, to cover any potential liabilities of Tech Squared. In addition,
certain significant shareholders of Tech Squared, representing approximately 44
percent of the ownership of the company, have agreed to a lock-up on the shares
of Digital River common stock that they will receive in the transaction, and
have also agreed to vote in favor of the transaction. The transaction is
expected to close in the fourth quarter of 1999.
XX Xxxxx Securities Corporation acted as financial advisor to the
special committee of the Tech Squared board of directors, and Broadview
International LLC acted as financial advisor to the special committee of the
Digital River board of directors.
Digital River and Tech Squared each expect to file a Form 8-K shortly
that will include the definitive agreement between the parties.
Digital River also announced that Xxxxx Xxxxx has resigned from the
Digital River board of directors.
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ABOUT DIGITAL RIVER*
Digital River, Inc., based in Minneapolis, is the largest online source of
software and a leading outsource provider of Web-based commerce solutions. The
company provides more than 6,000 software publishers and online retailers with
its proprietary technology for Internet delivery of more than 100,000 digital
products, including 30,000 software products and applications. For more
information, visit Digital River's Web site at xxxx://xxx.xxxxxxxxxxxx.xxx.
ABOUT TECH SQUARED
Tech Squared Inc., also based in Minneapolis, is a national marketer
and distributor of mid- to high-end microcomputer hardware, software and
peripherals primarily to businesses in the desktop publishing, graphic arts and
pre-press industries, as well as an emerging customer base of Internet and
intranet site developers.
* Except for the historical information contained herein, this press release
contains forward-looking statements, including statements containing the
words, "believes," "anticipates," "expects" and similar words. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others: the Company's
limited operating history and variability of operating results; market
acceptance of electronic software delivery; the Company's ability to maintain
relationships with software publishers and online retailers; competition in
the electronic commerce market; and other risk factors referenced in the
Company's public filings with the Securities and Exchange Commission.
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07/11/99
