Magic Raises $17 Million in Sale of Subsidiary
January 8, 2008 Alex Woodie
System i development tool maker Magic Software has sold its Advanced Answers on Demand (AOD) subsidiary to Fortissimo Capital for $17 million, the software company announced in late 2007.
AOD develops a suite of applications, also called AOD, that are targeted at the long-term care industry, including retirement and continuing care facilities, home health, and rehabilitation agencies. The AOD suite was developed in Magic’s fourth-generation language, eDeveloper, and runs on Windows servers. AOD is based in Fort Lauderdale, Florida, while Magic Software is headquartered in Israel, and has U.S. headquarters in Irvine, California.
The sale of the AOD subsidiary to the Israeli venture fund Fortissimo Capital is part of Magic’s restructuring strategy, says Eitan Naor, president and CEO of Magic Software. “We are pleased with this transaction, which we view as an important step forward in our long-term strategy focused on developing our core business,” Naor says. “As we look forward into 2008, we aim to continue growing and improving our core business while selling other vertical assets not related to our main focus.”
That main focus is selling its suite of development tools, called eDeveloper, as well as software integration tools, headed by iBOLT.
As part of the deal, AOD will continue to resell Magic’s products. When it’s all said and done, the sale of AOD will give Magic a one-time capital gain of $9 million, recordable in the fourth quarter of 2007, Magic says. That gives Magic $30 million in cash entering 2008, Naor says.