Division Group Plc, the Bristol, UK-based virtual reality applications developer, is paying $22m for ObjectLogic Inc, the San Diego, California developer of software that enables computer-generated images to be viewed on a variety of different platforms. The immediate logic behind the deal is that both companies sell into similar markets and have common customers. But longer term, the group plans to combine the development teams to produce an integrated product range. Division is paying $16m in a mixture of cash and shares immediately and a further $6m if sales hit a target of up to $6.75m in the year following the acquisition. To help finance the deal and provide further working capital, Division is raising around 5m pounds by a placing and open offer of shares. While ObjectLogic looks like a good fit, the market was less than impressed and Division shares eased back 5% to 47.5 pence. While Division has shed its hardware side to concentrate on virtual reality products, the company’s mid-term performance is less than impressive. Revenues slid back 8.1% to 2.1m pounds, though the recent award of a 1m pound order from the Airbus consortium suggests a more buoyant second half. Division blames the cost of building up a sales organization for the increase in net losses from 956,0000 pounds to 2.2m pounds and says the acquisition of ObjectLogic’s sales force will help improve sales.
