Aether Systems, Inc. a leader in wireless data services and systems, and Reuters, the global information and news group, today signed a letter of intent to set up a new, independently managed company to develop and provide wireless data applications in Europe, initially focusing on financial markets. The new company will be headquartered in the United Kingdom.
Following its formation, the new company will design, develop and operate wireless services for clients in a variety of industries. Revenues will be derived from service fees, transaction fees and design and development work. The company's strategy will be to build its business both organically and through acquisition of complementary companies.
Aether Systems develops wireless data and transaction solutions for mobile professionals and consumers. Aether will initially own 60 percent of the new company. It will contribute $100 million in cash and will have three directors on the Board. David Oros, Chairman and CEO of Aether Systems, will be Chairman and acting CEO of the new venture. The management team of the new company will be announced in due course.
Under the proposed agreement, Reuters will initially own the remaining 40 percent of the company through a combined contribution of assets and approximately $22 million in cash. It will have two board members. Reuters will be the primary supplier of news and financial information to the new venture, which will be licensed to employ the Reuters and Aether brands in its products and services.
The proposed venture with Reuters is part of Aether's strategy to expand internationally as a leading wireless applications services provider. Aether is developing innovative corporate wireless data applications for smartphones, handheld computers and two-way pagers, while hosting and supporting those applications over a multitude of wireless data networks.
"We are extremely excited to team up with Reuters - the recognized world leader in information and news services - as the market in Europe for wireless applications and services is now taking shape," David Oros said. "The European and US markets for wireless data are evolving along different tracks. Each has its own complexities, including competing standards and network limitations. Removing those complexities for our business customers and allowing them to gain new efficiencies and productivity by truly empowering their mobile workforces - is what Aether is all about."
This transaction will enable Reuters to accelerate its plans to be a leading provider of data and content for wireless applications in Europe. It will allow Reuters to move from supplying wholesale data to providing information, transaction capabilities and services to users of wireless applications. Importantly, the new company will create a base for transition to the next generation of Wireless Application Protocol (WAP) services.
Peter Job, Reuters chief executive, said: "Reuters wireless strategy is for anyone, anywhere, anytime, to have access to personalized information services. Delivering these services requires partnerships with carriers, manufacturers and infrastructure specialists. We already have a number of strong partnerships in place, in particular with Vodafone, Nokia and Ericsson. We now want to take the business to a new level and be more directly involved in the provision of specific applications services in the wireless market for our customers. Reuters has been an enthusiastic investor in Aether Systems since 1998 and I am looking forward to working with them in bringing their successful business into Europe."
The transaction will be subject to the negotiation and execution of definitive documentation and upon Aether obtaining the requisite financing for its contribution, as well as other customary closing conditions.
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