EDGAR Online and UBmatrix today announced the signing of a definitive merger agreement that would create the first global end-to-end provider of solutions for the creation, validation and analysis of XBRL (eXtensible Business Reporting Language) content. UBmatrix is one of the original inventors of the XBRL financial standard, which is being mandated worldwide by many regulators to improve the transparency and efficiency of business reporting.
The merger would combine EDGAR Online’s position as the leading provider of US Securities and Exchange Commission (SEC) public company XBRL filings and XBRL data, and UBmatrix’s experience as the leading XBRL software provider to independent software vendors and major US and international regulators. The combined entity will be strongly positioned to provide global markets with XBRL based transparency solutions from issuers to regulators to investors.
The merger will be an all equity transaction with the issuance by EDGAR Online of preferred and common shares equal to approximately 16% of the Company’s common stock on a fully diluted basis, subject to post-closing adjustments. Currently UBmatrix has $1.8 million of cash on its balance sheet, and will be required to satisfy all indebtedness by the closing. In addition to the merger consideration, current UBmatrix shareholders have agreed to invest an additional $2 million in cash into the Company through the purchase of additional EDGAR Online preferred shares (convertible into 1,381,088 common shares of EDGAR Online as of January 28, 2015).
“We are proud to announce this strategic merger. UBmatrix is the leader in XBRL software and is relied upon by some of the largest regulators and software companies in the world. EDGAR Online is a world leader in XBRL filing services and data used by some of the largest issuers and investment firms in the world. The new company will be strongly positioned as a global leader in XBRL software, services and data,” said Philip Moyer, President and CEO of EDGAR Online. “We expect this combination of businesses, brands and intellectual capital will allow us to expand the set of solutions we can offer to customers and partners in this rapidly growing market.”
“Creating a single comprehensive source for XBRL solutions in support of financial transparency will accelerate the market for this information exchange standard,” said Sunir Kapoor, President and CEO of UBmatrix, which is a privately held company headquartered in Redwood City, California. “Just as important, we believe that we will have the broadest and strongest network of partners in the industry. We expect this to ease adoption of the XBRL standard for organisations across the global financial information supply chain – from corporate filers and regulators to financial data providers and investors.”
Under the terms of the agreement, UBmatrix will become a wholly-owned subsidiary of EDGAR Online. It is expected to initially operate as a standalone unit of the combined company, using its existing brand and under the leadership of Kapoor, who will serve as President of the unit. Barry Schuler, a director on the board of UBmatrix and former chairman and CEO of America Online Inc., will join the board of EDGAR Online at closing.
When the merger becomes effective, the shareholders of UBmatrix will be entitled to receive an initial payment of approximately 74,379 shares of EDGAR Online Series C Preferred Stock (initially convertible into 5,129,573 shares of common stock) and 2,685,088 shares of EDGAR Online Common Stock in consideration for the merger, a portion of which shares of common stock will be issued to employees of UBmatrix. Approximately 1,622,042 shares of EDGAR Online Common Stock will be paid into escrow to secure the post-closing indemnification obligations of the UBmatrix stockholders. Through January 28, 2015, Series C Preferred Stock issued in the merger is expected to receive paid-in-kind dividends that will result in it being convertible into an additional 2,998,957 shares of EDGAR Online common stock. In connection with the merger agreement and simultaneously with the closing, the UBmatrix shareholders will purchase an additional $2 million worth of Series C Preferred Stock with cash (initially convertible into 871,546 shares of common stock) pursuant to a Stock Purchase Agreement. This Series C Preferred Stock is expected to receive paid-in-kind dividends that will result in it being convertible into an additional 509,542 shares of EDGAR Online common stock.
Since its founding, EDGAR Online has transformed itself from a provider of US SEC EDGAR documents into the leading provider of XBRL filing services, data and analytical tools, and has produced over 37% of all mandated XBRL filings submitted to the SEC to date, without a single restatement. EDGAR Online has also built the only historical XBRL data set in the US market, which is widely used by money managers, ETFs, hedge funds, and corporate analysts.
UBmatrix is a leading provider of a complete portfolio of XBRL-based software solutions for global regulatory organisations and commercial enterprises, including the Federal Deposit Insurance Corporation, Keane Federal Systems under contract to the SEC, Deposit Insurance Corporation of Ontario, Banque de France and Belgian Tax Authority. UBmatrix licenses XBRL software solutions to some of the world’s largest enterprise software vendors including Oracle and SAP. UBmatrix holds the seminal XBRL patent #6,947,947, issued in 2005 and entitled “method for adding metadata to data.”
The definitive merger agreement has been approved by the Boards of Directors of both companies and by the shareholders of UBmatrix. The issuance of the EDGAR Online stock in the merger and certain of the other transactions contemplated by the merger agreement are subject to a vote by the EDGAR Online shareholders. Closing is contingent on this approval as well as other customary closing conditions. If the agreement is approved by shareholders, it is anticipated that the merger will be consummated in the third quarter of 2010.