MuM takes on an Open Mind

One of the leading CAD solutions providers in Europe, Mensch und Maschine Software (MuM), has acquired 100% of Open Mind Technologies.

One of the leading CAD solutions providers in Europe, Mensch und Maschine Software (MuM), has acquired 100% of another German company, the CAM system specialist Open Mind Technologies of Unterfohring, near Munich.

The latter, best known for its hyperForm, hyperMill and hyperFact software products, has a wholly owned UK subsidiary based in Wantage, Oxfordshire, whose day-to-day operations are unaffected by the takeover.

Open Mind, with nearly 90 employees and an annual turnover in 2001 of Eur 8.5 million, is one of the leading providers of CAM technology focusing mainly on the major growth areas of high-speed and five-axis milling.

The company has been in the market since 1994 and has an installed base of almost 5000 CAD/CAM workstations in Europe, the USA and Asia.

Exports accounted for over half of turnover in 2001.

Software from Open Mind is primarily used in the automotive and aerospace industries as well as in turbine engineering and medical engineering.

Alongside well-known large companies such as DaimlerChrysler, BMW, VW, Volvo, Toyota, EADS, Alessi and Goodyear, the list of users includes a whole range of SME companies, predominantly in the supply industry.

"For us, the absorption of Open Mind into the MuM group is the crowning achievement of our technology offensive", says MuM chairman Adi Drotleff on the takeover.

"Of the group's 480 employees, more than half already work for our technology and services subsidiaries.

This means that already in 2002 more than 50% of the group's gross yield will be generated from our own technology.

By comparison, in 2001 this share was only 21%".

For Werner Schwenkert, the founder of Open Mind, the synergies with other MuM technology subsidiaries, especially Euklid, represent significant motives for moving under the MuM group's wing: "The profiles of Open Mind and Euklid complement each other perfectly.

While Euklid brings a solid customer base as a brand that has been established in the market for nearly 30 years, we can offer a strong guarantee for the future with Open Mind's innovative technology.

Our sales strength in Europe and increasingly also in the USA stands beside Euklid's outstanding market position in Japan".

However, synergies do not just arise with Euklid, but also with the MuM subsidiary AIM and its Compass PDM product line, and in the medium term with RCT, a company active in automation for the shoe industry whose main focus is also on CAM.

The consolidation of Open Mind in the MuM group is planned retrospectively to 1st January 2002.

For 2002, the new group subsidiary is expected to make a contribution to revenues of approx.

Eur 11 million as well as a contribution to results at the EBITDA (earnings before interest, taxes, depreciation and amortisation) level of between Eur 0.5 and 1.0 million.

For 2003, around Eur 14 million in turnover and Eur 1.5 to 2.0 million EBITDA are planned.

The MuM executive board's estimates for turnover and profits development in 2002 and 2003, which were announced only recently at the financial results press conference, will remain essentially unchanged by this.

However, it can be expected that turnover and EBITDA in 2002 are more likely to move nearer to the upper end of the target zones of Eur 170 to 185 million (turnover) and Eur 14 to 17 million (EBITDA).

For the earnings per share after goodwill amortisation, however, on account of the increase in the number of shares for 2002, the executive board would view even achieving the lower target value of Eur 0.80 per share as a success, while for 2003 and following years an increasingly positive influence of the new tech subsidiary on the net profit-turnover ratio and hence on earnings per share is expected.

The takeover is proceeding via a share swap, preserving liquidity.

Thus initially a value of Eur 6.9 million was set for Open Mind, for which its shareholders receive some 600,000 MuM shares from an increase in capital from authorised share capital decided on today by the executive and supervisory boards.

This increases the total number of MuM shares by 13.5% to somewhat over 5 million.

The very moderate assessment for a fast-growing technology company with a multiple of just 0.85 of the turnover already generated in 2001 was accepted by OPEN MIND shareholders in view of the current undervaluation of MuM shares, which offers large scope for positive mid- to long-term share price development.

For this reason, MuM is also under obligation only in the event that MuM shares do not sustainably reach a level of Eur 30.50 in the next five years (corresponding to roughly 60% of the historical highest share price) to make a cash settlement on 1st April 2007 of a maximum Eur 2.9 million.

The final valuation of Open Mind thus lies within a range of Eur 6.9 to 9.8 million.

In addition, the Open Mind founder shareholders, Werner Schwenkert, Dr Josef Koch and Christine Fitz, who together own some 83% of Open Mind capital, are documenting their long-term commitment within the MuM group with a three-year unconditional freeze on selling stock (thus only 17% or about 100,000 of the MuM shares that have just been issued, the majority of which are held by Siemens Venture Capital, Munich, Germany, can find their way onto the market before 1st April 2005.

This corresponds to around 2% of MuM's share capital).

Werner Schwenkert will take over the newly created research and development directorship in the MuM group.

He thus joins the hitherto five-man team around Adi Drotleff, consisting of Peter Baldauf (Sales), Michael Endres (Marketing), Jens Jansen (IT) and Peter Schutzenberger (Finance).

Dr Josef Koch continues as before as software development director at Open Mind.

Christine Fitz remains head of business operations at the Open Mind subsidiary.

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