Agilysys Announces Strategic Transformation

Agilysys, Inc., announced today that it will divest its distribution business to focus solely on growing its IT solutions business ─ the Enterprise Solutions Group (ESG) ─ a leading provider of innovative IT solutions to corporate and public sectors, with special expertise in select vertical markets, including retail and hospitality.

The company has signed a definitive agreement to sell substantially all of the assets of its KeyLink Systems Group (KSG) to Arrow Electronics (Arrow) for $485 million in cash. JPMorgan acted as financial advisor to Agilysys on this transaction and has provided the board of directors with a fairness opinion. Through the sale of KSG, Agilysys will exit all distribution-related businesses and exclusively sell directly to end-user customers. By monetizing the value of the KSG distribution assets, Agilysys will significantly increase its financial flexibility and redeploy the proceeds to accelerate the growth, both organically and through acquisition, of its IT solutions business.

In addition, the Agilysys board of directors has authorized the self tender offer to repurchase up to 6 million of its outstanding common shares, or approximately 20% of the company's outstanding shares. Agilysys currently expects to commence the estimated $100 million tender offer as soon as reasonably practicable following the closing of the proposed sale of KSG.

"Today's announcement will lead to the completion of the strategic transformation we began in 2003 when we exited the electronic components distribution business," said Arthur Rhein, Agilysys chairman, president and chief executive officer. "This decision reflects the successful expansion of our IT solutions business over the last four years, and the excellent long-term opportunities available to accelerate our growth as a solution provider. In addition, as we continue to position the company closer to the end customer, we will enhance our ability to provide differentiated value and greater rewards to customers and shareholders."

By Agilysys