LONDON - Troubled Swedish internet consultancy Icon Medialab is to merge with rival Dutch web company Lost Boys to form a new company, which is predicting positive operating results by mid 2002.
The two signed an agreement yesterday, underwritten by a rights issue of approximately £12.4m, which will secure the financial basis of the merged company.
The deal will be voted on by Icon shareholders at an extraordinary general meeting, which will be held on January 18 2002. The deal will see Icon acquire Lost Boys from its shareholders, against a consideration of 30m shares.
The move follows yesterday's events, which saw shares of the debt-ridden Swedish company suspended from the stock exchange in Stockholm.
Icon has been desperately hunting new finance with which to secure the future of the troubled consultancy. The company has seen its shares plunge more than 98% since their peak in early 2000 and has axed around 500 jobs during 2001.
For the time being, the two companies will continue to operate under their existing names until a new name and branding can be agreed.
The client base of the merged company includes many leading European, American and multinational companies. Icon clients include Pirelli, Telefonica, Stora Enso, Lafarge and Siemens while Lost Boys includes Postbank/ING Group, Audi/Volkswagen among its clients.
The third-quarter pro-forma consolidated turnover of the new group was £20.5m and by year-end the group will have a workforce of around 1,500 people, with operations in 16 countries. It will be particularly strong in Sweden, the Netherlands, Spain, the US and Germany.
Michiel Mol, majority shareholder and CEO of Lost Boys, said: "We have spoken to various possible partners and we're convinced that Icon Medialab is the best partner for us in the upcoming consolidation process in our industry. Their geographic reach, the installed client base, as well as their technical and consulting capabilities, strongly complement our company."
Following the completion of the merger, the two said there would be more cuts, in terms of overhead reductions and by merging operations in certain countries. There were no details available on how many job losses the merger may lead to.
The merger will see a shift of power away from Sweden to the Netherlands as the new company will be managed from Amsterdam, where current interim CEO Rens Buchwaldt will take the position as CEO for the new company. The merged company will, however, continue to be listed on the O-list of the Stockholm stock exchange.
The board of the merged company is proposed to consist of seven members. Three board members from Lost Boys, two of the current board members from Icon Medialab and two new independent board members will be proposed for election by the shareholders at the January 18 EGM.
Lost Boys was founded in 1993 and has approximately 500 employees spread over Amsterdam, Barcelona, Berlin, London, Madrid, Paris, San Francisco, Warsaw and Zurich.
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