Baltimore disposes of last major business unit

22 Sep 2003

The one-time golden child of the FTSE100, Baltimore Technologies, has entered into an agreement to sell its last major business unit, the PKI division, to beTRUSTed for £5m sterling in cash.

Subject to shareholder approval at a forthcoming extraordinary general meeting, the conditional sale agreement marks the end of a divestment programme that saw the company sell off a number of key divisions over the past seven months. In its first-half year results last week the company said that anticipated up to £15.3m sterling in gross proceeds from the sale of its SelectAccess business to HP earlier this year for £8m sterling, the sale of its Omniroot managed services division to BeTRUSTed for £2m sterling and a financial settlement with Clearswift for £4.5m sterling on the sale of Content Technologies last year.

This final divestment will bring the total cash proceeds to approximately £20.9m sterling from all of the sales. It is understood that the sale of SelectAccess to HP has now closed and funds from the deal were been received last Thursday.

Describing the rationale for the divestment of so many critical business units, the company stated that since the launch of the controlled sale process in May, Baltimore has lacked critical mass. “During the course of the past two years the company has succeeded in significantly reducing operational cash burn. However, Baltimore alone does not represent a platform on which to consolidate. The need for scale in today’s infrastructure software market makes the disposal of Baltimore’s core PKI business an obvious proposal,” the company said.

Baltimore intends to use the cash from the disposal of its PKI business for general corporate purposes. It expects that the disposal will be completed by the end of November.

The company added that certain PKI employees will transfer to beTRUSTed. The PKI group will remain principally based in Ireland. Baltimore said that it would implement a redundancy programme for the majority of its remaining employees.

Commenting on the sale of the company’s prized PKI division, Baltimore’s CEO Bijan Khezri said: “We firmly believe in the need for scale to continue driving consolidation of the software industry worldwide. The long-term competitiveness of the PKI business requires critical mass and beTRUSTed has emerged as an excellent partner to take our PKI technology and customer base to its next level.

“This transaction is our last significant asset disposal and will deliver on our commitment to eradicate operational cash burn and maximise shareholder value. The cash balance resulting from Baltimore’s successful asset disposals effectively puts the future strategic options available to Baltimore Technologies into a new perspective.”

By John Kennedy