Three months before its deadline, Fortissimo Acquisition (FSMO.OB), a special purpose acquisition company formed to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination involving Israeli-based activity, has agreed on a combination transaction to acquire 50% of the U.S. firm Psyop, based on a valuation of $60 million.
Fortissimo Acquisition, which is owned by Fortissimo Capital, will pay Psyop's owners $10 million cash and another $20 million in shares. The deal, subject to the approval of Fortissimo Acquisition's general assembly, is scheduled to close in late June. Psyop's founders could also make another $13.8 million based on profit in the next three years.
Psyop develops, designs and produces digital content, including digital movies based on 3D animation for the advertising industry. The firm's technology is based on visual effects that combine animation with live characters, and has won a number of prestigious prizes. Psyop's clients include Coca Cola, Absolut, Nike, Mercedes, Pfizer, Home Depot and AIG. The firm reported revenues of $20 million for the first three quarters of 2007.
Once the deal is completed, Psyop will establish a research and development center in Israel, as stipulated in Fortissimo Capital's prospectus, which requires its investments to be Israeli companies, or alternatively, foreign companies operating in Israel or which intend to establish operations in Israel.
Fortissimo Acquisition raised $27.2 million in an October 2006 Wall Street IPO and warrant issue, the proceeds of which are held in trust, and which would be returned to investors if the firm failed to identify material assets or activity within 18 months, and complete the acquisition by October 2008. On completion of the deal Fortissimo Acquisition will change its name to Psyop, and seek to float its shares on Nasdaq.
Fortissimo Capital is a fund specializing in technology bi/sed Israeli firms in financial straits, or that need to make quick business realignments. In recent years the fund has acquired control in Telrad, Nur Macroprinters, Radview, Soda Club, Orev Technologies and AOD. Last month Fortissimo Capital reached an agreement on the sale of Nur's activity to U.S. firm Hewlett Packard, for $117.5 million.