Eli Reifman
Eli Reifman Photo by Motti Kimche
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Asseco Poland, Europe's fifth-biggest software group, is acquiring 51% of software group Formula Systems from Emblaze.

For Warsaw-listed Asseco, the acquisition provides an entry to new markets. For London-listed Emblaze, it represents a premium over Formula's present market cap.

Emblaze, a cellular technology group founded by embattled entrepreneur Eli Reifman, had bought the 33.6% controlling interest in Formula in 2006, to have a central revenue generator in the group. Later it increased its stake.

Emblaze said it could not turn down Asseco's offer, which priced Formula at 43% above its market cap. Emblaze said it would report a capital gain of about $35 million on the sale, which it would invest in its business and use to take advantage of opportunities in the market.

The deal, worth up to $145 million, follows Asseco's buying spree, which it used to more than double sales to nearly $1 billion in two years.

The deal remains contingent on approval by Emblaze shareholders, who will convene to discuss it before the end of November.

As of year-end 2008, Formula had paid its shareholders $30 million in dividends, of which Emblaze received $15 million. It spent most of that money developing a mobile phone ("else" ), which flopped. If the dividend is included in the calculation of returns on Emblaze's investment, then its return on Formula is 74%.

Reifman remains registered as a major shareholder at Emblaze, with 15.3% of its shares. However, there is doubt as to whether he has possession of the shares.

Formula earned $31 million last year on sales of $435 million. With the sale, Emblaze remains essentially bereft of a revenue driver.