CSI Wireless and Kansas based RHS have entered into a Letter Agreement whereby CSI will purchase RHS' sales, marketing and distribution assets associated with the market-leading Outback line of GPS guidance products for agriculture applications (the "Outback Business").
Under this Letter Agreement, CSI and RHS will combine their respective GPS operations to create the world's leading supplier of GPS products for agricultural markets.
The Outback Business will be combined with CSI's GPS Business Unit to create "Hemisphere GPS" which will market Satloc and Outback branded products, together with all of CSI's other GPS products.
CSI currently manufactures the Outback branded line exclusively for RHS.
On a proforma basis, for the year ended December 2004, the combined revenue of CSI's GPS Business Unit and the Outback Business would have been approximately $45 million.
Hemisphere GPS brings together CSI's proprietary GPS technology and manufacturing strengths, with RHS's sales, marketing, branding and distribution expertise.
Together they have made the Outback product line the global market leader for agricultural-related GPS products.
The transaction is aligned with CSI's corporate strategy to leverage its GPS engineering strength. CSI is intent on leveraging its advanced technology position and the underlying intellectual property to increase its dominance within its existing and new GPS markets.
Stephen Verhoeff, President and CEO of CSI commented, "Combined, we become the industry leader in agricultural GPS products, with strong R&D capabilities, marketing and sales strength and distribution channel expertise.
This is a rapidly growing market and we now hold the market leader position. Our agricultural GPS business is very profitable and this acquisition will allow us to further increase our dominance and CSI's profitability over the long term."
Rick Heiniger, Chief Executive Officer of RHS will be appointed President of Hemisphere GPS, and Dean Ryerson, RHS' President will be responsible for Hemisphere's combined operating functions as Vice President and General Manager.
Both have agreed to sign multi-year employment contracts.
"This is a dramatic development within our market and is tremendously exciting for us," stated Mr. Heiniger.
"Combining our businesses is strategically powerful. Hemisphere will be a formidable competitor in a rapidly expanding market as a result of its customer focus and high value, high performance GPS.
"Because we have aligned all aspects of the enterprise, from technology development to product sales, efficiency improves, quality increases and faster response to market is achieved.
"We now have the enterprise components necessary in one well-managed delivery structure to be the perfect supply partner to existing and future customers. This formula will be hard to compete with."
