Datawatch (DWCH) Exercises Option to Purchase Monarch Intellectual Property For $8.541 Million
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Datawatch Corporation (NASDAQ: DWCH) has exercised its option to purchase from Raymond Huger, d/b/a Math Strategies, the intellectual property underlying the Monarch Report Analytics platform. Huger is the original developer of Monarch and its related intellectual property. Pursuant to a formula contained in a 2004 option purchase agreement between Datawatch and Huger, as amended, the purchase price for the intellectual property assets will be $8.541 million. The transaction is expected to close within 60 days.
Datawatch's intent is to finance the purchase through the combination of a subordinated note with warrants from Massachusetts Capital Resource Company, a working capital line of credit with Silicon Valley Bank and Datawatch's own cash balances. As a result of the transaction, Datawatch will eliminate royalty payments to Huger, which totaled approximately $1.5 million in fiscal year 2011. Datawatch will incur an interest expense related to the financing and a non-cash charge on an on-going basis as the value of the acquired intellectual property is amortized. The transaction is expected to be accretive on a cash basis.
Datawatch's intent is to finance the purchase through the combination of a subordinated note with warrants from Massachusetts Capital Resource Company, a working capital line of credit with Silicon Valley Bank and Datawatch's own cash balances. As a result of the transaction, Datawatch will eliminate royalty payments to Huger, which totaled approximately $1.5 million in fiscal year 2011. Datawatch will incur an interest expense related to the financing and a non-cash charge on an on-going basis as the value of the acquired intellectual property is amortized. The transaction is expected to be accretive on a cash basis.
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