Agilysys Signs Agreement to Acquire Innovativ

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. October 14, 2008

MAY 25, 2007. Agilysys Signs Definitive Agreement to Acquire InnovativAgilysys, Inc. (Nasdaq: AGYS), a leading provider of IT solutions, today announced it has entered a definitive agreement to acquire Innovativ Systems Design, Inc., a privately held company based in Edison, N.J. At approximately $260 million in revenues, Innovativ is the largest U.S. commercial reseller of Sun Microsystems servers and storage products.

Innovativ is an integrator and value-added reseller of servers, enterprise storage management products and professional services. The company designs, implements and deploys complex, large-scale IT infrastructure solutions, acting as a single hardware, software and services source for its enterprise customers. Employing an experienced team of senior technology and business experts, Innovativ also offers a broad portfolio of proprietary professional services to support its customer solutions. With the company's Sun relationship and strong presence in financial services and telecommunications, the acquisition will further diversify Agilysys' supplier mix, establish new markets and broaden the company's customer base.

Over the trailing 12 months ended March 31, 2007, Innovativ generated revenues of approximately $256 million and earnings before interest, taxes, depreciation and amortization ("EBITDA") in excess of $20 million.

Innovativ's achievements have earned it a ranking of 132 in the VARBusiness 500 in 2006 and, as recipient of the 2005 VARBusiness Top Revenue Generator Award, the company is recognized as one of North America's top solution providers and one of only 17 honored by the magazine.

The purchase price of $100 million will be funded by cash on hand. In addition, Agilysys will pay an earn-out of two dollars for every dollar of EBITDA greater than $50 million in cumulative EBITDA over the first two years after closing. The earn-out will be limited to a maximum payout of $90 million.

The acquisition is expected to close on or around July 1, 2007, subject to, among other things, the satisfaction of customary closing conditions.

"The acquisition of Innovativ will establish a new and significant relationship between Sun and Agilysys," said Arthur Rhein, chairman, president and chief executive officer of Agilysys. "Moreover, the addition of Sun expands Agilysys' offerings to include four of the most pervasive computer technology suppliers: EMC, HP, IBM and Sun."

Tony Mellina, chief executive officer of Innovativ, said, "Our employees are excited to join Agilysys, a recognized leader in IT solutions. Together, the organizations will leverage their combined resources and talents to benefit our customers." Mellina will become senior vice president and lead the company's newly created Agilysys Sun Technology Solutions business unit.

Rhein added that the acquisition of Innovativ is an important step in continuing Agilysys' growth as one of the leading providers of IT solutions to the corporate and public sectors. The acquisition is also consistent with announced plans to use proceeds from the sale of its former distribution business to fund growth organically and through acquisition.

Based on its growth plans, the company has established several long-term financial goals, including: Grow sales from approximately $500 million to $1 billion within two years and to $1.5 billion in three years; -- Target gross margins in excess of 20% and EBITDA margins of 6% within three years; -- While in the near term return on invested capital will be diluted due to acquisitions and legacy costs, the company continues to target long term return on capital of 15%.

Following the close of the Innovativ acquisition and including the company's recent acquisition of Stack Computer, Agilysys will have pro forma revenues in excess of $800 million.