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Infocrossing Will Acquire SMS

Carrier Hotels Staff Posted Mar 4, 2004

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IT outsourcing provider Infocrossing, Inc. said today that it will acquire ITO Acquisition Corp, a data center outsourcing company doing business as Systems Management Specialists (SMS), for $36.5 million in cash and Infocrossing stock.

SMS is headquartered in Orange County, California, and will provide Infocrossing with a West Coast operation to complement its existing presence in Leonia, N.J., not far from New York City.

SMS is expected to add approximately $33 million to Infocrossing's gross revenue during the first year after the deal closes. The two companies' organizations will be integrated throughout 2004, and Infocrossing said the purchase will be "accretive on an earnings per share basis in 2004."

To fund the acquisiton, Infocrossing plans to raise $35 million by issuing new debt and equity.

"The acquisition of SMS is an important step in solidifying our position in the outsourcing market," said Zach Lonstein, Chairman and Chief Executive Officer of Infocrossing. "The deal strengthens our capabilities, expands our market reach and provides the operating infrastructure to target additional growth opportunities.

"With the addition of SMS' experienced leadership team, we have the infrastructure and skills to deliver improved value for our clients and shareholders, and realize our vision of becoming a recognized leader among providers of strategic outsourcing services in the United States," Lonstein added.

Upon completion of the deal, SMS Chairman & Chief Executive Officer Patrick A. Dolan will become President & Chief Operating Officer of the combined companiy. Robert B. Wallach, current President & Chief Operating Officer of Infocrossing, will be promoted to the position of Vice Chairman.

Founded in 1981, SMS is a provider of IT outsourcing services to medium and large enterprise companies. SMS was sold to Marconi, plc in June 2000. When Marconi began divesting operations, Dolan and other SMS managers partnered with private equity firm Riordan, Lewis & Haden to acquire SMS in February 2003.