According to reports in the Jerusalem Post and confirmed by PW, Gemstar-TV Guide has pulled out of a deal to acquire Versaware, an e-publishing services provider and software developer with offices in the U.S., Israel and India. Sources contacted by PW said Versaware is looking to new sources for financing.
The Jerusalem Post reported that Versaware cofounder and former CEO Harry Fox had announced a preliminary agreement with Gemstar-TV Guide to acquire Versaware for $170 million in January. The Post reported that Fox had said Versaware needed a larger sales and marketing force, and an acquisition by a larger firm with such a force was the best way for Versaware to increase its revenues. However, the collapse of the Gemstar deal has prompted rumors of layoffs in Israel and in the U.S. According to the Post, the company laid off 27% of its employees in the U.S. and Israel earlier this year. The newspaper also reported that the company has been unable to pay its 170 Israeli employees, and layoffs appear likely. The company has about 1,200 employees worldwide, mostly in India.
However, Sol Rosenberg, cofounder of Versaware and interim CEO, told PW that there was "no deal" with Gemstar and called the Jerusalem Post reports "hearsay. We've been talking to lots of people about all kinds of alliances. Gemstar is one of our customers." Rosenberg acknowledged that the company has been affected by the general economic downturn for tech companies. He said the layoffs in Israel were part of a planned restructuring: "We wanted to move more of our production from Israel to India, and we wanted to do it in stages. This is intended to help make us profitable."
He was critical of reports in the Post about Versaware, and called the coverage "a local blowup in Jerusalem. It's a small town, and the high-tech community in general has been hit with a lot of recent layoffs." He declined to confirm whether the firm was facing a cash-flow problem or whether layoffs or another acquisition were imminent. "I can't announce anything right now about the future or what we'll do," said Rosenberg, "but the company is intact and we're delivering our products." He also said that Versaware cofounder Harry Fox continues to be a shareholder and "a trusted adviser" to the company.
