Acquisition Will Add Established Surplus Asset Dealer Network and Directory
And Online Surplus Asset Trade Site to FreeMarkets(R) Surplus Asset
eMarketplace
PITTSBURGH, March 22 /PRNewswire/ -- FreeMarkets, Inc. (Nasdaq: FMKT) the
world's leading B2B eMarketplace, today announced that it has signed a
definitive agreement to acquire the assets of Surplus Record, Inc. and SR
Auction, Inc. Surplus Record and SR Auction, privately held companies based
in Chicago, IL, comprise a directory and network of dealers and buyers and an
online surplus asset trade site for business surplus, new and used industrial
equipment, machinery, and machine tools.
The acquisition further strengthens FreeMarkets' position as a leader in
the emerging B2B online surplus equipment and inventory space. Industry
analysts estimate that the worldwide market for surplus equipment and
inventory is worth $300 billion annually. FreeMarkets' client base of large
purchasing organizations generates substantial amounts of surplus equipment
and inventory. Today, most of these assets are sold offline. This
acquisition enhances FreeMarkets' ability to leverage its client base as large
industrial companies increasingly turn to the Internet to sell their surplus
equipment and inventory.
Surplus Record brings 76 years of experience in the surplus asset
marketplace and a network of thousands of dealers, end-users and listings to
the FreeMarkets Surplus Asset eMarketplace. The acquisition of Surplus Record
and SR Auction follows FreeMarkets' recent announcement of its agreement to
acquire iMark.com, a leading business-to-business online marketplace for asset
recovery. By combining Surplus Record's surplus asset listings with the
technology, market making and value-added services offered through the
FreeMarkets Surplus Asset eMarketplace, FreeMarkets will create greater
liquidity for buyers and sellers of surplus equipment and inventory.
"Surplus Record has a world-class reputation among dealers and end-users
and over 76 years of industry experience, and SR Auction provides an online
site through which dealers can trade surplus assets," said Glen Meakem,
chairman and CEO of FreeMarkets. "FreeMarkets has always blended the best of
technology with a deep understanding of the markets we serve and a desire to
deliver significant value to our clients. Our acquisition of Surplus Record
and SR Auction is an extension of that philosophy. We are thrilled to extend
our best-in-class offering to dealers, empowering them with easy-to-use
technology to deliver substantial results to their bottom line."
With the addition of Surplus Record and SR Auction, the FreeMarkets
Surplus Asset eMarketplace will provide enhanced liquidity and reach to buyers
and sellers of surplus assets. The site will feature:
-- Nearly 200,000 dealers and end-users
-- Over 50,000 listings for assets worth more than $750 million
-- Advanced web-based technology platform and applications for
efficiently managing and trading surplus across multiple Web sites
including corporate intranets, vertical marketplaces and other
exchanges
-- Online and offline listing partnerships for maximum exposure
-- Value-added services such as leasing, transportation, rigging,
storing, refurbishing and investment recovery
-- A track record of over $30 million in online sales to date
"We are pleased to be joining the FreeMarkets team," said Tom Scanlan,
President of Surplus Record and SR Auction. "FreeMarkets understands that
technology, in concert with a robust dealer network and other value-added
services, delivers maximum value to manufacturers. We look forward to
combining our experience and dealer network with FreeMarkets' asset recovery
offerings and client base to achieve significant benefits for our user and
dealer community."
Under the terms of the agreement, FreeMarkets will acquire Surplus Record
and SR Auction for $18 million in cash. The acquisition will be accounted for
as a purchase and is not expected to have a material impact on FreeMarkets'
2000 results. At closing, the assets and employees of Surplus Record and SR
Auction will become part of a wholly owned subsidiary of FreeMarkets, and will
be integrated with the FreeMarkets Surplus Asset eMarketplace group. The
Boards of FreeMarkets, Surplus Record and SR Auction have unanimously approved
the transaction, and holders of all of the shares of Surplus Record and SR
Auction have agreed to vote in favor of the transaction. Closing, which is
subject to customary conditions, is expected to occur in the second calendar
quarter of 2000 or sooner.
About FreeMarkets
FreeMarkets is the world's leading B2B eMarketplace, with online auction
markets for industrial parts, raw materials, commodities and services. The
Company created online auctions for over $2.7 billion worth of purchase orders
in 1999 and nearly $1.0 billion worth of purchase orders in 1998. Since 1995,
FreeMarkets has created online auctions for products in more than 70 supply
verticals, including injection molded plastic parts, commercial machinings,
metal fabrications, chemicals, printed circuit boards, corrugated packaging
and coal. More than 3,000 suppliers from over 45 countries have participated
in the FreeMarkets B2B eMarketplace. FreeMarkets provides access to its
eMarketplace to industrial buyers and suppliers. The FreeMarkets B2B
eMarketplace includes industry-leading online auction technology, technical
operations, market making services, access to a global database of suppliers
and supplier research, call center support to buyers and suppliers in over
30 languages, and marketplace rules. The Company's current clients include
The Commonwealth of Pennsylvania, United Technologies Corporation, The Quaker
Oats Company, Owens Corning, Eaton Corporation, Emerson Electric Company,
FirstEnergy Corp., SmithKline Beecham plc, Navistar International and Delphi
Automotive Systems Corporation. FreeMarkets can be found on the Web at
http://www.freemarkets.com. FreeMarkets is a registered trademark of FreeMarkets,
Inc.
About Surplus Record and SR Auction
Surplus Record, Inc., founded in 1924 and the world's largest independent
monthly directory (816 pages) of used and surplus machinery and equipment,
operates the Internet's most visited online used machinery and equipment
classified Web site, http://www.surplusrecord.com, through SR Auction, an
industry-specific vertical auction site. The Web site, launched in 1995, has
over 50,000 listings valued in excess of $500 million updated daily by more
than 1,000 suppliers. Surplus Record also publishes the Surplus Record, a
monthly directory with a worldwide circulation of more than 140,000. Surplus
Record is an exclusive publishing entity not affiliated directly or indirectly
with any association, corporation or individual buying and/or selling
machinery and equipment.
Forward-looking statements
Statements in this press release that are not historical facts, including
those statements that refer to FreeMarkets' plans, prospects, expectations,
strategies, intentions, hopes and beliefs, are forward-looking statements.
These forward-looking statements are based on information available to
FreeMarkets today, and FreeMarkets assumes no obligation to update these
statements as circumstances change. There are risks and uncertainties that
could cause actual results to differ materially from the forward-looking
statements, including, without limitation, market acceptance of our online
auction marketplace, the competitive nature of the market for
business-to-business online auction services, FreeMarkets' ability to retain
and increase revenue from existing clients and to execute agreements with new
clients, FreeMarkets' ability to attract and retain qualified personnel, the
size of the market for used equipment and surplus inventory, the demand for
online auction and other asset recovery services by buyers and suppliers, and
FreeMarkets' ability to successfully integrate acquisitions. Risk factors are
described in more detail in FreeMarkets' filings with the Securities and
Exchange Commission.
For further information, contact Karen Kovatch of FreeMarkets,
412-297-8767, or kkovatch@freemarkets.com
SOURCE FreeMarkets, Inc.
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Related links:
http://www.freemarkets.com
CONTACT:
Karen Kovatch of FreeMarkets, 412-297-8767,
or kkovatch@freemarkets.com
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