MERGER & ACQUISITIONS

DESCARTES – STAR NAVIGATION SYSTEMS

Author: Gurinder Aujla.Gugs.aujla@gmail.comhttps://ca.linkedin.com/in/guaujla

INFORMATION ABOUT AUTHOR, COPYRIGHTS & REFERENCES Author: Gurinder Aujla, gugs.aujla@gmail.com

https://ca.linkedin.com/in/guaujla Lazaridis School of Business and Economics, Wilfrid Laurier University, Waterloo,

Canada. Study done in Jan 2016. for MBA Mergers & Acquisitions Class. All material for this presentation is sourced from publicly available information like

MarketWatch, Yahoo Finance, Google Finance and respective company websites. Author doesn’t endorse/verify/authenticate any information sourced. All copyrights for this presentation belong to the author and any use of these slides

without prior permission may result in legal action. Viewers are welcome and encouraged to contact me to further knowledge sharing! Thanks for reading!!!

INFORMATION ABOUT THE FIRMS

Acquiring Firm: Descartes, HQ in Waterloo. http://www.descartes.com Engaged in providing SAAS to the

logistics industry. TSX: DSG; NASDAQ: DSGX Market Cap: $497M; Assets:

$565M Total Liabilities: $69M Stock Price: $25.69

Firm to be Acquired: Star Navigation Systems, HQ in

Toronto. http://www.star-navigation.com Designs products and services for

the aviation industry. TSX: SNA; FWB: S3O Market Cap: $1M; Assets: $2M Total Liabilities: $3M Stock Price: $0.025

Company Information• Founded in 1981 in Waterloo and still HQ in Waterloo.• IPO in 1998, Listed on TSX in 1998 and NASDAQ in 1999.• Has offices and reseller location on all 6 continents.• Opened a development office in 2007 in Shanghai to serve China region.• Maker of SAAS solutions for the logistics industry.• Recorded revenues of $170.9 million YE2015 with an increase of 12.9% over 2014.• Operating profit of $22.6 million, an increase of 53.9%.• Net profit $15.1 million, an increase of 56.7%.

Business Activity• Provider of SAAS solutions to the logistics and supply management industry in all 3

modes of transportation, namely, air, ocean and truck modes.• Introduced 8 new products in 2002.• Solutions to route, schedule, track, and measure resources. • Rate, audit and pay transportation invoices.• File customs and security documents for import and export.• Provides consulting, implementation and training services including project management

and consulting services to assist in configuration, implementation and deployment of solutions.

Merger, Acquisition and Partnership Activities• 1st acquisition in 1998 of Lightstone Group and Calixon.• Signed a 3 year deal with British Airways World Cargo (BAWC) in 2004.• Acquired Flagship Custom Services in 2006, Pacific Coast Tarrif Bureau in 2008.• Acquired Oceanwide and Scancode in 2009, and launched United By Design.• Launched European Union Custom Filing Readiness Program in 2009, partnered with New

Trend International Logistics Technology.• Strong acquisition and partnership activities to date ranging solutions from the Airline,

Ocean and Truck industry to working with Canadian Border Services Agency.

Reasons to acquire Star Navigation Systems• Strong interests in the Airline industry backed up key strategic alliances and buying

activity.• Have been adding companies with similar synergies to the portfolio.• Cash on hand of $15 million in YE2015.• Main competitors are Manhattan, Oracle, Unisys, SAP besides others.• To be relevant in the future company needs to add a portfolio like SNA to diversify its

interests.• SNA stock at an all time low trading at $0.025 so it will be a bargain.

Company Information• Founded in late 1990’s in Toronto.• Designs products and services adding value to the aviation industry.• Focus on aerospace solutions providing benefits to the industry, airlines, consumers,

environment.• Primarily address issues in the aviation industry for safety and efficiency.• Patented services for solutions in the aviation industry.• Market Cap $8.94M, Enterprise Value $11.03M.• Operating Cash Flow -$1.51M, Levered Cash Flow -$2.31M.

Business Activity• STAR-A.D.S. – a product that offers World-wide real time tracking is embedded for safer

aircraft operations. • Products for Commercial Airlines, Military Aviation, Helicopters, Business Aircraft Assist

Search And Rescue by providing last transmitted location, OEM Manufacturer.• Future applications: Land vehicles• Patents in Australia, Canada, Hong Kong, India, United Kingdom and United States.

News and Media• Jan 2016, partners with ISONEO French group providing them with real-time on-board

systems.• Jan 2016, announces support for UN climate change initiatives.• Dec 2105, announces Transport Canada Approved Organization status.• Aug 2015, announces new MMI orders worth $175K.• Aug 2015, partners with Chengdu Spaceon Technology Co. Ltd. of China.• Mar 2015, proposes tracking solutions in response to MH370 crash.

Reasons to sell to Descartes• SNA stock at an all time low, with dangers of being eliminated from the stock exchange.• Descartes has strong industry presence in the market and available resources in the

field.• SNA Market Cap of $8.94M and Descartes has enough cash on hand.• It will be a Win-Win for SNA and Descartes both as both companies have similar

technologies.• Descartes can push the SNA patented technology into newer markets like private

aviation, small airlines, developing markets, logistics industry, rail networks etc.