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Jun. 24, 2008

Hostopia and Deluxe Corp. said yesterday that they have entered into a definitive agreement for Deluxe to acquire Hostopia, a provider of web hosting services that enable small and medium-sized businesses to establish and maintain an Internet presence.

Deluxe states that it will acquire Hostopia in an all-cash transaction that values Hostopia at approximately CDN $124 million. Under terms of the Merger Agreement, the company says that it will pay C$10.55 in cash for each outstanding Hostopia common share.

Subject to a final accounting allocation of the purchase price, the acquisition is not expected to have a significant impact to the company's earnings and operating cash flow for fiscal 2008, it adds.

Colin Campbell, Chief Executive Officer of Hostopia, said, "after careful analyzis, the Hostopia Board of Directors has unanimously approved this transaction with Deluxe. We believe the transaction delivers outstanding value to the Hostopia stockholders. Deluxe and Hostopia have many similarities, including a desire to help small businesses grow and promote their businesses."

Campbell added "our customers will benefit from increased product and service offerings which include small business logo design, print-on-demand services and e-mail marketing, all of which have demonstrated demand from small businesses. In addition, Deluxe brings access to new channels for Hostopia including direct mail to small businesses and sales through financial institutions."

Lee Schram, Chief Executive Officer of Deluxe said "we are very excited with the prospect of providing Hostopia's industry-leading, private-label web services to our small business customers and collectively growing our product and service offerings as we move forward together."

He added "Hostopia has grown top line revenue in excess of twenty percent in each of the last three years. While we have substantial knowledge and expertise in selling to the small business market, we believe that Hostopia's ability to attract new customers and provide additional services to that market will increase the power of our offerings."

"This acquisition is in line with our long-term strategy of broadening the products and services we offer to small businesses to manage, promote and grow their businesses. We also believe that the transaction will offer significant value to our shareholders as we continue to introduce growing products and services with recurring revenue streams," added Schram.

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Source: Deluxe Corp..