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Journal-News.com

Reynolds merging with Houston company

By John Nolan

Staff Writer

KETTERING | Reynolds and Reynolds Co. said Tuesday that it plans to merge with Universal Computer Systems Inc. of Houston, Texas, to increase the company's value to shareholders and improve service to auto dealers.

Under terms of the deal, holders of Reynolds' common stock will receive $40 per share in cash. Reynolds put the transaction's value at $2.8 billion, including the assumption of Reynolds' debt.

The combined company will continue to be known as Reynolds and Reynolds Co., with the products of both companies to be marketed only under the Reynolds brand. Reynolds will continue to have its headquarters and principal operations in the Dayton area. The company provides computers and software to help auto dealers run their businesses.

The merger is subject to regulatory clearance and approval by Reynolds shareholders. The company plans to schedule a special meeting of shareholders during the final quarter of this year to vote on the deal. Reynolds board members Richard H. Grant III and Fin O'Neill, president and chief executive officer, have agreed to vote their shares in favor of the merger.

Goldman Sachs Capital Partners and Vista Equity Partners led an investor group that is providing equity financing for the merger.

It has been a vigorous summer for Reynolds. The company announced on July 21 that it will eliminate 450 jobs over three years, including 170 within three months, as part of a plaan to cut operating costs by $90 million and boost earnings. Those job cuts will hit hardest at the company's Kettering headquarters in Miami Valley Research Park, eliminating positions tied to overhead and management functions, according to the company.

On July 27, Reynolds completed its acquisition of DCS Group PLC, a United Kingdom-based company that is one of the largest suppliers of software and services to the European auto retailing market.

Reynolds earned $27.8 million, or 43 cents per share, on revenue of $250 million in the quarter ended June 30, compared with earnings of $23.8 million _ 37 cents per share _ on revenue of $247 million a year earlier.

Reynolds was founded in Dayton as a business forms printing company in 1866. It began serving dealers in 1927 with accounting forms. Universal Computer Services was founded in Houston and provides dealer management systems to auto dealers around the country.

Contact this reporter at (937) 225-2242 or jnolan@DaytonDailyNews.com.