Scala Business Solutions to merge with Epicor

Scala Business Solutions to merge with Epicor Software Corporation to createa leading global midmarket provider of integrated ERP, CRM and SCM solutions leveraging microsoft and Web services.

Epicor Software Corporation and Scala Business Solutions have jointly announced that the expectation is justified that they will reach agreement on a merger.

The proposed merger will be effected by a public offer by Epicor for all the outstanding ordinary shares in the capital of Scala at an anticipated aggregate transaction value of approximately US$87 million (the equivalent of ?3.27 per ordinary share), as of the closing price on November 13, 2003, consisting of a cash price of US$ 41.7 million subject to adjustment, plus 4.1 million shares of Epicor's common stock.

The offer is made up of a cash price of US$1.823 per Scala share plus 0.1795 shares of Epicor's common stock.

Scala's Supervisory Board and Management Board expect to recommend the public offer to its shareholders.

On a date to be determined by Scala, an extraordinary general meeting of shareholders will be organized to discuss the public offer.

Epicor's Board of Directors has approved the transaction.

It is expected that the public offer will commence following the completion of Epicor's due diligence investigation of Scala, the receipt of a fairness opinion by Scala, regulatory approvals, the filing of an S-4 registration with the SEC by Epicor, and other customary conditions including among others material adverse changes to Scala and management retention agreements.

Epicor anticipates that it will commence the public offer for all outstanding ordinary shares of Scala and publish an offer memorandum in December 2003, and close the transaction in the first quarter 2004.

The combination is expected to be accretive to Epicor's GAAP earnings in the second quarter 2004 and for the fiscal year 2004.

The proposed merger would create the largest independent midmarket provider of collaborative ERP, CRM and SCM applications based on Microsoft's .NET platform and Web services, committed to solving the unique challenges facing midmarket businesses worldwide.

The combined company will expand its global presence with worldwide coverage of sales, consulting and support for midmarket and large multinationals as well as local enterprises, offering a broad suite of integrated solutions that have been implemented by more than 20,000 customers worldwide.

Both Epicor and Scala customers will be served by a global entity with the reach and scale to more effectively support their operations, and will be well positioned for growth with local support in emerging markets, and in key markets where Scala traditionally performs well such as Scandinavia, Russia, Central and Eastern Europe, and China.

Scala's customer base is predominantly European with Epicor's largest customer base predominantly in North America, Australia and the U.K.

The resulting company's revenues will be diversified across regions with approximately 52% of its revenue base in North America and 48% outside North America.

"We are delighted to join forces with Scala's exceptional and visionary team as we pursue tremendous global opportunities," said George Klaus, chairman, CEO and president at Epicor.

"The acquisition of Scala enables Epicor to expand its capabilities to service and support its customers, to become a truly global organization with substantial revenue and operating synergies.

The organization will allow us to leverage Epicor's and Scala's regional strengths and distribution channels to further support multinational customers around the world." Klaus added, "This combination also further leverages our industry-endorsed road map to deliver.NET solutions and Web services to an expanding base of midmarket customers.

The combination of Scala and Epicor positions us to become a global midmarket ERP leader with over 20,000 customers, and approximately US$250 million projected annual revenues, to drive greater value for our customers and, in turn, shareholders, and will enable us to contribute to our growth and creation of shareholder value going forward." The combined company plans to further support and develop iScala products.

In the long term, the combined company's product offering would be developed using the functional synergies of all products, and the integration advantages of.NET and Web services.

"Today's announcement is exciting news for the shareholders, customers, employees and partners of both our companies," said Andreas Kemi, Chief Executive Officer at Scala.

"Together, we stand on the threshold of enormous opportunity driven by our potential to offer a range of Microsoft technology-based products that are broader and deeper in functionality and would be delivered to market faster than either Epicor or Scala could have done independently.

With the collaborative expertise offered by this new partnership - and guided by our shared vision of improving the business success of our customers worldwide - we are in position to rapidly deliver and deploy our leading business software solutions across the globe." Both companies will continue their unwavering commitment to developing and bringing to market world-class software and services based on Microsoft technology.

Both companies are strong Microsoft partners - as globally managed independent software vendors (ISVs) and Microsoft Global ERP Ecosystem partners - and have actively participated for many years in numerous Microsoft joint development programs and early adopter technology initiatives.

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