MathStar lives? Firm buys language software vendor

SAN FRANCISCO—MathStar Inc., a programmable logic vendor that ceased operations over a year ago, has acquired a Wisconsin-based language software firm for nearly $16.6 million in cash and stock, according to a regulatory filing made Monday (Jan. 11).

MathStar (Hillsboro, Ore.) closed its doors in 2008 after trying and failing to find a buyer. According to reports by the Portland Business Journal, MathStar has been operating with only one employee, CEO Alex Danzberger Jr. Former CEO Douglas Pihl resigned over the summer when MathStar signed a non-binding agreement to merge with the language software company, Sajan Inc., according to an earlier report by the Business Journal.MathStar's website is no longer accessible.

Prior to the signing of the non-binding merger agreement last July, an equity firm, Tiberius Capital II LLC, and a software vendor, PureChoice Inc., each made multiple bids to acquire MathStar for as much as $11.5 million. But shareholders balked, largely because MathStar holds cash reserves greater than that amount. According to the company's most recent quarterly report, MathStar has nearly $13 million in cash and cash equivalents on its balance sheet. The Portland Business Journal reported over the summer that MathStar was considering a merger with a company—possibly Sajan—that would use MathStar's cash for expansion.

Tiberius Capital last November sued MathStar's brokers, advisers and executives over the decision to reject its acquisition attempts, according to a report by the Minnesota Star Tribune. Several MathStar investors last year pushed the company's board of directors to liquidate the firm, but the plan was rejected by shareholders.

Sajan bills itself as an on-demand language translation service and technology provider. The firm is headquartered in River Falls, Wis. According to Inc. magazine's website, the company employs 80 people and had 2008 revenue of $10.7 million.

It is not immediately clear what MathStar is planning to do following the acquisition, which is expected to close in the first quarter. The company could not be reached for comment. The Portland Business Journal speculated that MathStar would leave Oregon following the acquisition.

Under the terms of the acquisition, MathStar will pay Sajan shareholders $6.1 million in cash, plus a $1 million one-year promissory note that pays 8 percent interest, according to the regulatory filing, made with the U.S. Securities and Exchange Commission. MathStar will also transfer 7 million shares of its common stock, which closed at $1.35 Monday.