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TWST: What is Silverstar Holdings?
Mr. Kabatznik: Silverstar Holdings is a company that is focused on the
acquisition of businesses in the interactive entertainment software industry
that are poised to benefit from the ubiquity of new technology, such as the
Internet, digital distribution of content, etc. We are currently focusing on
acquiring middle market computer game companies throughout the world. We think
that we have identified a market gap between the huge players in the industry,
such as Electronic Arts, Activision, THQ, etc., and the thousands of middle
market - $10-$50 million revenue - companies around the world that are somewhat
orphaned in today's industry with the larger players only interested in
intellectual property that will sell millions of copies. Therefore, these
companies struggle to find distribution and struggle to find exit strategies for
their shareholders. We see an opportunity to acquire solid companies with good
intellectual property and good management for below average industry multiples,
and build it up to some sort of critical mass where we can benefit from
economies of scale, both industrially and financially.
Silverstar itself was founded over 10 years ago. It went public in early 1996.
We have consistently focused on acquiring businesses in different industries
that we see having certain strategic gaps. We identify strategic gaps, strategic
opportunities in countries or industries, and we strive to take advantage of
those within the context of running a small publicly traded company. For
example, we started out acquiring consumer goods companies in South Africa in
the mid- to late 1990s. We were very successful in that.
We then divested those businesses and profitably focused on the online travel
space. We were the first pan-European online travel service provider in the
world. We were nicely positioned. That outcome was not as favorable as the South
African one. We just positioned ourselves well, but unfortunately the Internet
boom came to an end just as we were pending an IPO in London. But in that case,
we did again identify the strategic niche, took advantage of it, and built a
very strong position. Unfortunately, we did not have the firepower to carry it
to the finish line. Similar to the South African and the European online
situation, we think we've identified a very interesting strategic gap in the
interactive entertainment space. We think that we are nicely positioned to take
advantage of that opportunity.
I'd particularly emphasize that point in light of our recent announcement that
we have made a definitive offer to acquire all the shares of a company called
Empire Interactive, which is an AIM-based company. It is an 18-year-old company
listed in London on the AIM Exchange that has very, very strong IP franchises.
It's a business that does about $50 million in revenues. That combined with our
current operation of Strategy First in Montreal, certainly now positions us as
one of the largest independent interactive software businesses in the world. I
think that we have shown, by virtue of the process, that we can execute on our
strategic plan by virtue of the fact that we've managed to access this business,
and to enter into an agreement to acquire it. This is our ability to find these
assets and to acquire them at what we believe is below market multiples.
Tickers included in this excerpt: SSTR
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