Tom Sweeney

It's a coming of age tale….

Despite layoffs, Protus acquisition ‘breaks a log-jam’ in Ottawa: insider

Posted by sweens on December 7, 2010


By Elizabeth Howell

After years of undisclosed acquisitions of Ottawa firms, the high-profile, US$213-million Protus IP Solutions Inc. acquisition on Monday could prove the turning point for the local tech industry, according to one insider.

An undisclosed number of employees will be severed from Ottawa’s Protus IP Solutions Inc. following its acquisition by U.S.-based j2 Global Communications, according to Protus’s CEO.

However, the managing partner of Perry Martel International said the layoffs, though never pleasant, came at an opportune time for the affected employees.

“It’s the best time of the year to be laid off because managers are in their office right now doing Christmas period planning budgets for the new year, and with new budgets come new hires,” David Perry pointed out.

But taking a step back from the company itself, Mr. Perry said j2’s interest in the Ottawa firm “breaks a log-jam” for a city known for low-profile takeovers with acquisition sums never revealed.

It proves the key for local companies to become acquisition-worthy, he said, is effective marketing outside of Ottawa and Canada.

“The (founders) – I’m going to get in trouble for this,” he quipped, “are two fairly dull engineers. They shun the limelight.

“They just do the work, and fax is considered a dull business. All these Internet businesses (in Ottawa) that have come and gone, and crashed and burned, have been the darlings of the business industry. And they got nothing.” 

Chief executive Joseph Nour, though “pleased” by the takeover, said the layoffs were a tough choice, according to an e-mail to employees acquired by OBJ.

“The plan is to continue to aggressively market and sell the brands key to Protus’ historical success and to maintain operations in Ottawa,” Mr. Nour wrote.

“There will, however, be realigning of resources in order to optimize synergies, resulting in an immediate reduction of our overall headcount.

“The decision to eliminate some positions was extremely difficult and was not taken lightly. These changes are important for future achievements and the ability to continue to drive profitable growth.”

Protus had 260 workers before the acquisition, according to OBJ files. Company officials did not immediately respond to OBJ requests for comment.

Steve Adams will now lead the Ottawa office, becoming Protus’ general manager and vice-president and directly reporting to j2 CEO Hemi Zucker.

j2 made the purchase out of cash on hand and expects $15 million in related expenses in the next nine months, with between $5 million to $11 million charged in j2’s current fiscal quarter.

The two companies were in court in 2008 regarding Protus’ opposition of  j2’s trademark application for the word ‘eFax’ in the United Kingdom.

Earlier this year, that patent was revoked

“The European Patent Office held that, in the face of the prior art in the field, the patent lacked any ‘inventive step’ because a ‘person skilled in the art’ could achieve the claims of the patent by using ‘well-established’ search techniques,” Protus said in a statement at the time.

Protus remained strong through the recession and was 10th on OBJ‘s list of fastest-growing companies in 2009.

It provides software-as-a-service communications for business under three main products: MyFax, Campaigner and My1Voice.

http://www.obj.ca/Technology/2010-12-06/article-2020786/UPDATE-2%3A-Despite-layoffs%2C-Protus-acquisition-breaks-a-log-jam-in-Ottawa%3A-insider/1

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