Buy-and-build player, Avisen, continues to feed its voracious appetite (see IndustryViews M&A) with an agreed all-share offer for, well, another buy-and-build player, Xploite (see Xploite CEO launches NetServices M&A drive). Avisen is to pay 52.2p a share, a 43% premium to yesterday’s close, valuing Xploite at £11.4m. The only remaining operating business in Xploite is SaaS storage analytics developer, Storage Fusion, which recorded a £400k loss last year (to 31st Oct. ’09) and for which the sales memorandum reports “sales momentum being slower to develop than originally envisaged”. Hmmm. The market has marked AIM-listed Xploite’s shares up 12% but only to 41p. Avisen, meanwhile, is down 16% to 12.3p. The whole thing looks a bit weird to me but I guess someone out there must think it makes sense.
Articles tagged: acquisition
-
Thursday 11th March 2010
Avisen snaps up Xploite – but why precisely?
Posted by Anthony Miller at 09:39 - 0 comments -
Thursday 11th March 2010
The Gladstone Stakes
Well, it looks like we may be on the final lap of the Gladstone Stakes, with Constellation yesterday posting its formal offer document at 33p a share (see Constellation buys and bids again for Gladstone). Gladstone is recommending shareholders sit tight to see if late starter Active Network is going to truly get out of the gate with its 36p mooted offer (see New Gladstone suitor queers Constellation’s pitch). Investors are hedging their bets, with Gladstone’s shares currently at 34p.Posted by Anthony Miller at 09:20 - 0 comments -
Thursday 11th March 2010
Eg gets real-time with Xtaq
Eg solutions, AIM–listed operations management software provider, is to acquire a small Bristol-based outfit called Xtaq. Xtaq – with 8 people and a turnover of £550k – won’t make a big difference to eg in revenue terms (about 10-12%). But its business performance management (BPM) software, Nuqleus, is said to be complementary to eg’s own offering. Nuqleus offers real-time data capture and dashboard functionality, features which eg would like to build into its software so this offers a shortcut. Eg also has an eye on cross-sell/upsell into Nuqleus’s customer base, which includes financial blue-chips like Barclaycard, Citibank, GE Capital, and RBS. Xtaq also has some public sector clients; we remarked some while ago that we believed public sector could be a good opportunity for eg (eg solutions wades through the chewing gum). We are starting to hear about a lot of interesting little players in the BPM space - both Business Performance Management and Business Process Management (for example, see AOM active in BPO operations) and we expect to see much more M&A activity as the market consolidates. The holy grail for many of them, we would imagine, is to become an 'Aris', the BPM product developed by Germany-based IDS Scheer, and now owned by Software AG (see Software AG extends scale and reach with IDS Scheer). Aris has is the standard business process modelling tool in the SAP environment (and widely used elsewhere). We would imagine the likes of eg and AOM are vying for a similar position with the leading BPO players. But just in the UK there are others -- PNMSoft and Corizon, for instance -- also competing for a share of the pie.
Posted by Philip Carnelley at 08:35 - 0 comments -
Monday 8th March 2010
K3 dresses up Dutch style with Pebblestone
Not even a week after picking up its hosting partner, DigiMIS (see K3 reaches for the clouds), supply-chain ERP software player, K3 Business Technology announced that it has acquired the main bits of Netherlands-based ERP solution provider to the fashion industry, Pebblestone. K3 will pay up to €2m for the Microsoft Dynamics focused player, which turned over just under €4m last year with about €0.5m pre-tax profit. That sounds rather reasonable at first blush, especially given that future year tax deductions will bring the net price down to €1.5m.K3 also announced interim results based on its new June FY (to line up with Microsoft). Revenues for the six months to 31st Dec. ’09 rose 15% to £23.5m while operating margins trimmed back just 40bps to 18.4%. K3 chairman Tom Milne sees tough market conditions ahead though was optimistic on new business pipelines.
Posted by Anthony Miller at 09:00 - 0 comments -
Monday 8th March 2010
New Gladstone suitor queers Constellation’s pitch
A new suitor for education, health and leisure software player, Gladstone, made itself known just after markets closed last Friday, in the guise of US-based Active Network, a ‘provider of application services technology and marketing solutions for community service and participatory sports organisations’. Active Network has mooted a 36p per share offer, trumping Constellation’s 33p offer last week (see Constellation buys and bids again for Gladstone). Gladstone’s board said they would make the ‘dash for Active Network’s cash’ if no higher bid was forthcoming, however Constellation now holds nearly 44% of Gladstone’s stock and seems desperate to take the company out. Don’t you just love an auction?Posted by Anthony Miller at 08:14 - 0 comments -
Monday 8th March 2010
Northgate acquires Convergys HR business
NorthgateArinso, one of Northgate Information Solutions’ three divisions, announced plans last week to acquire the HR Management division of US provider Convergys. This looks like a good buy from Northgate that promises to significantly strengthen its HR business and boosts its presence in the US market.Northgate is paying c$85m in cash on closing and $15m in cash over three years for the assets – including the global HR service delivery network and entire customer portfolio – of Convergys’ HR Management (HRM) division. Prior to the sale, Convergys had expected the division to turn over around $250m this year with an EBITDA of $20m. The valuation of 5x EBITDA is roughly in line with where Convergys’ shares were trading before the deal was announced.
The acquisition, which is expected to close in Q2, could be ‘transformational’ for NorthgateArinso. Most significantly, Convergys HRM will provide NorthgateArinso with considerably stronger presence in the important US market, which accounts for over a third of the global HR services market. As Chris Stone, CEO of Northgate Information Solutions said: “As it is home to many multinational businesses, it is a critical marketplace for us as a specialist and we expect to strongly develop our position in the US over the coming years.”
The purchase will also add scale for NorthgateArinso, which already claims to be one of the top five global HR services companies, and help to boost its global credentials. Convergys HRM will bring around 2,300 employees to NorthgateArinso, taking the HR business to around 8,000 employees, a third of which will be based in the US. Combining Northgate’s HR software and services expertise with Convergys’ HR outsourcing know-how could also create opportunities to develop the business.
As for Convergys, it will now focus on its Customer Management and Information Management businesses but this may not be the last sale we see. The company has promised to “take opportunities to further streamline the business as they are identified”.
Posted by Tola Sargeant at 08:00 - 0 comments -
Thursday 4th March 2010
VT cuts bait on Mouchel fishing trip
After a ‘put up or shut up’ notice from the LSE, VT Group has backed off its putative bid for Mouchel, partly because Mouchel won’t talk to them and partly because they are fighting their own defence against predator Babcock. Indeed, Babcock had made the dropping of VT’s bid for Mouchel a precondition of its own offer, so it rather looks like this may be the bet with the shorter odds after all. Sighs of relief – for now – at Mouchel.Posted by Anthony Miller at 07:59 - 0 comments -
Tuesday 2nd March 2010
Constellation buys and bids again for Gladstone
Well, it looks like the board of education, health and leisure software player, Gladstone, was right to snub Canadian player Constellation’s 25p a share offer back in Nov. ‘08 (see Education, Education). After another series of talks at the end of last year, Constellation mooted a 33p a share bid, and today bought another 13.6% of the equity at 33p, raising its stake to 43.5%. Constellation has therefore made the required mandatory offer for the rest of the stock, conditional on acceptances topping 50% of the voting rights. Gladstone’s shares immediately jumped 18% to the offer price.I must admit, I had thought that the Gladstone board had blown its chances back then, but clearly Constellation is desperate to buy the company. Last year (to 31st Aug. ’09) Gladstone turned over £9.7m at 20% operating margin, and the current offer values them at around £17.5m. Can they hold out for even more?
Posted by Anthony Miller at 14:47 - 0 comments -
Tuesday 2nd March 2010
ACS cares to acquire Cerrus
Advanced Computer Software (ACS) is on the acquisition trail again this morning although today’s purchase will be rather easier to digest than last month’s buy, COA Solutions (see Murria’s ACS snaps up Alchemy’s COA). Today, ACS is paying just £0.37m in cash for Cerrus, the Surrey-based provider of a community care and support management product called Saturn.Cerrus, which has annual recurring revenues of c£0.6m, is a very small meal for Vin Murria’s team but nevertheless a potentially useful one. With around 60 community and social care customers in the UK and Ireland, Cerrus will go some way towards extending ACS’ footprint from health into the care sector. We’ve already seen other acquisitive public sector players – notably System C Healthcare and Civica – look to combine offerings for health and social care. Like them, ACS sees opportunities in the longer term trend towards the closer integration of the two sectors in the UK.
Posted by Tola Sargeant at 08:47 - 0 comments -
Wednesday 17th February 2010
Another twist to the Babcock/VT/Mouchel saga?
It just gets better and better. According to the Daily Mail (yeah, I know), BAE and VT Group may turn the tables on VT’s suitor, Babcock and make a counterstrike (see VT meat in bid sandwich). Oh well, one in, all in, I suppose.
Update
... and according to The Times, even Lockheed might be tempted to throw its hat in the ring for VT too, or even perhaps Boeing, Thales and Finmeccanica. . Any more for any more?
Posted by Anthony Miller at 09:13 - 0 comments -
Tuesday 16th February 2010
VT meat in bid sandwich
Well it just gets more interesting by the day. Only yesterday VT Group raised its offer for Mouchel (see VT ups the ante for Mouchel) but apparently omitted to mention that it had itself received an approach from engineering group Babcock a couple of weeks ago. The cash and share offer was made public this morning and values VT at 634p. VT’s shares closed yesterday at 584p valuing the company at just over £1b, though it's shares had closed last week at 508p. Needless to say, VT has rejected the bid as being wholly inadequate, an insult to the intelligence of all mankind, etc etc.That one (or both) of these deals will eventually consummate is surely on the cards. Industry consolidation is inevitable and inexorable. But if it is to be ‘the double’ – i.e. VT buys Mouchel and Babcock buys VT – then really what will become of Mouchel? Our anecdotal observation of ‘cascading M&A’ tends to leave the company at the bottom of the food chain lonely and unloved. In particular, I would put good money on a bet that Mouchel’s back-office BPO activities would be consigned to oblivion (not intentionally – but by neglect) in much the same way that ITNET was (in my opinion) after its acquisition by Serco (and much more on that after Serco’s prelims next week.)
Let’s see how this plays out – and indeed whether Serco might decide to join the fray.
Posted by Anthony Miller at 08:05 - 0 comments -
Monday 15th February 2010
VT ups the ante for Mouchel
Engineering and support services group VT (nee Vosper Thornycroft) has increased its ‘proposal’ to buy smaller peer, Mouchel, to an equivalent of 294p a share. Previously VT had offered 260p (see VT still courting Mouchel). Both offers were on a ‘mix and match’ cash and share basis. Mouchel closed last week at 250p though the shares had been as low as 150p last summer.We had previously said that the combination makes reasonable sense, though this would be a substantial acquisition for VT, given that Mouchel is over half VT’s size by revenues though only 30% of its market cap. As far as we know, no one else is overtly sniffing around Mouchel though we would imagine that Serco would be looking on with interest. Capita is most unlikely to make a play given that is essentially back-office focused and in any event prefers to buy in bite-size chunks.
Assuming this deal eventually consummates, it will hardly be the last we’ll see in UK BPO (see Consolidation and privatisation opportunities in BPO), either in ‘heavy lifting’ services or back office. The inevitable huge cutbacks in government spending will undoubtedly encourage smaller BPO players to seek comfort under the wings of larger peers in order to have some semblance of a chance of picking up a share of the outsourcing spoils.
Posted by Anthony Miller at 08:17 - 0 comments -
Friday 12th February 2010
M&A valuations continue to rise
Latest figures from our friends at Regent bring some heart to those seeking to sell their businesses – tech valuations in Europe are on the up and are once again “close to their normal relationship with valuations on the public markets”. Regent noted fewer megadeals in January, but transaction volumes increased 12%. Net net, though, aggregate deal values were down on a trailing three-month basis.One of the more significant deals during the month was Advent’s buy-out of pensions management specialist firm Xafinity, from prior owners, Duke Street, for £190m. Xafinity, which coyly tags itself “the viable alternative to Capita”, turned over £132m last year (to 31st March ’09) at 4.8% operating margin. However, interest charges (I assume related to the prior buy-out) kept the business in net loss to the tune of £9m. Xafinity was generating some £21m of net operating cash flow and the price Advent paid represented about 9x last year’s EBITDA.
When we last met Xafinity CEO, Tim Robinson, he was on the lookout for more acquisitions (see Xafinity eyes further acquisitions) – it sounds like the Advent buy-out is the stepping-stone. I hope to bring you more on Xafinity in a later post.
Posted by Anthony Miller at 08:20 - 0 comments -
Thursday 11th February 2010
Murria’s ACS snaps up Alchemy’s COA
Not quite in the ‘bite-size chunk’ category of M&A, Vin Murria’s health care software group Advanced Computer Software (ACS) has just snapped up Alchemy-backed accounting and business management software group COA for £100m cash. We have known both companies and their management teams for yonks and it’s best you track through our prior posts on ACS and COA to get the latest picture.In our 8th Dec 09 post COA bucks trend with new licence orders we said "we won’t take bets on COA being sold in the next year because we think it’s a cert". But we were not anticipating ACS being the buyer. We have much to digest here given that the deal breaks all the ‘Holway M&A rules’ both in terms of size of acquisition (COA is twice ACS' size) as well as knitting patterns! It’s also hard to judge valuations as the last FY accounts for COA were for the year to 31st March 2009 and the interims story (see post above) was one of declining revenues albeit higher EBITDA. However, Murria says the deal is “immediately earnings enhancing and highly cash generative”.
We understand that COA exec chairman Fiona Timothy will be waving an amicable fond farewell, but that the rest of her management team have the right incentives to stay on board.
There will definitely be more on this later.
Posted by Anthony Miller at 12:24 - 0 comments -
Wednesday 3rd February 2010
Wily Wylie makes acquisition number 23
Clearly not up for retirement just yet, ex-Sage founder Graham Wylie has just made his 23rd acquisition in a little over six years after founding his SME software and services mini-conglomerate, Technology Services Group (and thanks yet again to Paul Kunert at Microscope). This time it’s Newcastle-based network and infrastructure services firm, Croft Technology. The deal brings TSG’s headcount up to 460 though we have no clue what it does to its financials as TSG has yet to file its 2008 accounts. And there’s a promise of more M&A to come.I admit it. I just don’t know how you go about even trying to make 20+ disparate twenty-man companies scattered across the country work in any semblance of blissful harmony – or maybe you don’t even try. Still, there’s little doubting the sage Mr Wyllie’s entrepreneurial credentials and perhaps one day the ‘grand plan’ will become apparent.
Posted by Anthony Miller at 15:36 - 1 comment -
Wednesday 3rd February 2010
Phoenix sorts out KCOM’s knitting
As tipped last week by the excellent Paul Kunert at Microscope, support services group Phoenix confirmed it is taking over break/fix support at comms services player, KCOM through a reciprocal outsourcing and acquisition arrangement. Phoenix is to pay £1.8m cash for the break/fix contracts and take on 142 KCOM staff. Phoenix management advise that the “multiyear” outsourcing deal will be profitable from day one though declined to put a value on it. The broker estimates that I have seen suggest the contracts are worth £6m p.a. to Phoenix. Seems very fair to me. And it’s just another great example of ‘sticking to the knitting’ - KCOM want to be providing telecom services, not fixing broken boxes – which is of course Phoenix’s strong suit (well, one of them, anyway!). Good stuff – for both companies.Posted by Anthony Miller at 15:06 - 0 comments -
Thursday 21st January 2010
Oracle-Sun: EU approval nears
Oracle has sent out invitations to a briefing on its joint Oracle-Sun strategy, for next Wednesday evening (UK time), Jan 27th. We take this to mean that it is confident EU approval is near. We’ll bring you more once details are revealed, although the noises from Oracle already about integration of the broad range of components it will have: “software, hardware - complete” means that there probably won’t be surprises. Financial analysts will be keenly watching for news of staff reductions. A recent report by a UBS analyst that up to half the workforce would go – that’s almost 14,000 layoffs – was dismissed by Sun as ‘absolutely untrue’.
Addendum 15:00 Thursday Jan 21: we read that indeed the EU has this morning given its "unconditional approval" for Oracle to buy Sun - e.g., see Computerworld.
Posted by Philip Carnelley at 08:25 - 0 comments -
Monday 18th January 2010
SDL acquires Fredhopper, beats expectations
In a brief trading statement, SDL announced that it will exceed expectations for the year with revenue of c£171m and PBT around £29m – that’s up 8% and 15% respectively. On a conference call, CEO Mark Lancaster said that both Tridion, its content management product, and its services had done well in Q4. In his view, there had been something of a recovery in Europe as well as some market share gains, but the US was seeing more of a return to investment. However, as at the interims (see Currency translates into growth for SDL), growth would still have been slightly negative at constant currency after a difficult first half.SDL also announced the acquisition of Fredhopper, a small merchandising software provider with a turnover of around €2m, for €5.5m. Fredhopper, based in Amsterdam, offers software to guide online customers to offers and products based on ‘affinity analysis’ – similar to the recommendations to buy that we have all experienced from Amazon. It has around 100 customers from across Europe: large retailers including names like Philips, Debenhams and Toys’R’Us (UK). While Fredhopper's direct impact will be small, short-term, SDL sees it as complementary to its Tridion marketing and web content management offering, extending its reach from marketing into retail at a time when retail is increasingly conducted online. It will offer an integrated solution allowing it to address a wider (and expanding) market. This seems a very logical move to us but we’d like to see a little more detail on how it will all fit together, once the dust has settled. SDL’s prelims are March 1st , we expect to learn more then.
Posted by Philip Carnelley at 08:55 - 0 comments -
Monday 18th January 2010
BT says ta-ta to Mosaic
A tersely worded stock exchange announcement that BT has sold its ‘on-demand digital media management platform’, Mosaic, to Tata Communications (TCL) belies the significance of the continued shift in the tech (and arguably industrial) balance of power to India.Mosaic is (apparently) a SaaS-based multi-channel media management platform. Clients include the London based TV network, ITV. The gross assets in the deal were valued at a paltry £500k. I guess the disposal makes sense in terms of BT’s quest to untangle its knitting, but what a great piece of IP for Tata to store in its Tiffin box!
TCL – not to be confused with sibling Tata Group company and India-based offshore services leader TCS (Tata Consultancy Services) – is the ‘largest provider of international long distance, enterprise data and internet services in India’. Last year’s sales (to 31st March 2009) were around Rs100bn (c. £1.3bn) – a fraction the size of BT’s £21bn revenue base. Like TCS, TCL is listed on the Bombay Stock Exchange, but unlike TCS (much to the chagrin of international investors), TCL also has ADR shares listed on the NYSE. Parent company Tata Group is the $70bn tea-to-IT conglomerate – with lots more in between. Tata Group has no fewer than 27 publicly listed subsidiaries. Get the picture?
Posted by Anthony Miller at 08:36 - 0 comments -
Monday 21st December 2009
Capita bolsters IT services with Synetrix
UK BPO leader, Capita, continues its quest to be seen also as a player in stand-alone IT services with the acquisition of privately held, Apax-backed ICT services firm, Synetrix. Capita will pay net £75m cash, representing about 1x sales and 7x EBIT, based on Synetrix’s forecast FY £74m revenues and £11m profit (June 2010). By the way, this would give Synetrix a 15% margin, 2-3 points better than Capita’s. Synetrix is the largest acquisition Capita has made since the £77m it laid out for IBS OpenSystems in June 2008 (see Capita forced to sell IBS R and B business for the unfortunate tale).Synetrix was founded in 1998 by its six current directors and employs 193 staff. It seems very well entrenched in local government and particularly in education – a point which won’t be lost on RM. Synetrix also plays in central government and the private sector, with a client base of well known brands such as Honda and Thompson Travel.
This looks like another really canny buy by Capita, boosting both its IT services credentials and its local government/education presence at a very reasonable price. Capita has been picking up a few ICT services firms of late, including Computerland (June 2008), ABSNet (Oct. ’08) and Carillion (June ’09). Synetrix will add another useful string to its bow.
But the deeper dive into IT services is a volte face by Capita, which for years insisted that it was purely a business services company (for example, see Capita buys Computerland. Why?). Now that many IT services players are well entrenched in the UK BPO market – and increasingly those from India – perhaps Capita feels it needs to bolster its defences, if not mount a counterattack. And it's probably right!
Posted by Anthony Miller at 12:46 - 0 comments -
Thursday 17th December 2009
Xploite CEO launches NetServices M&A drive
Ian Smith, currently CEO of what is now all but a cash shell, Xploite (see Xploite shows the power of the ‘dark side’), is to make a £115k personal investment in AIM-listed network managed services player, NetServices, and an offer to purchase another £2m worth of shares at near double last night’s closing price! NetServices shares had been trading around 3-4p most of the year, closing last night at 4.5p, valuing the company at £1.4m. Smith’s proposed option is priced at 8.7p. Xploite sold off its core managed services business, Anix, to US-based ACS in May. Smith already owns 2.4% of NetServices, and the new investment will raise this to 12.2% and give him a non-exec seat on the board. His holding will increase substantially if the purchase option is exercised, though probably just shy of a majority stake.The move signals Smith’s interest in playing a ‘buy-and-build’ game in the network managed services market, which is highly fragmented with many players running below the £15m revenue mark. NetServices fell into a £815k pre-tax loss this year (to 31st August ’09) on £5.9m revenues (down 17%). The starter’s gun has been fired – now let’s sit back and watch the race!
Posted by Anthony Miller at 08:19 - 0 comments -
Tuesday 15th December 2009
ADP snaps up OneclickHR
US-based HR software/BPO player ADP is to acquire AIM-listed OneClickHR (via its local subsidiary, ADP Network Services) for some £14m. ADP will pay 10.5p a share, just a 9% premium to yesterday’s close. However, OneClickHR’s stock had been on a remarkable run since March, where it had been languishing under 5p. Its shares peaked at 11p in September, one assumes in anticipation of a bid. OneClickHR turned over just under £6m last year at 5% operating margin. TechMarketView subscription service clients will be able to read our views on the implications of the deal in a later UKHotViews Extra post.Posted by Anthony Miller at 09:22 - 0 comments -
Monday 16th November 2009
ACS bolts on another acquisition
Advanced Computer Software (ACS), acquisitive provider of software and IT services to the UK healthcare sector, has made another bolt-on acquisition. It has snapped up clinical software supplier Healthy Software for £0.9m in cash and shares plus payment of shareholder loans. Healthy Software has annualised sales of over £1m, EBIT of £100k and, importantly for ACS, a high level of recurring revenues (70%). However, given recent new product development, ACS believes the company is set to deliver significantly stronger results. The company’s principal product, Crosscare, is used by hospices, palliative care and GP practices for end-of-life care requirements, and will complement ACS’ existing end-of-life and iNurse applications.
In light of CEO Vin Murria’s comments recently (see Advanced Computer Software has a healthy first half) we’ve no doubt we’ll be reporting on more acquisitions from ACS in the healthcare space shortly. But future targets are just as likely to be in areas such as business intelligence, which will come into their own in a market focused on ROI, KPIs and efficiency, as further bolt-on acquisitions in the clinical arena.
Posted by Tola Sargeant at 07:53 - 0 comments
