HONG KONG/LONDON (Reuters) ? British business software company Sage Group Plc has been picked as preferred bidder in the auction of Australian peer MYOB Ltd, people familiar with matter said on Wednesday.
Sage outbid private equity firms Kohlberg Kravis Roberts & Co LP and Bain Capital to enter exclusive talks to buy the provider of accountancy software. One source said the British company had bid up to A$1.4 billion ($1.5 billion).
Sage's shares pared earlier losses and closed 1.4 percent lower at 245 pence, underperforming a 0.5 percent weaker benchmark London index.
Its A$1.3-1.4 billion bid gives a valuation of about 13 times MYOB's core earnings, and was at least 10 percent above bids from competing private equity firms, two sources said.
An announcement could come soon, one of the sources said.
The deal would be Sage's biggest to date and would mark a resumption of the acquisition strategy that has driven the group's international growth during the last decade.
It also demonstrates large corporate buyers' ability to outbid private equity firms for strategic assets, a reversal from last year when HG Capital snapped up Italian software firm TeamSystem and KKR bought a majority stake in Norway's Visma.
Analysts at Espirito Santo Investment Bank said that although there were few financial details publically available for MYOB, they estimated the deal could be 5-6 percent accretive to Sage's estimated earnings in financial year 2012.
But they also questioned whether it was the best use of cash for Sage, as there was limited scope for synergies and the company had walked away from the TeamSystem auction partly because it would not have leveraged the company's existing infrastructure.
"Therefore, while MYOB would give Sage a leadership position in Australia, we are unsure if the remaining group would be able to benefit from this acquisition," the analysts said.
MINDING SMALL BUSINESSES
MYOB, an abbreviation of the phrase 'Mind Your Own Business', is being sold by private equity firms Archer Capital and HarbourVest Partners LLC, which bought it for about A$450 million in 2008. The firms had hired UBS AG to advise on the sale, sources have said previously.
Sage, which has a market value of $5.5 billion, supplies business management software to small- and medium-sized enterprises. Its sales are split about one-third software to two-third support contracts.
Sage has grown through acquisitions, typically moving into new markets by buying a local provider of software, and now has more than 6 million customers in more than 50 countries.
The group, based in Newcastle, north-east England, has not struck any major deals in the last three years, choosing instead to pay down debt, but Chief Executive Guy Berruyer said in May that M&A was still part of its strategy.
At its year end in March, Sage had net debt of 106 million pounds ($174 million) and had committed funds available of 545 million pounds until 2015-2017.
UBS analysts in a report on August 16 noted that other recent deals in the sector had been struck at enterprise values of more than 10 times EBITDA.
KKR acquired a 77 percent stake in accountancy software company Visma for 12.5 times EBITDA, and HG Capital's TeamSystem deal was struck at 11.3 times EBITDA, UBS said in the report. Both deals were in August 2010.
Archer and Sage declined to comment. HarbourVest did not respond to requests for comment. UBS was not immediately available for comment.
Sources declined to be named because they were not authorized to talk to the media. ($1 = 0.953 Australian dollars) ($1 = 0.609 British Pounds)
(Additional reporting by Simon Meads Editing by Jacqueline Wong)
sinkholes alexander calder calder alexander alvin and the chipmunks hipster antonio banderas
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.