Sage's £41m bid for Polish software firm Teta

Jun 24 2010 by Peter McCusker, The Journal

SOFTWARE giant Sage has made a £41m bid for a Polish software firm its hopes will consolidate its position in that country and be the start of an expansion into eastern Europe.

The Newcastle company wants to buy Wroclaw-based Teta, which supplies business software to companies with between 100 and 1,000 employees.

If Sage’s bid is successful, it will consolidate its position in the Polish market following the purchase of a smaller software firm five years ago.

And Sage, which is already a major player in Western European and other advanced economies, says it is looking for further opportunities in Eastern Europe.

The group, which has annual global revenues of more than £1.4bn, yesterday announced it had made an offer for Teta, which is listed on the Warsaw Stock Exchange.

Teta’s revenue for the year ending December 31, 2009, was £21m with pre-tax profits of around £3m. At December 31, 2009, Teta had net assets of £22m.

Paul Walker, Sage chief executive, said: “The proposed acquisition of Teta complements our existing business in Poland.

“By joining these businesses together we can offer our customers a richer portfolio of products and services, and further develop our offerings in the attractive Eastern European markets.”

The offer for Teta represents a premium of 15% to Teta’s average share price for the three months prior to May 31, 2010, and will be met out of Sage’s existing debt facilities.

David Clayton, director of strategy and mergers and acquisitions at Sage, said: “This is an important transaction as it increases the scale of our interest in Poland.

“Although we have made no major acquisitions for over two years, this is consistent with our overall strategy of moving into new geographical areas through acquisition.

“Poland is the first former Eastern Bloc country in which we have established a presence and we are looking at other markets with high-growth potential in central and Eastern Europe.”

There is still no news of a successor to Paul Walker who announced he was leaving the company after 16 years in the top job in April.

At the time he said: “It was simple – I do this until I’m 60 or go now, when the business is in good shape.

“I’m 52 and I’d like to have a go at some other things. If I don’t do it now, I’ll never get the chance. There are a lot of opportunities in the market.”

In its last annual results the company, which has 14,500 staff in 19 countries, including 1,400 on Tyneside, reported a 3% rise in pre-tax profits to £273.4m.