Sage leads the chase for TeamSystem
Jul 30 2010 by John Hill, The Journal
ACCOUNTING software giant Sage is believed to be leading the pack in the chase for Italian business management software group TeamSystem.
The Newcastle firm is said to be the highest bidder of three suitors and if successful, the acquisition would represent Sage’s biggest deal during its 20-year life.
Private equity groups HgCapital and Cinven are reportedly interested in the Italian firm, which has been put up for sale by Bain Capital. Final bids are expected today for the company that Bain bought for £228m in 2004, and Sage is believed to be a front-runner in an auction that could reach £550m.
If successful the deal would be a return to the growth through acquisition strategy Sage has pursued since it was founded in 1981.
Sage’s previous record acquisition was the deal for Emdeon Practice Systems, which was completed in 2006 for £307m. The company declined to comment on reports of any imminent bid.
Earlier this year Sage raised £200m from the global private placement market to refinance some of its existing debt and diversify its sources of funding.
It was due to push some of the money raised into a £41m bid for Polish software firm Teta. However, it declined to raise its offer for the firm in early July after bidding rival Unit4 upped its bid.
Sage director of strategy and mergers and acquisitions David Clayton told The Journal last month that the Teta bid was “consistent with our overall strategy of moving into new geographical areas through acquisition”.
Less than two weeks before Sage declined to raise its Teta bid, he said: “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.”
The Sage Group announced in an interim management statement on Tuesday that its trading was “consistent with management expectations” and that the company had seen “improving organic growth trends in our third quarter”.
It said that its net debt dropped from £305m to £280m between March 31 and June 30. It has a £650m syndicated bank facility which expires in August 2011.
Chief executive Paul Walker is one of the longest serving CEOs at a FTSE-100 company with 16 years experience in the role.
However, he announced earlier this year that he would be stepping down to focus on other business projects.
The company announced on July 16 that Walker would be succeeded by Sage mainland Europe and Asia operations CEO Guy Berruyer from October 1.
The company employs 1,200 staff at its head office at Newcastle Great Park. Pre-tax profits at the company jumped 15% in the half-year to the end of March to hit nearly £160m.
