SoftwareOne's Eye-Popping Takeover Offer to Crayon, Valued at a Whopping $1.2 Billion
Straight Talk on the Alley
Competitor Crayon from Norway will be absorbed by Software One.
Swiss IT services titan, SoftwareOne, looks to conquer new landscapes via a €1.2 billion acquisition of Norwegian IT heavyweight, Crayon Group. Stock holders of Crayon are being offered a hefty deal: 0.8233 new SoftwareOne shares and NOK 69 in cold, hard cash per share, as announced by SoftwareOne on Thursday - a 36% premium! But first, the shoe must fit: the offer needs SoftwareOne shareholder approval and a minimum acceptance threshold of 90% of Crayon's shares.
A Perfect Match, Like Peanut Butter and Jelly
This merger is the stuff dreams are made of. According to Daniel von Stockar, Chairman of the SoftwareOne Board, it’s a "one-of-a-kind opportunity" to merge these two titans, who bring "complementary businesses and highly qualified teams" together. The union places the group in a mouthwatering $150 billion market, growing at a steady mid-teens rate due to tech trends like cloud computing, data crunching, and AI.
But how will they finance such a deal? Simple. roz bankruptcy. ...err, no, pardon me. SoftwareOne is planning to raise capital, issuing up to 72 million new shares, which represents a whopping 32% of its share capital. They're also taking a hefty €700 million loan to finance the cash component of the takeover.
Swift Savings, Earnings Skyrocket
By 2026, the new-look company expects to boost earnings per share by about 25%, while excluding integration costs, things could get seriously rowdy, with earnings jumping by over 40%. With 18 months post-merger, they're eyeing a sneaky €80 to €100 million reduction in operating expenses - not too shabby. On the balance sheet, the pro forma annual revenue hovers around €1.6 billion, while the adjusted EBITDA stands at about €334 million. With around 13,000 staffers on board, this duo is aiming for the stars.
Everybody's Getting Along, If You Can Call It That
Both boards are onboard with the deal, with Crayon giving the green light by having two candidates overseeing the merger. With a combative powerhouse of SoftwareOne CEO Raphael Erb and Crayon CEO Melissa Mulholland at the helm, the new outfit plans to set sail from Stans, Switzerland.
Big Fish in Smaller Ponds
SoftwareOne specializes in steering companies toward software solutions from tech giants like Microsoft, SAP, and Adobe. This union breathes life into a geographically strategic pairing: SoftwareOne's dominance in the German-speaking world complements Crayon's stronghold in Scandinavia. However, a financial analyst warns that the competition in the crucial US market - even after acquiring Crayon - may still prove to be a daunting battle for SoftwareOne.
Rollercoaster Ride for SoftwareOne
SoftwareOne has gone through a series of twists and turns, seeking a buyer to take the company private for quite some time now. Negotiations with potential buyers have been as smooth as a bumpy car ride - especially given the shaky state of the current business world. The deal with Crayon's takeover is by no means the end of SoftwareOne's possible sale.
In the Spotlight
The founding shareholders of Software One tried to delist the company from the stock exchange, with help from financial investor Bain, last year. But the board put an end to this idea, declining the €3 billion non-binding offer. The founding shareholders, owning 29% of the company, weren't amused by this snubbing and swapped out the entire board - who then resuscitated the ideal of a sale. Shortly after, Reuters reported that Bain, along with two other financial investors - CVC and Apax - had expressed interest in Software One again.
To Sum It Up
The takeover of Crayon by SoftwareOne brings several benefits, such as expanded market reach, increased revenue potential, long-term cost reductions, and, after some initial hurdles, an improved bottom line.
- The takeover of Crayon by SoftwareOne is financed through issuing up to 72 million new shares and a €700 million loan.
- By 2026, the combined company expects to boost earnings per share by about 25%, with potential for earnings to jump over 40% when excluding integration costs.
- The merger between SoftwareOne and Crayon will bring together complementary businesses and highly qualified teams, positioning the new group in a $150 billion market, growing at a steady mid-teens rate.
