European software deal runs on servers of hope

SoftwareOne Holding AG

19/12/2024 14:10

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Yawen Chen
       LONDON, Dec 19 (Reuters Breakingviews) - Microsoft
supplier SoftwareOne is paying a mere 13% premium to buy
Norway’s Crayon Group for $1.4 bln, mostly in shares. Private
equity could swoop for the enlarged entity, improving the
picture for the target’s investors. Right now, they’re obliged
to rely too much on hope.
       
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    CONTEXT NEWS
    Swiss technology firm SoftwareOne said on Dec. 19 it would
acquire Crayon Group in a stock and cash offer which values its
Norwegian competitor at around $1.4 billion.
    Crayon shareholders will be offered 0.8233 new shares in
SoftwareOne and 69 Norwegian crowns ($6.1) in cash for each
Crayon share, implying an offer value of 144 Norwegian crowns
per share based on SoftwareOne’s undisturbed price. That implies
a 13% premium to Crayon’s undisturbed price of 127 Norwegian
crowns. 
    The companies said the deal financials are based on a mutual
understanding that Crayon’s fair valuation is 172.5 Norwegian
crowns per share, representing a premium of 36% to Crayon’s
undisturbed share price, while SoftwareOne’s is at 10 Swiss
francs per share, a premium of 38% to its undisturbed share
price.
    The deal would trigger accelerated growth and improved
profitability driven by annual cost synergies of 80 to 100
million Swiss francs to be reached within 18 months of
completion, according to the statement by the companies.
    Crayon's board of directors has unanimously resolved to
recommend Crayon shareholders accept the offer.
    SoftwareOne’s shares were up 10% to 6.4 Swiss francs as of
0942 GMT on Dec. 19. Crayon’s shares were down 4.7% to 128.6
Norwegian crowns. 

 (Editing by George Hay and Streisand Neto)
 ((For previous columns by the author, Reuters customers can
click on  CHEN/ 
yawen.chen@thomsonreuters.com))