TMT Blog – October 2008

Date

Welcome to the October report on M&A activity from Clearwater’s Technology team. This month Carl Houghton and I travelled to India to meet up with some of the country’s largest and most active IT services businesses to find out what is on the menu for acquisition targets in the UK and Europe.

Despite a general feeling of caution given what has been happening in the financial markets worldwide, the appetite for acquisitions is still strong, particularly European acquisitions which will allow the Indian corporates to reduce their historic dependency on a US customer base. With the playing field having been levelled somewhat for Indian and European/US purchasers we will expect to see them taking a more serious part in auction processes for quality UK businesses. For more details on our trip see our i-Deals blog, link below.

Deals completed in the UK

US security and storage provider Symantec Corporation announced that it would acquire UK online messaging and web security services business MessageLabs in a £398 million deal. The acquisition provides Symantec with a good position in the rapidly growing SaaS segment and strengthens its position in messaging security. MessageLabs founders Ben and Jos White, who made around £100 million from the deal, have since announced that they will use part of their windfall to create a new UK-focused technology venture capital fund.

Oracle Corporation announced that it had acquired UK business Advanced Visual Technology Limited, a leading provider of 3D visual macro space planning software for the retail sector. Financial details were not disclosed. AVT enables retailers to collaborate with their stores and supplier partners to design and plan retail floor space in real time with a current photo-realistic view of each store.

In a reversal of the current trend for Indian Technology giants looking to acquire in this country, UK BPO business Xchanging plc announced that it would acquire 75% of Indian BPO and IT services provider Cambridge Solutions in an £83 million deal. The acquisition provides Xchanging with greater scale, broader international reach, and a number of platforms for future growth.

Kofax plc, the UK document capture software provider, announced that it has acquired OptiInvoice Digital Technology AB, a Scandinavian business which develops and markets electronic invoice and other document processing software for £1.57 million. The OptiInvoice software eliminates the need to print, mail, receive and process paper-based invoices and other documents, reducing manual labour processes and costs and improving the accuracy of the related data.

French IT services business Sogeti, a subsidiary of CapGemini, announced that it would acquire UK software testing business Vizuri Limited for an undisclosed consideration. The acquisition establishes Sogeti’s position in the UK testing market.

The Capita Group continued on the acquisition trail with the acquisition of ABS Network Solutions Limited for £13.6 million. ABSNet provides IP-based networking solutions including network management, unified communications, on-site support and remote assistance. The acquisition enhances Capita’s position in the network services market as well as bringing CISCO accreditations and capability in emerging technologies.

Defence technology group Qinetiq plc announced that it would acquire UK business Commerce Decisions Limited for £9.9 million. Commerce Decisions is a provider of tender assessment and management software. Its AWARD evaluation software ensures procurers make the right buying decision by improving the effectiveness of the evaluation process and providing an audit trail for decisions.

Canadian vertical market software aggregator Constellation Software Inc announced that it intends to acquire the shares that it does not already own in Gladstone plc, a provider of software solutions to the leisure industry. Constellation already owns 28.8% of the listed software provider and will pay a further £8.98 million to take full control of the company.

Other Deals

US ERP vendor Epicor Software Corporation has received a proposal from private equity group Elliot Associates for a take private deal which would value the business at approximately $670 million. To date the Epicor board has voted unanimously to reject the offer which it views not to be in the best interests of the business.

HP has acquired LeftHand Networks, a leading provider of storage virtualisation and iSCSI storage area network solutions in a $360 million deal. LeftHand Networks’ solutions enable mid-market companies and remote offices or branches of large corporations to protect critical business data.

Oracle Corporation also announced this month that it would acquire Primavera Software Inc, a leading US provider of Project Portfolio Management (PPM) solutions in order to accelerate its momentum in delivering mission-critical operational applications. Primavera’s software enables companies to propose, prioritise, and select project investments, and plan, manage and control the most complex projects and project portfolios.

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