Sage bid offer trumped

Accountancy software firm Sage today saw its £334m (€583.1m) offer for Norwegian rival Visma trumped by a private equity firm.

Newcastle-based Sage must now pay more than £400m (€578.5m) to top the bid by HgCapital, which has secured support from the Visma board and investors holding 41.3% of shares.

However, Sage ruled out changing the price or other material terms of its offer last week after directors of Visma withdrew their recommendation because they no longer considered its bid to be fair.

The Visma board took that decision after revenues rose by a quarter between January and March, while earnings increased even faster at 43% – smashing its expectations and those of analysts.

Visma signalled that a number of key shareholders were unhappy with the Sage deal because they felt the UK firm was trying to gain control on the cheap.

In addition, shares in Visma had consistently been changing hands on the Oslo stock market above the level that Sage – the last technology stock in the FTSE 100 Index – was willing to pay.

Visma has 200,000 customers and is the largest Scandinavian seller of accountancy software to small and medium sized firms. Its revenues totalled £166m (€240.1m) in 2005.

In the offer document, HgCapital said the Visma board found the deal “interesting from an industrial perspective”.

This was because HgCapital intended to support the current management in building a world-class software firm whose head office would remain in Norway - in contrast to Sage which wanted to harness Visma to its operations.

HgCapital, which has offices in the UK and elsewhere in Europe and has funds under management of approximately €2.5bn, made the offer through its Engel Holding subsidiary.