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The business software company’s offer of 15 euros per IDS share — a 39 percent premium to Monday’s closing price — has been accepted by company founders August-Wilhelm Scheer and Alexander Pocsay, who owned a combined 48 percent of IDS.
Software AG said it had not had any problems finding finance for the deal, which will be earnings enhancing in its first full year, although it had to cast its net wider than would have been the case before the financial crisis.
“It was not a problem getting the money ... But the volume each bank was willing to give was lower. You need more banks nowadays to get the credit,” chief executive Karl-Heinz Streibich told Reuters on Tuesday.
The Darmstadt-based vendor of software used to pay company bills and manage the payroll said it would finance the deal with 107 million euros of savings and 385 million debt it plans to repay within four years.
Software AG is Germany’s second-biggest software maker after SAP and No.4 in Europe.
Its share were downs 5.5 percent at 47.44 euros at 0910 GMT, while IDS Scheer stock was up 38 percent at 14.94 euros.
German bank LBBW labelled the offer attractive as it includes a premium of around 51 percent on the average stock price in the last three months and of about 40 percent on the closing stock price on Monday.
“The transaction will create a global vendor of infrastructure software and business process management with more than 6,000 employees and more than 1 billion euros in sales,” Software AG said.
“The combination ... is expected to be accretive to Software AG’s operating earnings per share already in the first full fiscal year of consolidation (2010),” it said.
Depending when IDS Scheer is integrated, Software AG said its growth target could be beaten but added that a concrete forecast would only be possible after the deal is done — which will likely be in the third quarter.
It did say it expected the new group to make an EBITDA (earnings before interest, tax, depreciation and amortisation) margin in the mid 20s percent range by 2011.
Deutsche Bank, Commerzbank, HVB and the Software Foundation formed the consortium of lenders that lent the money for the deal, Streibich said.
Software AG said it had no plans for a capital increase and would delist IDS.
IDS founder Scheer had in the past ruled out a sale of the company he started in 1984, but told a German magazine late last year a disposal was possible if he could not boost profit.
“This is my life’s work,” Scheer said at the time. He had repeatedly dismissed rumours German software giant SAP was in talks to buy IDS Scheer.
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