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| Home - Software M&A Review - Jul 05 Issue |
Software M&A - Q2 Market Turnaround
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Trend Micro (NASDAQ: TMIC) acquires InterMute
Category: Security
Purchase Price: $15,000,000
Seller Revenue: $4,000,000
Revenue Multiple: 3.8x
Payment Terms: Cash
SEG’s Perspective:
Anti-virus software vendor Trend Micro acquires InterMute, a developer of anti-spyware products. An increasing security threat, spyware has attracted the attention of leading software vendors as evidenced by Microsoft’s December purchase of Giant Software, and Symantec’s April release of its consumer spyware solution. Trend Micro is reacting to market pressure and playing catch-up with this acquisition. Look for Trend Micro to rollout a stand-alone solution in the near-term and an integrated solution shortly thereafter.
International Business Systems (XSSE IBS B) acquires IDS Enterprise Systems
Category: Supply Chain Management
Purchase Price: $14,600,000
Seller Revenue: $14,600,000
Revenue Multiple: 1.0x
Payment Terms: Cash
SEG’s Perspective:
International Business Systems (IBS), a Swedish provider of supply chain management solutions to the mid-market, acquires IDS Enterprise Systems, an Australian developer of end-to-end supply chain solutions to the automotive industry. With offices in the UK, Netherlands, Australia and Thailand, IDS stands to benefit from IBS’s large distribution network and focus on select vertical markets. At 1.0 times TTM revenue, the purchase price is consistent with the overall supply chain industry – and for mature businesses with dated technology. IDS shareholders stand to earn an additional $2.4 million assuming certain profit based milestones are achieved.
Retalix (NASDAQ: RTLX) acquires Integrated Distribution Solutions
Category: Enterprise Resource Planning
Purchase Price: $44,400,000
Seller Revenue: $27,400,000
Revenue Multiple: 1.6x
Payment Terms: Cash and Stock
SEG’s Perspective:
Retalix, a provider of point of sale and back office solutions to the retail industry, acquires Integrated Distribution Solutions (IDS), a leading developer of ERP solutions for the food service distribution industry. This is an interesting strategic move by Retalix, which allows the company to grow their addressable market by moving up the supply chain versus the more traditional route of migrating into a parallel market. Look for Retalix to integrate the products and to push a vision of improved demand replenishment and forecasting. IDS shareholders will receive $37.4 million in cash, $7.0 million in Retalix stock and an earn-out of $5 million in Retalix shares contingent on certain performance criteria.
Retalix (NASDAQ: RTLX) acquires TCI Solutions
Category: Retail Merchandising
Purchase Price: $34,400,000
Seller Revenue: $21,900,000
Revenue Multiple: 1.6x
Payment Terms: Cash and Stock.
SEG’s Perspective:
In concert with its acquisition of Integrated Distribution Solutions, Retalix, a provider of point of sale and back office solutions to the retail industry, picks up TCI Solutions, a provider of strategic pricing, merchandising and inventory management solutions for the grocery industry. TCI’s merchandising and store operations solutions will complement Retalix’s POS and warehouse management solutions, and further the company’s pursuit of a single integrated solution. Retalix also picks up 400 customers that represent 30% of North America’s to 75 supermarket chains. Retalix paid $17.1 million in cash and $17.3 million in Retaix stock. TCI had a net loss of $2.9 million in 2004.
EV: Enterprise Value = equity purchase price, plus seller’s interest bearing debt, minus seller’s cash & cash equivalents
This report was prepared by Software Equity Group, L.L.C. (SEG), a mergers and acquisitions advisory firm serving the software, life science and technology sectors. SEG is solely responsible for its content. This material is based on data obtained from sources we deem to be reliable; it is not guaranteed as to its accuracy and does not purport to be complete. This information is not to be used as the primary basis of investment decisions. For more details, please visit www.softwareequity.com, or phone (858) 509-2800.
 
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