Darmstadt goalkeeper Marcel Schuhen: Software AG has strong ties to its southern Hessian homeland.
(Photo: Reuters)
Darmstadt In the takeover battle for Software AG, the financial investor Bain is getting serious. On Tuesday evening, his subsidiary Rocket Software submitted a non-binding offer for the Darmstadt-based group of 34 euros per share. The price could rise to 36 euros if the Software AG Foundation and Silver Lake agreed to a merger.
Silver Lake has offered 32 euros so far and has secured about 30 percent of the shares. The foundation of company founder Peter Schnell had made a binding commitment to sell a good 25 percent package. At the same time, Silver Lake bought another five percent on the stock exchange. This participation can be increased by a further nine percent via a convertible bond. The management supports the takeover by Silver Lake and had already rejected the first Bain offer.
Last week, Software AG made public the interest of a “US competitor”, whereupon Silver Lake improved the original offer to 32 from 30 euros per share. At that time, the financial investor rejected a possible joint takeover. One is “neither dependent on a partnership with another party, nor is the company interested in it”.
Silver Lake is a well known name in Darmstadt
Silver Lake and Software AG already know each other well. The investor has been involved in the software manufacturer for 18 months and basically supports the management’s course of “further developing the software manufacturer as an independent company with its headquarters in Darmstadt”, as stated in a statement. The Hessian company is valued at a good two billion euros.
>>Read here, how the bidding war will affect Software AG.
Bain Capital’s plans may look different. The private equity company is the majority owner of Rocket Software, a specialist in company software from the American east coast – and according to information from financial circles in the Handelsblatt, is interested in a merger with Software AG. The portfolios complement each other well, they say.
According to an insider, Bain and Rocket Software have already directly and indirectly secured a good ten percent of Software AG. Bain wants to merge the two companies. They “have a complementary portfolio of leading products, which together form an ideal basis for cross-selling and further growth,” advertised the financial investor for his takeover bid. The identity and culture of both companies would be protected.
In a merger with Rocket Software, the changes for Software AG are likely to be even greater than in a takeover by Silver Lake. The investor also warned – not altruistically – against selling to “a foreign competitor and the associated adverse social impact”.
Better odds for Silver Lake
The shareholders now decide how to proceed. Conditions are good for Silver Lake to receive 50 percent plus one share. The 30.1 percent stake that Silver Lake already holds is an important building block for this.
Software AG confirmed in a statement Tuesday night that Bain’s new offer had been received — but Software AG’s management also rejected the new increased offer. “This is not a superior offer and the Management Board of Software AG and the independent Takeover Committee acting on behalf of the Supervisory Board are in no position to consider it,” the statement said.
Silver Lake’s increased offering is in the best interests of all of the company’s stakeholders. It includes a significant premium for shareholders, has a high level of transaction security and will accelerate the execution of the company’s strategy as an independent company headquartered in Germany.
More: Silver Lake versus Bain Capital: Software AG bidding war