US FIRM Progress Software has emerged as the successful bidder for Iona Technologies with a cash bid of $4.05 per share, which values the company at $162 million (€103.8 million).
Iona had cash and marketable securities of $56 million at the end of March last, which means the net price is $106 million. The board of Iona has voted unanimously to accept the deal.
The transaction is expected to close in September subject to shareholder approval. It will also require regulatory approval in the US and Ireland.
Progress Software, like Iona, is quoted on the Nasdaq exchange in New York. Last week it announced revenues of $127 million for its second quarter to the end of May and a pre-tax profit of $22.7 million. Analysts are predicting it will have a turnover of $525 million in its 2008 financial year.
Both companies are involved in enterprise application integration but Progress also has technology to help large businesses manage, develop and deploy software.
Progress chief executive and co-founder Joe Alsop said Iona was the largest acquisition the company had made to date.
“We are very enthusiastic about it,” said Mr Alsop. “Iona has an impressive list of large customers who have their technology deeply embedded in their businesses.”
He said Iona would strengthen the company’s capability in the area of service-oriented architecture (SOA), which is becoming the standard for getting different computer systems to communicate.
Iona and Progress have had a business relationship for a number of years. Iona’s Orbix software is embedded in a Progress product while Iona recommended and co-marketed Progress’s Actional product for SOA management.
Iona announced last February that it was looking at its strategic options following an approach believed to be from Germany’s Software AG. Although Software AG subsequently pulled out a number of mostly US trade buyers are understood to have tabled bids.
Iona chief executive Peter Zotto said the acquisition provided the opportunity to form a “market-leading company” that could compete with the biggest software vendors in the market.
Those who will benefit most from the sale are Iona co- founders Dr Chris Horn and Dr Sean Baker, whose holdings put them in line for payments of $10.2 million and $5.1 million respectively.
The largest institutional shareholder in Iona is San Francisco-based investment fund Peninsula Capital Management, which holds 16.45 per cent of the company. Delaware-registered hedge fund Emancipation Capital built up a 6 per cent stake in Iona, which was largely assembled since the beginning of the year when the shares were trading as low as $2.13.
Lehman Brothers, who advised Iona on its 1997 initial public offering, led the sale process.
In private some Iona shareholders expressed disappointment at the price achieved. The net price of $106 million is just over one time the company’s annual revenues and twice the value of its annual maintenance contracts. Iona employs 310 staff primarily at offices in Dublin and Massachusetts, while Progress has 1,700 staff worldwide.
