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SoftwareOne turns down Bain and starts strategic review

Second bid rejected but offers have promoted board to seriously assess future of the business

SoftwareOne is sticking to its decision to refuse advances from Bain Capital, after turning down a second unsolicited bid and instead opting to assess all of its options.

The cloud and software specialist has been approached twice by Bain in the past few weeks, but on both occasions turned down the firm, arguing it had undervalued the business.

Following the second bid, submitted late last week, the board has issued a statement on its position, which does not totally rule out the prospect of a future sale, as it kicks off a strategic review.

“The board ... has carefully reviewed the second indicative offer with the support of its legal and financial advisors,” the firm stated.

“The board unanimously agreed that the second indicative offer does not adequately value the company, and is not in the best interest of SoftwareOne and the majority of its shareholders.”

SoftwareOne gained a fresh CEO, Brian Duffy, earlier this year, and the firm has been backing his vision and growth strategy. Its most recent results for Q1 were also solid, with an 8.7% improvement in revenues, giving the firm’s board the view it should continue to back its existing leadership team.

“In response to the second indicative offer by Bain Capital and considering the significant progress made under the new leadership team, the board believes that a strategic review of all potential options that drive value is in the best interest of the company and all shareholders,” the statement added.

Founding shareholders

Not everyone at SoftwareOne was against the Bain offer, with some of the founding shareholders – Daniel von Stockar, B Curti Holding and René Gilli – holding a combined 29% of the firm. They might still see a deal get through.

“The board is open to proactively discuss options that substantially reflect the fundamental value of the company, including with Bain Capital,” the board stated. “At the same time, the board will actively look at other options for value creation.”

The board has indicated it will provide updates as it goes through the review and share its final recommendation at the conclusion of the process.

Adam Warby, chairman of the board at SoftwareOne, said it was committed to delivering the best value for its shareholders and stakeholders.

“We have decided to launch a strategic review to ensure we deliver on this commitment – by considering all potential options and making the decisions that will maximise shareholder value, enhance our operations, and position the company for growth,” he said. “The fast-growing software and cloud market offers attractive opportunities, and we want SoftwareOne to be in the best possible position to capitalise on these and gain market share worldwide.”

The Bain courtship started back in June, when the firm made an unsolicited bid valuing the firm at 18.50 CHF, a share valuing the business at around £2.5bn. It upped that last week to around 20 CHF a share, valuing the firm at around £2.8bn.

Bain Capital has refrained from making public comments over its bids.

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