IBS AB has signed an agreement to sell 100 percent of one of its UK subsidiaries, IBS Public Services Ltd, by means of an IPO, fully underwritten, on the London Stock Exchange. IBS is expected to receive Eur 75m ($127m) of cash consideration, generating a capital gain of Eur 63m ($106m).
The disposal is a significant step in the strategic development of IBS to focus operations on core business areas. With a substantially strengthened balance sheet, as a result of the sale, IBS will now accelerate its strategic measures to focus on supply chain management for certain vertical markets.
IBS Public Services, acquired by IBS in 1991, focuses on public sector software and services, mainly for management of social housing, collection of local taxes and payment of benefits. During 2004, the company had a turnover of Eur 24m, amounting to some 9 percent of the IBS Group´s total turnover. IBS Public Services operates solely in the UK. There are few international synergies with IBS´s supply chain management business.
IBS Public Services will be listed under the name of IBS OPENSystems plc. The transaction is fully underwritten by Numis Securities Ltd and IBS is expected to receive the entire cash consideration on 23 March 2005 when the listing is effective.
The transaction is conditional upon admission to listing and trading of IBS OPENSystems plc on the London Stock Exchange. IBS will, in addition to the cash consideration, receive warrants to subscribe for 3 percent of the issued ordinary share capital of IBS OPENSystems plc.
IBS will continue to increase market penetration in the UK market for supply chain management software through the development and expansion of its remaining subsidiary, IBS UK Ltd.
The stated strategy of IBS is to complement organic growth with acquisitions which increase its customer base and specialist knowledge within areas where IBS has, or is able to develop, a leading international market position.
Commenting on the transaction, Magnus Wastenson, CEO of IBS, said the sale of the subsidiary provided capital to increase the pace at which IBS positioned its supply chain management business to focus on certain vertical markets.
"In the current consolidating market for business software, there are many interesting business opportunities for IBS. We plan to make a number of acquisitions moving forward.
"The acquisition of TMS in Australia, announced on March 1, 2005, means that we have already strengthened our international position in the area of business software solutions for the publishing industry. At the same time, we increased our market share in the expansive Australian market for supply chain software.
"We will seek to acquire additional businesses at attractive valuations, with customer focused offerings which fit with the overall IBS Group offering. We also intend to increase our market channels through acquisitions in selected countries where we want to increase our market share," he said.