Sage pays £184m for US credit processor

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The Independent Online

Sage, the UK's biggest software company, made its first move into e-commerce yesterday with the £184m takeover of Verus Financial Management.

The cash acquisition of the American credit-processing company gives Sage access to Verus's 101,000 small businesses in the US, such as petrol stations, restaurants and car dealerships. Sage, an accountancy software specialist, already provides payroll services for 1 million smaller American companies.

Paul Harrison, Sage's finance director, said: "The whole e-commerce market talked about in 2000 is back on again. We've been trialling merchanting services to SMEs [small and medium-size enterprises] for some time and there's been strong interest in the US.

"We expect to sell Verus products to US clients using our software and hope to sell our accounting software to Verus clients."

Verus, based in Nashville, Tennessee, processes credit card payments and cheques. It notched up underlying operating profits of £12m last year, three times better than in 2004, on sales of £36m. It carries £1m debts.

Sage shares edged 1p higher to 258.5p as some investors feared it had overpaid to diversify from its main business. But Cazenove was upbeat about the deal, Sage's biggest since it bought the US rival Interact 2001. Analysts at the brokerage wrote: "We view this as a smart move into a growing market and one which provides significant cross-selling opportunities in both directions." Another broker, WestLB, reckoned the shares would outperform the wider market, saying the "significant acquisition shows ambition".

Sage, which is based in Newcastle and is the FTSE 100's only pure technology company, said it is mulling a share buy-back programme and would consider further buys in payment-clearing and other areas in the US, Italy, Scandinavia and the Far East.