Sage snaps up Visma in £334m deal as 'bridge into Baltics'

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The Independent Online

The accountancy software specialist Sage Group yesterday unveiled plans to snap up Norway's Visma for around £334m in cash, its biggest acquisition to date.

Like Sage, Visma makes bookkeeping software and handles administration for smaller and medium-sized companies.

Britain's biggest technology firm - the only such company among the country's leading 100 firms - expects the buy to aid its expansion within Scandinavia and provide a bridgehead into the Baltic countries.

Paul Walker, Sage's chief executive, said: "The proposed acquisition of Visma is consistent with the Sage strategy of expanding geographically into new and attractive markets. Sage doesn't really have any presence in these markets today ... we see this as very complimentary to our business."

His firm's software is used by 4.7m customers but is facing mounting competition from heavyweight rivals in the small-business market, such as Bill Gates' Microsoft.

In response, Sage is sweeping up competitors to bolster profits and expand its reach. In its last financial year, Sage swallowed six companies for a total of £101m. It kicked off the new year with the £78.4m acquisition of the French business management software provider Adonix.

In January, Sage scooped the American payment processor Verus Financial Management for around £184m.

Paul Harrison, Sage's finance director, said that its healthy cash position gave the company a "reasonable amount of headroom" to do yet more deals.

Visma's 200,000 customers make it the biggest provider of business management software in Scandinavia. Sales last year were worth around £166m, against 145m in 2004. It notched up operating profits before depreciation and goodwill amortisation of around £22m, around a fifth better than the previous year.

Before the takeover can be put to bed, Sage must pick through Visma's books.

Sage shares advanced 278.5p to 2.25p as the City applauded its latest acquisition. George O' Connor, an analyst for Shore Capital, said: "While it [Visma] is a size bigger and a bit pricier than recent deals, it is well within Sage's comfort zone." He thought it likely that he would lift his target for Sage's full-year profits to £246.8m from £233m, and again told clients to buy the shares.

Analysts at the Swiss investment bank Credit Suisse reckoned the Visma deal would bolster Sage's earnings by up to 5 per cent in the first year. They expect the share to outperform.