German firm Software AG thought to be Iona's suitor
Saturday February 09 2008
Software AG, a German business software company, is thought to be the company which approached Iona with a view to a possible takeover.
Shares in Iona Technologies soared in New York trading yesterday, as the struggling software architecture firm confirmed it was in "very" preliminary negotiations which could lead to an offer.
The company could fetch as much as $150m (€103m) based on current valuations.
Early trading in the US saw Iona's market capitalisation rise to more than $127m, with analysts suggesting that likely suitors for the company included Germany-based Software, Oracle, and Progress Software.
In 2001, Iona acquired non-exclusive licence rights from Software AG, and also hired a substantial portion of the German firm's engineering team.
Moderation
Software AG, which makes what is called "service-orientated architecture" software, made three acquisitions last year, the largest of which being the $546m acquisition of US-based webMethods.
Despite the surge in its share price yesterday, Iona was still trading significantly below its 52-week high of $6.35. The shares moderated in early afternoon US trading, up over 21pc to $3.33, after rising more than 24pc earlier.
San Francisco-based Peninsula Capital Management has been busy buying Iona stock in the past few weeks and currently holds over 15pc of the company, while Schroder Investment Management owns 8.8pc. Co-founder Chris Horn, who is currently the firm's non-executive vice chairman, owns 6.6pc. Mr Horn re-took the position of CEO with Iona in 2003 in an effort to refocus the company, before handing over the reins in 2005 to current chief executive Peter Zotto.
Last month Iona, which produces so-called middleware that enables separate computer applications to link together, said that its quarterly revenue to the end of December 2007 was $18m -- below its target of between $20m and $22m and 21pc lower than the same period in 2006. The news saw the firm's shares slump over 25pc in New York. Iona's customers include Credit Suisse and ABN Amro. Turmoil in financial institutions led to delays in Iona closing transactions during the last quarter.
Iona lost of $700,000 last year compared to a net profit of $2.5m in 2006. It said it would shed jobs to cut costs. The company had $56.5m of cash and marketable securities on its books at the end of 2007. It has net debt of over $55m.
Earlier this week, another Irish middleware vendor, privately-held Cape Clear, which was founded by Iona co-founder Annrai O'Toole, was sold to US-based firm Workday for an undisclosed sum.
- John Mulligan
