Norkom board backing €217m BAE takeover bid
Kerley to reap €15m as offer from defence group one of highest for an Irish technology firm in past decade
Published 15/01/2011 | 05:00
The board of Irish financial software firm Norkom has recommended a €217m all-cash takeover offer from UK defence group BAE Systems.
The deal, which will gross about €15m for Norkom chief executive Paul Kerley, represents one of the highest takeover offers for an Irish technology company in the past decade. Norkom shareholders will receive €2.10 per share if, as expected, the deal is approved.
Mr Kerley owns 5.6pc of Norkom, which is valued at slightly over €10m under the terms of the acquisition.
However, BAE will also pay management for share options they have already been granted and which are 'in the money', or which are less than the share price at a specific date.
Mr Kerley had 2.4 million such options at the end of last March, for which he will receive a further €5m.
Chief operations officer Cecil Hayes will reap €6.3m for his shares and options, while chief financial officer Liam Davis will get €557,000 for his.
The BAE deal values Norkom's stock at a 36pc premium to its closing price on Thursday, and is more than double the price the shares were trading at in the week prior to the firm confirming in late November it was in talks with suitors. The company floated on the stock exchange in 2006 at €1.24.
Mr Kerley welcomed the deal, saying the takeover would give Norkom, which employs close to 400 people, a strong partner. He said BAE Systems emerged as the preferred buyer from four remaining interested parties.
He added that Irish listed investment firm TVC Holdings, which controls almost 29pc of Norkom, had played an important role in securing the transaction.
"We couldn't have hoped for a better home and there's very little overlap between us and BAE," he said, pointing out that BAE's customer base of insurance companies would present significant opportunities for Norkom's product suite.
Mr Kerley also said he would be staying with Norkom for the "foreseeable future".
Norkom develops and sells software to financial institutions that enables them to prevent fraud by monitoring transactions and also to meet strict compliance standards. Its clients include blue-chip firms such as Banque Populaire, HSBC, Rabobank and Banco Santander.
BAE Systems owns Detica NetReveal, which provides fraud prevention systems to clients such as Zurich.
Others who will gain from the takeover, which requires 80pc acceptance from shareholders, include Norkom non-executive chairman Shane Reihill. He is also executive chairman of TVC Holdings. Mr Reihill owns 1.2 million Norkom shares, valued at €2.5m.
TVC chief executive John Tracey, who is a non-executive director of Norkom, has a beneficial interest in 701,000 shares valued at almost €1.5m. TVC will see its cash balance boosted by about €41.7m. Its shares rose 20pc yesterday.