Wednesday 22 May 2019

German's $4-a-share bid for Iona sparks multiple interest

Tom McEnaney

German business-software company Software AG has indicated to the board of Iona Technologies that it is willing to make a formal bid valuing the Irish company at more than $4 per share. The stock closed at $3.39 on Nasdaq yesterday, having gained 14c after appointing advisers on a possible sale.

Earlier this month, Iona, said it had received a very preliminary approach from a rival which may or may not lead to a sale.

On February 9, Irish Independent Business identified the company which made the approach as Software AG, a fast-growing German business software company.

It is understood no price was mooted at the time of the original approach but that Software AG subsequently came back with an opening bid. The exact level of that bid is unknown but one informed source said it was in excess of $4.

Approach

It is also understood that since Iona announced that it had received an approach a number of other trade buyers and at least one private-equity house have made approaches.

Iona said yesterday it had appointed international bank Lehman Brothers "to evaluate and advise its board of directors regarding strategic alternatives for the business, including, but not limited to, the sale of Iona or merger of Iona with another entity offering strategic opportunities." It is understood the software company has also appointed Merrion Capital, an Irish stockbroking firm, to advise on a possible sale.

Any list of potential suitors for Iona is likely to include competitors such as Tipco, IBM, BEA, Oracle and Progress Software. Any bid in the $4-$5 range would be at a significant discount on Iona's 52-week high of $6.35.

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.

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