Aptitude Software to sell Microgen in £51m deal
Business software and services provider Aptitude Software Group has entered into an agreement to sell the entire issued share capital of its wholly-owned subsidiary Microgen Financial Systems (MFS) to Moscow Bidco, it announced on Thursday.
The London-listed firm described Moscow Bidco as a newly-incorporated private limited company controlled by funds advised by Silverfleet Capital Partners, with the disposal being for an aggregate cash consideration of £51m.
It said the disposal was conditional only on the approval of Aptitude's shareholders at a general meeting.
Aptitude described the disposal as a “major milestone” in its long-term strategy of creating two independent software businesses which benefit from recurring revenues, and represented the “start of a new era” which would sees the Aptitude Software business become the total focus of the group.
On 25 March, Aptitude announced that it had concluded that a demerger of MFS on to AIM would enhance the group's ability to allocate capital and management attention on the higher growth Aptitude business, while also providing MFS with the ownership environment for it to successfully pursue its own independent growth strategy focusing on its specialist target market and servicing its international customer base.
The Aptitude board said it considered that the benefits of a demerger also applied to Aptitude in the case of the disposal.
Following the announcement on 25 March, discussions had been held with Silverfleet in respect of the potential acquisition of MFS.
The board said it believed that the aggregate cash consideration of £51m represented a fair value for the business, which recognised MFS' market position, track record of organic growth and positive cash characteristics.
Additionally, it said it believed that the disposal provides certainty over the crystallisation of the value of MFS, without the longer timeframe and risk associated with the previously-announced demerger process.
Assuming Completion on 30 June, the net cash proceeds arising from the disposal were expected to be approximately £48.4m.
The Aptitude board said it intended that the company would return a “significant majority” of the net cash proceeds to shareholders, unless more value-creating opportunities arose, and subject to prevailing market conditions.
In the financial year ended 31 December, MFS generated revenue of £18.0m, adjusted operating profit of £7m, profit before taxation of £9.1m - benefitting from a £3.2m gain on the disposal of the small non-core payments business - and, as at year-end, had gross assets of £41.1m.
“The disposal represents a significant milestone in the strategic development of the group and, as was the case with the previously announced proposed demerger, the board strongly believes that the disposal enhances the long-term prospects of both businesses and will benefit clients and employees”, said Aptitude Software Group chairman Ivan Martin.
“In line with my comments on 25 March, we believe that the disposal will simplify the group, allowing the higher growth Aptitude Software business with its specialised financial management software applications to be the sole focus going forwards whilst Microgen Financial Systems looks forward positively to its future as a focused independent software business based on its leading product, Microgen 5Series.
“The disposal process provides certainty over the crystallisation of the value of MFS for Aptitude shareholders, without the longer timeframe and risk associated with a demerger process and we will evaluate, in consultation with our shareholders, how best to deploy the net proceeds of the disposal for the benefit of shareholders over the coming months.”