HP bids for Tower Software
HP has offered $3.39 a share for the privately held Tower Software.
Major shareholders Quadrant Private Equity, company founder Brand Hoff and chief executive Martin Harwood, who together own 90 per cent of the business, have said they will accept the bid in the absence of a higher offer from another party.
Quadrant Private Equity took a 63 per cent stake in Tower in early 2007.
Tower has aggressively pursued the public sector markets in Britain and the US in recent years and makes more than 60 per cent of its revenue offshore.
HP South Pacific managing director Paul Brandling said the acquisition would bolster HP’s credentials in the regulation and compliance software arena.
“What it does is gives HP end-to-end solutions in a market segment that’s booming,” Mr Brandling said.
“Analysts say this segment is growing well in excess of 20 per cent per annum and one of the exciting opportunities here is to apply HP’s global muscle and global customer footprint as a growth lever.”
In the absence of suitors with better offers, the deal is slated to be completed in this quarter. Mr Brandling expects the integration of Tower to be completed by the end of the year.
The deal is conditional on 85 per cent of Tower’s staff accepting employment offers from HP. Mr Hoff expects these offers to be tabled later this month or early May and be open for about a month. “The HP people have been speaking to our senior managers and I would expect in the next couple of months (when) the process is open that these things will be finalised and all the employees will be taken care of,” he said.
Mr Brandling would not rule out redundancies among Tower’s 240 staff as part of the acquisition process, and declined to say whether current CEO Martin Harwood would survive the transition. “I can’t answer that one specifically … (but) we want the workforce and the senior team,” he said.
In the 2007 financial year Tower increased its revenues by over 30 per cent to $45.2 million.
Founded 22 years ago, Tower has about 1000 customers.
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