The European Commission (EC) has approved privately held Swiss consultancy SoftwareONE’s acquisition of COMPAREX, in a deal that will create a software services heavyweight overseeing nearly £9 billion of software purchases annually.
The acquisition, first announced on October 9 2019 (the terms of the deal have not been disclosed), was assessed under simplified European merger review procedures. Today’s news announcement came in a daily e-shot from the EC.
The EC had initially been concerned that the deal would lead to an unfairly dominant position in the market for SoftwareONE’s private equity house owner KKR – which has $195 billion of assets under management, including other software firms.
However the EC concluded: “The acquisition would result in a competitive situation, given the companies’ moderate combined market position resulting from the proposed transaction.” The combined firm will span software licence and lifecycle management, cloud migrations, strategy and compliance, as well as software procurement.
Neither SoftwareONE nor COMPAREX could be reached for comment.
COMPAREX Acquisition: 88 Countries
The new entity will operate in 88 countries with a 5,500 strong army of customer service staff and have a major cloud migration component.
SoftwareOne in October said that “following the combination, SoftwareONE will help customers optimize and manage an estimated €10 bn in software purchases.”
Cloud and software portfolio management and consultancy enterprise SoftwareONE is also heavily involved in compliance mitigation strategies as well as licencing and procurement projects. It has a reported net income of over £4.7 billion-equivalent while COMPAREX’s last reported net income was £2.2 billion-equivalent.
Making the deal, SoftwareONE Executive Board member Dieter Schlosser highlighted the software and services industry’s shift to a subscription-based business model and growing demand for cloud services. The company also pointed to COMPAREX’s “exceptional expertise in workforce productivity” as an attraction.
The investigation was done under the Commissions simplified merger procedure which was introduced in 2013 to help cut the time and cost involved in approving company acquisitions. Normal merger procedure requires both parties to submit extensive data on all markets affected by the company merger. This data is costly and expensive to compile. If two companies are not expected to have a significant competitive impact on the market, then they can proceed through the simplified merger procedure.