It appears a bidding war has broken out for component-based modeling tools company Select Software Tools Plc. The company announced yesterday that it has received preliminary indications of interest concerning a possible acquisition of Select from more than one suitor, but isn’t prepared to name names. As well as considering the offers it says it is also reviewing strategic alternatives for its business. Stuart Frost, chief executive of the Cheltenham, UK-based company, has confirmed that at least two companies, based in different countries have their eyes on Select. Industry watchers say Rational Software Corp would be a likely buyer, but Rational spokesperson Kara Myers said that as far as she is aware, the company is not looking to acquire Select and Frost himself said Rational would not necessarily fit in with the Select strategy. Select’s biggest asset is its component manager, which operates with multi-vendor repositories and Java. Select reported net losses for the year to December 31 up at $7.7m from a loss of $1.7m at the same time last year, on revenue that rose 78.8% to $25.6m. The loss for the year included the restatement of third quarter results concerning a problem with a $3m original equipment manufacturer deal, which coincided with the departure of its chief financial officer Jerry Davison (CI No 3,363). But figures for the first quarter were a bit perkier and Frost doesn’t think it will be too long before the company returns to profitability. Commenting on the reasons behind the proposed acquisition, Frost said, We can carry on as an independent company, but we have to consider shareholder value. Select trades on Nasdaq and has approximately 10.3 million shares in circulation. The biggest single owner of stock is Frost himself, with 1.1 million. He said: Select is very well positioned and I don’t want to do anything that will throw it all away after 10 years of effort. Frost is unsure at the moment as to how much Select will fetch when it is sold. The company’s market capitalization is around $55-$60m, and Frost says he would expect a premium to be paid on top of that, but has not divulged how much that might be. An announcement detailing Select’s decision and the name of a possible purchaser is expected soon. Select’s stock was trading up 26.9% at $5.31 as we went to press, and had been as high as $5.62 on Tuesday, but a long way off its year high of $14.37 in October.
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