Rival bidders are lining up to pounce on Pegasus Group Plc, the Northamptonshire, UK accounting software company which accepted a 430 pence-a-share cash offer on Tuesday from Australian software group Solution 6 Holdings Ltd (CI No 3,816). The shares rose 10% to 480 pence yesterday in anticipation of a higher bid with some city optimists predicting the shares could go as high as 600 pence.
Sage Group Plc, the biggest UK accounting software company, was quick to declare its interest. Sage is reviewing its options, one of which would be to make an offer for Pegasus, said a company statement. While emphasizing there was no assurance that an offer would be forthcoming, Sage said that any offer would be for cash and it wouldn’t need to raise funds from shareholders.
In other words, topping the 29.9m pounds ($46.4m) offer from Solution 6 would be small change for a company like Sage which had revenue of $497m last year. Given that Sage is the dominant supplier of accounting software in the UK, a bid for Pegasus may alarm regulators because of the market share Sage would then control. But asked about monopoly considerations Sage would only respond with a no comment.
Derbyshire, UK-based IT services company Electronic Data Processing Plc had been mentioned as a possible bidder, but it has sold its 7.18% stake for 2.14m pounds, in line with the current bid price. The other substantial shareholder is entrepreneur Bob Morton, who is reputed to have built up a 13% stake and is likely to hold out for a higher offer.
The current attraction of accounting software companies is that since their applications are the basis on which most companies run their operations, they are in a perfect position to capitalize on clients needs to move to e-commerce by selling higher value packages.
