Newcastle-upon-Tyne based Sage Group Plc has been on the acquisition path once again. This time the target is French personal computer accounting software company, Saari SA, which it will buy for UKP18.5m under a five year unsecured loan of UKP20m with no earn-out. It is currently buying 96.82% of the company but Sage is confident that the remainder of Saari’s shareholders will sell when approached by the company. Sage see the move as complementing its existing CIEL business in Paris as well as providing a key stepping stone towards occupying the number one slot in the French accountancy software market: Sage currently ranks Saari as the number two software in the market in terms of turnover behind Microsoft Corp. The acquisition will also give Sage a 4,000-dealer distribution channel in the French market which it intends to use for others products such as Telemagic. According to chairman David Goldman, Sage bought the UKP29m-a-year company for a mere UKP18.5m because there were not that many natural buyers, Saari needed new management and was not prepared to restructure, so Sage stepped in at a convenient point. Goldman estimates restructuring costs to be in the region of UKP1m and will involve some streamlining: Sage has 12 sales people against Saari’s 1,100 and is also weighed down by 90 administration and finance staff. Goldman also says that there will be some product rationalisation involved with the acquisition. Sage’s senior management intend to keep a firm hand on Saari until a new chief executive and finance director are recruited sometime early next year. With the acquisiton of Saari, Sage brought forward its year-end results to September 30, which continue to reflect strong economic performance: pre-tax profit rose 48% at UKP14.2m on sales up 19.3% at UKP49.3m. According to Goldman Sage’s continuing profitablity is partly down to its ability to generate recurring revenues from cost-effective sales to its existing user base; selling to existing customers generated UKP22m or some 44% of total revenue. Sage hopes to grow its user base to 8,500 registered users in the next financial year. It is also due to consistent growth in software sales. Software sales accounted for UKP25.9m of turnover with Sage UK contributing UKP12.1m, DacEasy bringing in UKP5.7m, TeleMagic at UKP2.5m, CIEL 4.0m, and Timeslips and MultiSoft contributing UKP400,000 and UKP1.2m respectively.
