The deal was prompted by CA’s plan to exit the business software market to concentrate on management software. For its part, Newcastle, UK-based Sage needs to find growth in new markets after a sluggish financial performance in which it has been outshone by rival Intuit and faces a growing threat from Microsoft’s Great Plains unit.
Under terms of the deal, which is expected to close in February, CA will receive $88m for its 90% share and Sage will buy the remaining shares from the company’s staff.
In the year to March 31, Pleasanton, California-based ACCPAC recorded pre-tax income of $5.4m, up from a loss of $9.9m on revenue that increased 13.2% to $88.2m. The company is still growing and CA said it is likely to generate revenue of around $28m in the quarter to December 31.
ACCPAC offers a broad range of software covering accountancy, manufacturing, point of sale, EDI, eCommerce, CRM and warehouse management. But around 75% of its revenue comes from accountancy and CRM software, areas that Sage knows well.
It will give Sage a substantial customer base in Canada and other territories such as Singapore, South Africa and Australia. Another big attraction is that it has copied salesforce.com’s hosted CRM model and has a strong base amongst the larger SMEs.
Given the holiday season, Sage is holding off a conference call on the deal until the New Year but an area where it clearly believes it can squeeze more revenue is selling support services to ACCPAC’s customers. While Sage’s Best Software subsidiary in the US, has a penetration rate for support of around 50%, ACCPAC only sells support to around 12% of its customers.
Sage chief executive Paul Walker said that the company’s customer service and marketing expertise would enable it to sell more software and services to ACCPAC’s customer base.
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This article is based on material originally produced by ComputerWire.
