German database developer Software AG has reported first-quarter net income up 2.7% at DM11.3m ($6.1m) on revenue that rose 13.2% to DM157.5m ($85.4m). At the pre-tax level, meanwhile, profit rose 55%, to DM21.3m ($11.5m).

The Darmstadt-based company explained the essentially flat net profit by the fact that corporate income tax has increased significantly this year in Germany. However, Software AG’s pre-tax increase should provide a healthy fillip to its plans to float 64% of its stock on Frankfurt’s small cap exchange, the Neuer Markt, on April 26.

The flotation will be preceded by an initial public offering (IPO) of almost 17 million shares, the final price for which is to be announced on Sunday, April 25. A spokesperson for the company said that, considering the price range for bookbuilding (30-37 euros, or $31.84-$39.27), which ends tomorrow, the offering should bring anywhere from 501m to 618m euros ($531m-$655m) in proceeds.

Of the 16.7 million shares in the IPO, only three million are new, which stand to generate between 90m and 111m euros ($95.5m-$117.8m) for the company itself. The rest are being sold by the pension funds and foundations, the ‘Stiftungen’, which hold the bulk of Software AG’s stock.

That said, the main strategic objective of the IPO is not to raise money for the company, which is still sitting on some 125m-130m euros ($133m-$138m) in cash left over from, among other things, the sale of its former US subsidiary, SAGA, in 1996.

Instead, explained the spokesperson, the flotation is designed both to give the company greater visibility, and to create the alternative of making acquisitions via stock swaps, instead of paying cash, as it did for Paris-based Goal Technologies earlier this year (CI No 3615).

Unlike the DM4.4m in cash it paid for Goal, Software AG wants to pay for future acquisitions with its own shares. In other respects, however, the Goal buy is a model for what is to come in terms of its acquisitions, the spokesperson explained. ‘We’ll be looking primarily for companies in professional services that will be able to implement our software in particular sectors,’ he explained.

In geographical terms, the acquisitions will not be in the US, as Software AG maintains on-going relationships with SAGA, which gives each the exclusive rights to sell the other’s products in its respective territory.