In response to recent market speculation, and after consultation with the Nordic Exchange Stockholm, the Board of Directors of Telelogic AB confirms that it has received a conditional takeover proposal for all the issued and outstanding shares in the company at SEK 21 per share in cash, the firm said in a statement. However, there can be no assurance that this will result in a transaction.
Telelogic will make a further announcement in the event of further developments, the company said.
The firm’s stock had climbed on the news by 2.3% to SEK 20.50 by the time of writing.
Our View
Telelogic is by no means in trouble financially. In its latest quarter it saw sales rise from SEK 327m to SEK 388m, while profit after tax was up from SEK 28.4m to SEK 36.1m.
The firm has a respectable portfolio of products in the application lifecycle management or ALM, enterprise architecture and systems and software design spaces.
While competitors in the space include the likes of MKS, Troux Technologies, TechExcel and many more, we believe that the only firms large enough to swallow Telelogic – of those that would want to – include Compuware, Serena, BEA, Oracle, Borland, IBM, HP and Microsoft. IDS Scheer is an outside bet – it does the process diagrams that Telelogic could help it to build the business processes behind.
Which is the likely suitor? It’s a tough call on this occasion. Borland may not have quite enough money to do it and there would be significant overlaps, and overlaps would be a problem for Serena also. There seems little synergy with Oracle’s Fusion Middleware strategy with Telelogic, while Microsoft is a stranger to acquiring large firms in this space.
Although IBM has a large installed base in ALM already, its technology is not the most up-to-date and it would surely get benefit from the enterprise architecture tools Telelogic bought from Popkin – in our view one of Telelogic’s more valuable assets that has not been fully exploited.
BEA is still digesting its Fuego BPM acquisition and it is hard to see exactly how Telelogic fits into BEA’s SOA strategy, which seems aimed higher up the decision tree than Telelogic’s modeling and ALM tools. HP is still digesting its Mercury buy, and there are yet more overlaps between Mercury and Telelogic.
In our view then, the most likely candidates are Serena and Compuware, with IDS Scheer an outside bet. Although Serena has numerous overlaps it may be after the customer base, as it was not so long ago taken private and is in the process of fleshing out what it calls its IT Change Governance vision.
Compuware too has overlaps in the ALM space but these could be worked around, and Compuware may want to broaden its footprint as Software AG’s recent acquisition of webMethods may give Compuware some stiffer competition in SOA, legacy modernization and the like. If we had to settle on a vendor buying Telelogic, we would guess it’s Compuware, but surprises are not uncommon in the sector.
