BANGALORE/NEW YORK, April 26 (Reuters) – Lawson Software Inc has agreed to be bought by private equity firm Golden Gate Capital in a cash deal valuing the business software maker at about $2 billion, weeks after hiring bankers to look into a possible sale.
Mid-sized business software makers are looking to consolidate in a bid to gain scale in a market dominated by heavyweights such as Oracle and SAP.
Hewlett-Packard Co had considered buying business software company Tibco Software Inc, Reuters reported earlier this month.
Last month, Reuters reported that Lawson — in which billionaire investor Carl Icahn has an 11 percent stake — had hired Barclays Capital to look at strategic options, including a possible sale.
On March 11, Lawson said it received an unsolicited bid from Golden Gate Capital and privately-held software company Infor at $11.25 per share in cash.
Tuesday’s deal, still at $11.25 a share, follows a robust market check, including a number of inbound calls from parties and proactive outbound calls, a source close to the situation told Reuters. There will be no go-shop provision.
The source said the $11.25 per share price to be paid by GGC Software, an affiliate of San Francisco-based Golden Gate Capital, and Infor, was not the starting point, and the two sides had negotiated over multiple rounds.
The acquisition, which comes close on the heels of private equity firm Apax Partners’ early-April buy of Epicor Software and Activant Solutions, is expected to close in the third quarter.
The sale of Lawson comes nearly a year after Icahn disclosed his stake in the company, which prompted shareholder speculation over what he might do, pushing up the stock price, the source said. Lawson said its board unanimously approved the GGC deal.
“(Lawson) will extend our existing portfolio, particularly in areas such as healthcare, public sector, manufacturing and human capital management,” Infor CEO Charles Phillips said in a statement.
The deal has fully committed debt financing from Credit Suisse, Bank of America Merrill Lynch, Morgan Stanley, Royal Bank of Canada and Deutsche Bank, Lawson said.
The deal was financed through $1.1 billion in secured credit facility, $560 million in senior notes and equity plus Lawson cash, a second source close to the situation said.
There will be a separate vehicle for Lawson as Infor already has its own capital structure, the second source said.
Barclays Capital acted as financial adviser to Lawson and Skadden, Arps, Slate, Meagher & Flom was the legal adviser for the deal. Evercore Partners and Morgan Stanley acted as financial advisers to GGC Software Holdings and Infor.
Lawson shares, which have risen nearly 18 percent since it received the first offer last month, last traded down 8 percent at $11.18 on Tuesday on Nasdaq.
Close to 22 million shares changed hands, well above the stock’s normal daily volume, making it one of the most heavily traded stocks on Nasdaq.
(By Saqib Iqbal Ahmed and Nadia Damouni; editing by Ian Geoghegan and Saumyadeb Chakrabarty)