PE Firms Face Sage in TeamSystem Auction

LONDON (Reuters) – A clutch of buyout firms are lining up against business software provider Sage (SGE.L) as they vie to buy Italy‘s TeamSystem from Bain Capital, sources familiar with the situation said.

Advent International, Cinven [CINV.UL] and HG Capital are all into the second round of the auction process, sources said.

Bids for the Italian firm, which provides tax, payroll and budgeting software for small and mid-sized businesses, are due towards the end of the month.

Seller Bain Capital is looking for up to 600 million euros ($756 million), the Financial Times has reported. That would value TeamSystem at around 12 times earnings before interest, tax, depreciation and amortisation (EBITDA).

The private equity firms and Sage declined to comment.

Analysts think the business is a good fit for Sage but see the company as cautious about overpaying. Earlier this month it pulled out of a bidding war over Polish IT provider Teta as it could not justify raising its offer.  

Morgan Stanley analysts said in a recent note that TeamSystem would give Sage an “excellent opportunity to expand in Italy, where it is under represented”.

Private equity firms, on the other hand, are competing aggressively for deals and increasingly buying companies from each other in so-called secondary buyouts as they look to deploy hundreds of billions of dollars of unspent funds. 

Bain was among the buyout houses to lose out to rival KKR [KKR.UL] in the race to buy pet goods retailer Pets at Home, the largest European private equity deal of the year so far and catalyst for a wave of similar buyout deals.

By Simon Meads and Quentin Webb
Additional reporting by Paul Sandle; editing by Jon Loades-Carter ($1=.7939 Euro)