Geac, a global enterprise software company for business performance management, announced it has entered into a definitive merger agreement to acquire Comshare, Incorporated, a leading provider of corporate performance management software, for U.S. $52 million in cash, by way of a cash tender offer, to be followed by a cash merger. Under the terms of the definitive agreement, Comshare shareholders will receive U.S.$ 4.60 in cash for each share of Comshare common stock held, representing a 31 percent premium to Comshare's trailing 20-day average share price. This latest acquisition broadens Geac's suite of business performance management solutions with the addition of Comshare's MPC suite of planning, budgeting, forecasting, financial consolidation and management reporting and analysis solutions.
The Comshare acquisition follows the successful purchase of Extensity on March 6, 2003. Comshare's Board of Directors has unanimously approved the transaction and agreed to recommend that its shareholders accept it. Geac plans for the tender offer to close by August 2003 and expects the transaction to be accretive to earnings 90 days following completion of the merger as the business is integrated into existing Geac operations.
"At our annual shareholder meeting last October, we outlined Geac's business performance management strategy, and this acquisition represents yet another step in our journey to execute on that strategy and get Geac growing again," said Paul D. Birch, President & CEO of Geac. "Comshare is expected to add roughly 12 percent to Geac's annualized revenue, based on the last twelve months of reported revenue from each company. Geac can now participate in a new U.S.$ 1 billion market, growing over 10 percent per year. This acquisition is designed to build long-term shareholder value for Geac."
"Comshare's MPC suite of financial planning, budgeting, forecasting and consolidation software provides many new products to cross-sell to our more than 5,000 enterprise customers, since MPC appeals to the same CFOs and corporate controllers that rely on Geac's ERP transaction systems today," said James M. Travers, senior vice president and president, Geac Americas.
"This addition to the Geac product line is in direct response to demand from Geac customers. Even more importantly, we also expect to continue to sell aggressively to many new customers who use non-Geac ERP systems. These two revenue streams are a powerful combination, so we believe that we can accelerate the revenue growth of MPC." Travers also observed that Comshare MPC has approximately 500 customers worldwide, and enjoys a strong customer satisfaction rating. In a recent third-party survey, 91 percent of Comshare customers said they would buy MPC again.
"From a technology perspective, Comshare's MPC application is the industry's only fully integrated, highly scalable suite of budgeting, forecasting, planning, and consolidation modules running a single shared database," said Tim Wright, chief technologyoOfficer of Geac. "It is built on a solid new technology base, with product strengths that are well known to industry analysts. The product has demonstrated its high scalability in demanding environments, with several Fortune 500 customers that have more than 1,000 users each."
Following the close of the transaction, Geac plans to standardize on Comshare MPC for internal use by its divisions worldwide and begin to implement the suite, replacing Geac's current budgeting and consolidation applications.
The acquisition will be accomplished by a cash tender offer at U.S.$4.60 per share for all of Comshare's outstanding common stock, which is expected to be commenced on or before July 3, 2003 by Conductor Acquisition Corp., a wholly owned subsidiary of Geac, followed by a cash merger in which any outstanding shares not tendered will be acquired by Conductor Acquisition Corp. for U.S.$4.60 per share. In connection with the closing of the tender offer, all outstanding Comshare stock options become immediately exercisable by their terms. In connection with the merger, all outstanding stock options will be cancelled and holders of outstanding stock options to purchase approximately 1.4 million shares of Comshare's common stock at exercise prices less than U.S.$4.60 per share will, assuming they have not been exercised prior to completion of the merger, receive in cash an aggregate of approximately U.S.$2.2 million, representing the difference between the approximate U.S.$4.0 million aggregate exercise price which otherwise would have been paid by the holders, and the approximate U.S.$6.2 million aggregate value of the shares underlying the options at the offer price of U.S.$4.60 per share.
The tender offer is expected to be consummated by August 2003, and, assuming at least 90 percent of Comshare's outstanding common stock is tendered, the merger will close immediately thereafter. The transaction is subject to regulatory clearance, approval by Comshare's stockholders (if less than 90 percent of Comshare's outstanding shares are acquired by Geac in the tender offer) and other customary closing conditions. The holders of approximately 15 percent of Comshare's outstanding common stock, including Dennis Ganster, Comshare's chief executive officer, Codec Systems Ltd. and Anthony Stafford, have agreed to support the transaction and to tender their shares to Geac. The Board of Directors of Geac has received a favorable independent fairness opinion respecting the financial terms of the Comshare merger from Yorkton Securities Inc.
Geac's approach to business performance management goes beyond mere financial analytics by linking a company's operational and financial processes with management, planning and control solutions. These solutions and services help automate, measure and improve its customers' businesses for better performance. Comshare products will be integrated into Geac's existing application offerings through the use of Geac's application integration framework, which is designed to speed integration and maximize interoperability between disparate applications. This represents an important step in Geac's ongoing efforts to build a complete suite of front office applications.
In a global assessment of customers' IT requirements, approximately 33 percent of Geac's ERP customers surveyed said that they are interested in acquiring improved business intelligence and reporting tools, such as budgeting, planning and forecasting. These organizations are looking for products that enable them to extract more value from their investment in Geac ERP to monitor and manage overall performance more effectively. Additionally, enterprises face the increasing need for integration, analytics and real-time data access to comply with stricter public disclosure mandates.
According to the May 2003 IDC report entitled "Worldwide Financial and BPM Analytic Applications Software Forecast and Analysis, 2003 2007," business performance management and financial analytics applications in 2002 out-performed enterprise application software and business intelligence tools, growing 8.8 percent. IDC also forecasts this market segment to exceed U.S.$ 1 billion in 2003 and for its compound annual growth to accelerate to more than 10 percent per year through 2007, which is faster than most enterprise software sectors.
"The tough financial climate puts added pressure on measuring and optimizing business performance, and financial analysis and planning are key to these objectives," said Henry Morris, Senior Vice President for Financial Analytics, IDC. "In addition, the specter of increased regulation (via Sarbanes-Oxley and other new government policies) puts pressure on organizations to streamline their financial processes. When executives are held responsible for the accuracy of these reports, as well as for delivering early warnings of changes, there is ample justification for prioritizing investments in financial analysis and business performance management."
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