NORTHGATE AGREES TO ACQUIRE A MAJORITY STAKE IN ARINSO
Northgate Information Solutions plc (“Northgate” or the “Company”), the UK’s leading supplier of specialist software, IT services and outsourcing solutions to the human resources (“HR”) and public services markets, announces that it is to ac
NORTHGATE AGREES TO ACQUIRE A MAJORITY STAKE IN ARINSO AND WILL MAKE A SUBSEQUENT MANDATORY PUBLIC OFFER FOR THE REMAINING SHARES
Northgate has signed an agreement, conditional on Northgate shareholder approval, (the “Share Purchase Agreement”) with Jos Sluys, the Chief Executive of ARINSO, to acquire his holding of 9,069,840 shares in ARINSO (representing approximately 60.43 per cent of the outstanding share capital of ARINSO) for €18.75 in cash and five new Northgate shares for each ARINSO share. The Share Purchase Agreement values each ARINSO share at €25.181,2 and the total consideration for the stake at €228.4 million (£155.4 million)1,2 at yesterday’s closing price of 87.5 pence per Northgate share.
Northgate is targeting a completion date for the Share Purchase Agreement of, at the latest, 1 August 2007. Shortly after completion, Northgate will launch a mandatory public offer to acquire the remaining shares in ARINSO in accordance with Belgian rules on public takeovers. The board of ARINSO has indicated that it will unanimously recommend such an offer to its shareholders subject to review of the takeover prospectus to be filed in the framework of the takeover proceedings. The total consideration for the whole of the share capital of ARINSO upon full acceptance of the offer would be approximately €377.9 million (£257.2 million)1,2,5.
Summary
• ARINSO, currently listed on Euronext Brussels, is the leading independent provider of SAP-based HR services and solutions in Europe, Asia and the Americas including HR outsourcing, technology integration services and strategic consulting
• ARINSO has a global HR platform with over 2,500 employees operating in 27 countries across five continents. ARINSO has built HR and payroll solutions for one in five of the world’s 500 largest companies, as listed by Fortune Magazine, from which more than six million employees are currently being serviced
• The combination of ARINSO with Northgate’s existing HR division will create a world leading HR software and outsourcing operation
• A combined Northgate and ARINSO will be well positioned to address the $15 billion worldwide HR outsourcing market7
• The combination will provide a substantial global platform from which Northgate can grow the enlarged business through:
- Marketing Northgate’s core HR application, ResourceLink, to international customers through ARINSO’s sales and support network; and
- Further promoting ARINSO’s euHReka global platform based on SAP from which to win multi-national HR outsourcing deals
• Following completion of the Share Purchase Agreement, the Chief Executive of ARINSO, Jos Sluys, will join the Board of Northgate and take a leading role in the development of strategic client accounts
• The transaction has the full support of the ARINSO board and senior management
• For the 12 months ended 31 December 20066, ARINSO reported revenues of €203.8 million (£138.7 million)1 and EBITA4 of €17.4 million (£11.8 million)1
• The Board expects the Acquisition to be earnings enhancing (before amortisation, options costs and exceptional items) in the first full financial year following its completion3
• Northgate has arranged a new £500 million debt facility fully underwritten by a syndicate of banks to complete the Acquisition and refinance existing facilities
The Share Purchase Agreement is conditional upon the approval of Northgate’s shareholders at an Extraordinary General Meeting (“EGM”). The Notice of EGM will be included in a circular setting out the details of the Share Purchase Agreement and Acquisition. The circular will be sent to shareholders as soon as practicable.
Northgate’s Chief Executive, Chris Stone, commented: “This transaction represents a unique opportunity for Northgate and represents a step change in our growth and development. At a stroke it will transform our successful Human Resources division into a world class business, with market-leading products that can serve the HR needs of corporate clients on five continents, from the largest multi-nationals to SMEs. Northgate and ARINSO are an excellent fit in terms of products, technologies, geographies and clients. From now on, I look forward to working with Jos and his colleagues to take full advantage of the opportunities that this presents us with.”
ARINSO’s Chief Executive, Jos Sluys, added: “We operate in a market where three elements really matter: references, technological edge and size. We already have a very strong reputation with leading employers and have been recognised for our expertise in SAP HR and payroll platforms. With Northgate, we now have the opportunity to make a quantum leap in terms of market share. The entire management team is confident that Northgate is the right partner at the right time.”
ARINSO’s Chairman, Willy Breesch adds: “ARINSO’s track record since 1994 has been impressive. Jos and his management team have grown the company from five people to more than 2,500, becoming a global market leader in HR services. For the company, its employees, its customers and its shareholders, the combination with Northgate makes great sense. The board of ARINSO therefore endorses the move with strong confidence that it will lay the foundation for the future growth of the new company.”
This announcement should be read in conjunction with the further details set out in the attached document.
