11th Jun 2008 07:00
11 June 2008
SQS Software Quality Systems AG
("SQS" or the "Company")
SQS acquires Validate of Sweden
Acquisition bolsters European presence and targets
strategically significant Scandinavian markets
SQS (AIM: SQS.L), the global leader in independent software testing and quality management services, is pleased to announce further expansion into Scandinavia with the acquisition of a software testing and quality management business based in Sweden.
SQS has entered into an agreement to acquire at least 96% of the issued share capital of Validate Technology Svenska AB ("Validate"), a software testing and quality management business in Sweden, and its subsidiaries (together the "Validate Group") (the "Acquisition"). The Acquisition will be executed predominantly through the acquisition of 2020 Governance AB, the holding company of 91.2% of the issued shares of Validate. The closing of the Acquisition ("Closing") is expected to occur on 1 July 2008, by which time it is hoped that SQS will have also acquired the outstanding 4% of the Validate Group, although this is not a pre-condition to Closing.
Validate is headquartered in Kista, Sweden and has subsidiaries in Finland and Norway. One of the leading providers of software testing in Scandinavia, the Validate Group currently has approximately 70 staff and 20 customers including many of the region's blue chip corporations. In the year ended 31 December 2007 Validate generated profit before tax of €0.3m on revenues of €4.6m and is expected to generate profit before tax of €0.8m on revenues of €8.0m in the current year. As at 31 December 2007, Validate had net assets of €0.4m. All of the senior management of the Validate Group will remain with the Company following completion of the Acquisition.
Rudolf van Megen, CEO of SQS, said, "With a similar profile in terms of customers and offerings we believe Validate is a perfect fit for us. The management team has been successful in the Scandinavian region and as part of SQS we believe they can make further inroads in that market. We are pleased to be building a presence now in this region which we see as a mature market with a healthy pricing environment and where software testing is regarded as an essential investment in any software development programme."
Arne Wallmon, Chairman of the Board of Validate, added, "We are delighted to be joining one of the leading companies in our industry. Being part of SQS will enhance our position in the market and also bring us additional capabilities that we can leverage with current and new customers. We look forward to being part of the global leader in this industry and extending our position in the Scandinavian market."
Terms of the acquisition
Maximum consideration for the Acquisition (assuming the purchase of 100% of the Validate Group and subject to certain adjustments depending on the development of the SQS share price) will be Swedish Krona (SEK) 153.3m (€16.4m) of which, overall, 25% will be satisfied in cash and up to 75% can be satisfied by the issue of new SQS ordinary shares to the vendors (who include current Validate management). Of this maximum consideration, SEK 68.1m (€7.3m) (the "Initial Consideration") is due on Closing and SEK 85.2m (€9.1m) will be deferred and payable over the three years following Closing, dependent upon the achievement by Validate of specified growth and profit targets. Of the Initial Consideration, 37% (SEK 25.2m (€2.7m)) will be satisfied in cash from internal SQS resources and 63% (SEK42.9m (€4.6m)) through the issuance of 1,221,144 new SQS ordinary shares (the "New Ordinary Shares"). Application will be made for the New Ordinary Shares to be admitted to trading on the AIM Market of the London Stock Exchange. Following the admission to trading of the New Ordinary Shares, SQS will have 22,820,253 ordinary shares in issue. No sale of New Ordinary shares will be permitted during the six months immediately following Closing. After this period, each recipient will be permitted to dispose of up to 25% of his / her holding of New Ordinary Shares. Disposals of further 25% tranches will be permitted at the end of each of the three subsequent six month periods.
SQS has already established a global leadership position for independent software quality management and testing. The Directors of SQS believe that the Acquisition will further enhance its position in Europe and is in line with the Company's stated strategy of global expansion through acquisition. The Acquisition is expected to be immediately earnings enhancing. This statement regarding earnings does not constitute a profit forecast nor should it be interpreted to mean that earnings per share of SQS for the current year or future years will necessarily match or exceed the historical published earnings per share of SQS.
Throughout this announcement the exchange rate used has been SEK 9.3462 = €1.
Enquiries:
|
SQS Software Quality Systems AG |
Tel. +49 (2203) 91 54 0 |
|
Rudolf van Megen, Chief Executive Officer |
|
|
Rene Gawron, Chief Financial Officer |
|
|
Altium |
Tel. +44 (0)20 7484 4040 |
|
Nick Tulloch |
|
|
ICIS Limited |
Tel. +44 (0)20 7651 8688 |
|
Tom Moriarty |
|
|
Bob Huxford |
About SQS
SQS is the global leader in independent software testing and quality management services. SQS consultants design and oversee quality management processes during software and IT systems development and test the resulting products for errors and omissions.
Headquartered in Cologne, Germany, SQS now has more than 1100 employees across Europe and in Africa. The Group has a strong presence in Germany (Cologne, Munich, Frankfurt, Stuttgart, Goerlitz and Hamburg) and in the UK (London, Woking, Birmingham, Manchester, Belfast), Ireland, the Netherlands, Switzerland, Austria, Egypt and South Africa. SQS also has a minor stake in an operation in Portugal and a partnership operation in Spain.
With more than 4,000 completed projects under its belt, SQS has a strong customer base including 36 FTSE-100 companies, half of the DAX 30 and nearly a third of the STOXX-50. It supports clients in a wide range of industries, including major corporations such as Deutsche Bank, Deutsche Telekom, Barclays, BP, Boots, Credit Suisse, Volkswagen, and Daimler.
www.sqs-group.com
Related Shares:
SQS Software Quality Systems AG