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The board of automotive Software as a Service (SaaS) company Infomedia (ASX: IFM) has embraced a $651 million takeover offer from TPG Capital Asia, entering a scheme implementation agreement with the suitor ahead of a shareholder vote expected in November.
The $1.72 per share cash offer represents a 30 per cent premium to yesterday's closing price for shares in Infomedia, which reported increased earnings in the December half and just a few months ago spent €6.1 million ($10.9 million) to acquire 50 per cent of European AI startup Intellegam.
Listed on the ASX in 2000, Sydney-based Infomedia provides connected solutions for automakers and dealers, helping them sell genuine original equipment manufacturer (OEM) parts, streamline technician workflows, and assist with data management and insights.
Infomedia shares had slumped from their $1.80 level in August last year, as client acquisition and higher sales were overshadowed by a $4 million customer churn event and a cyber security incident that affected its IT partner.
While the current offer is below historic levels and chairman Jim Hassell believes in the long-term value of the company, his message to shareholders is to immediately take the return.
"The board unanimously recommends this transaction to Infomedia shareholders. The all-cash offer represents a compelling premium of 41% to Infomedia’s three-month VWAP (volume-weighted average price) and delivers certainty of value in an increasingly uncertain environment," says Hassell, who took on the role after previous chairman Jon Brett resigned in March due to health reasons.
"The board considers that the proposal appropriately reflects the strength of Infomedia’s platform, the execution of its strategy to date, and the growth opportunities it has created.
"While we remain confident in the long-term outlook for the business, the scheme enables shareholders to realise full and fair value now, without the risks and uncertainties associated with continued execution as a standalone listed company."
IFM shares are up 27.42 per cent at the time of writing at $1.682 - just shy of the offer price, reflecting a variety of conditions including Foreign Investment Review Board (FIRB) and shareholder approvals, and an assessment from an independent expert.
TPG Australia & New Zealand head Joel Thickens describes Infomedia as a market-leading software provider to the "highly resilient" and growing auto parts and servicing end-market.
"Together with its experienced management team, the company has continued to innovate and improve its software solutions, with significant opportunities for further international expansion," Thickens says.
"TPG is a major investor in the global software sector, with US$24 billion invested across more than 80 companies, including Wind River and McAfee, and a dedicated software team of more than 90 professionals around the world.
"By leveraging this global network and software experience, we believe TPG is well positioned to further accelerate Infomedia’s international expansion across the Asia Pacific region, EMEA and the Americas, building on TPG’s track record of creating multi-regional platforms of scale."
If the scheme proceeds, Infomedia has also agreed to provide to TPG a loan equal to the available excess cash on Infomedia’s balance sheet to pay part of the cash consideration - a matter that will also be voted on by shareholders via a special resolution at a meeting due in November.
The scheme implementation agreement comes with a break fee of $6.5 million, applicable to either party under certain circumstances.
The announcement follows TPG's investment in another Australian company, Brisbane-headquartered home care provider Five Good Friends (FGF), in April.
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