St. Paul-based Lawson Software has agreed to a $2 billion buyout offer from the private equity firm Golden Gate Capital and business-software company Infor.
Lawson has annual sales of about $750 million and about 3,800 employees, including 800 in downtown St. Paul. Lawson is a big provider of software to the health care sector, as well as state and local governments.
The company said it's too early to say whether jobs will be cut as a result of the deal.
A GOOD BUY FOR INFOR, ANALYST SAYS
California-based Golden Gate has helped fund dozens of acquisitions for Atlanta's Infor over the years.
Thrivent Asset Management analyst David Rudow said Infor was attracted by Lawson's strength at selling to some attractive sectors.
"It's the health care and the higher ed and the state and local," he said. "Their expertise there is what really made them an attractive candidate for Infor."
Health care is seen as a key growth area where Lawson could help providers meet the federal government's push to move to electronic medical records.
Combined, Infor and Lawson will serve about 75,000 clients.
Lawson's stock has been trading above $12 a share and some analysts thought Lawson could sell for several dollars more per share. That would have been worth hundreds of millions of dollars to Lawson shareholders.
Investors speculated another buyer might emerge, but the bid from Golden Gate and Infor was the only one Lawson disclosed.
Thrivent's Rudow says he was disappointed the company only fetched $11.25 a share — the same as the original offer.
"Which is, in my mind, kind of a low value," Rudow said. "I guess it kind of tells you there there was probably no other company out there shopping it around. But it's a good deal for Infor, at that valuation."
Some analysts thought Lawson could fetch as much as $15 a share.
Scott Berg of Feltl and Company of Minneapolis was one of those optimistic forecasters. He said given where the stock has been in the past few years, it's not necessarily a bad valuation for the company. Lawson shares have risen more than 50 percent in the past year.
Lawson spokesman Terry Blake said his company did seek other bids.
"That review included reaching out to all of our competitors and it did not result in a superior proposal to the proposal we had from Golden Gate Capital and Infor," he said.
Blake wouldn't say if Lawson received other offers. "I can just say that there were no other superior proposals," he said.
Several law firms have already announced they might go after Lawson for not getting a higher price for the company. Analysts say such legal moves are to be expected with just about any deal.
But Lawson says one of its biggest shareholders, billionaire investor Carl Icahn, has told the company he's happy with the transaction. Icahn bought up about 11 percent of the company starting when the stock was less than $7 a share.
JOBS PICTURE UNCLEAR
As for jobs, Lawson said it's too soon to tell whether — or how many — cuts might be coming.
"It's natural for people to be concerned," Blake said. "Many times these acquisitions are good things for employees. We really don't know what we don't know at this point, until the deal closes and then the integration plans are outlined by the acquiring company."
But analysts like Thrivent's David Rudow expect layoffs, maybe in a year or so.
"Finance, accounting, legal, marketing that'll be the first batch that will be trimmed and then they'll see how profits come in," Rudow said. "Then they would move on to cut [research and development] if they don't get to the margins they need to be at."
Rudow expects Infor will want to take Lawson's profit margin from its current 15 percent or so and hit the 25 percent range.
If jobs cuts come, Rudow expects they may fall the hardest on the company's workforce in the Philippines. He said Lawson moved a lot of its back-office operations there several years ago to save money.