Assystem Technologies makes £281m bid for SQS

SQS Software Quality Systems announced on Friday that it has reached agreement with Bidco on the terms of a recommended all-cash offer to be made by Bidco for the entire issued and to-be-issued share capital of SQS it does not not already own.

The AIM-traded company said Bidco is a newly-incorporated German company acquired by Assystem Technologies SAS, for the purpose of making and implementing the offer.

Under the terms of the offer, SQS shareholders who accept it will be entitled to receive 825p in cash for each SQS share.

The offer valued the entire issued and to-be-issued share capital of SQS at approximately £281.3m on a fully-diluted basis, and represented a premium of approximately 56.4% to the closing price per SQS share of 527.5p on 14 December.

It also represented a 53% premium to the volume-weighted average closing price per SQS share of 539.1p in the six months to 14 December, of 31.5% to the highest-ever closing price per SQS share of 627.5p in May 2015.

The SQS management board and the SQS supervisory board, who had been so advised by Numis as to the financial terms of the offer, each considered the terms of the offer to be fair and reasonable, the board said.

Accordingly, the SQS management board and the SQS supervisory board each intended to recommend unanimously that SQS shareholders accept the offer.

Bidco had also received irrevocable undertakings from Rudolf Van Megen, Herald Investment Management and Marlborough Fund Managers to accept, or procure acceptances of, the offer in respect of a total of 7,104,868 SQS shares, representing approximately 21.9% of SQS's existing issued share capital.

In addition, Bidco also received non-binding letters of intent from Octopus Investments, Brooks Macdonald Asset Management, Rock Nominees, Miton Asset Management, J O Hambro Capital Management and Schroder Investment Management to accept, or procure acceptances of, the offer in respect of a total of 10,172,543 SQS shares, representing approximately 31.4% of SQS's existing issued share capital.

Accordingly, Bidco has received irrevocable undertakings and non-binding letters of intent to accept, or procure the acceptance of, the offer in respect of approximately 66% of SQS's existing issued share capital.

“The SQS boards welcome the offer and believe that it reflects an attractive valuation for SQS at a significant cash premium to the prevailing share price,” said SQS chief executive Diederik Vos.

“We believe that it is an opportunity to join up with an organisation that is complementary and which provides enhanced opportunity for the benefit of our staff and customers.

“Combining the two companies will create a truly global business delivering a ‘best in class’ offering to customers based on a shared culture of technical excellence, continued innovation and providing the highest standards of service.”

Olivier Aldrin, chief executive officer of Assystem Technologies and the managing director of Bidco, said the Assystem board was “delighted” that its proposal had been recommended by the SQS boards.

“The coming together of Assystem Technologies and SQS creates a dynamic, fast-growing international business with complementary outlook, strategic geographical presence and an enhanced ability to market innovative products and services,” Aldrin explained.

“The enlarged business will combine SQS's expertise in quality assurance and process consulting in the digital world, with Assystem Technologies' breadth of engineering product design capabilities, positioning the enlarged group to leverage the convergence of the digital and physical worlds to offer quality assurance of both products and processes to its enterprise customer base across a range of complementary geographies and end markets.

“We believe that the potential revenue synergies available from combining SQS with Assystem Technologies, as well as some limited integration benefits, are fairly reflected in the significant cash premium which the Offer represents.”