RBS agrees to buy AIM-listed FreeAgent for £53m

Royal Bank of Scotland has agreed to pay £53m for FreeAgent, which makes software that helps small businesses manage their finances.

RBS will pay 120p for each FreeAgent share – 86% more than the AIM-listed company's closing price on 26 March and 67.3% higher than FreeAgent’s average share price over the past six months. The offer is 42.9% higher than the 84p price of FreeAgent shares when the company floated in November 2016.

RBS, one of Britain’s biggest banks for small businesses, has an existing deal to offer FreeAgent software to its customers. Since its launch in September 2017, more than 10,000 RBS customers have signed up for the software.

The bank, which has 700,000 micro-business customers, said owning FreeAgent would help it build customer engagement and that its financial clout would help FreeAgent increase sales to other customers. FreeAgent’s software helps small businesses and their accountants manage invoices, expenses, VAT and payroll.

The bank will buy FreeAgent through a subsidiary, RBS BidCo. About 23.5% of the amount paid to FreeAgent’s founders will be in RBS BidCo shares. The company will operate independently within the RBS group, keeping its management team and Edinburgh headquarters.

Ross McEwan, RBS’s chief executive, said: “Since the beginning of our partnership, we have been impressed by FreeAgent and its technology and are excited by the enhanced offering we will be able to provide to our customers. We believe that a technology-enabled solution for our business banking customers will make it easier for our customers to build their businesses safely and securely."