Mathews, who has overseen a strong turnaround in Mincom’s financial performance in the past two years, said Francisco Partners’ $8.77 a share bid – representing a 110% premium on the most recently transacted share value of the public unlisted company – had been recommended by Mincom’s board.
He said the offer had also been well received by staff who were among Mincom’s shareholders, but could not comment on the views of major shareholders, 28% equity holder Colonial First State Private Equity Capital and Caterpillar (11.2%).
The holding of CFSP, a Commonwealth Bank subsidiary, is worth about $88 million at the Francisco Partners bid price, while Caterpillar’s stake is valued at $35 million.
Both groups came on board at Mincom well before the 2005 arrival of Mathews, who said shares in the company were then fetching $2.00-2.50.
Significant improvement in Mincom’s revenue growth and profits in the past two years culminated in a 20% surge in 2005-06 sales to $200 million. Net profit improved from $1.3 million in 2004-05 to $9.7 million last year.
The company’s mining business segment generated about $84 million of sales in 2005-06.
While organic growth has been solid on the back of the global mining boom and increased penetration into new markets, Mincom has made a string of modest acquisitions in the past two years to lift its expansion rate.
Two weeks ago it bought US utility software developer, Conversant, and last week it announced the acquisition of Queensland-based JKTech’s JKMetAccount metallurgical accounting software.
Mathews said a further acquisition should be announced next week.
“We’ve been able to prove to the market, and I guess Francisco Partners, that a team which has bought companies all over the world, integrated them and made them more successful, can do that well,” he said.
“So I’m expecting more acquisitions – particularly in the mining space – and probably larger ones.”
Mathews said question marks over Mincom’s long-term ability to finance significant growth in the global enterprise asset management software market would be erased by the backing of Francisco Partners.
“We’ve put a big line through that one,” he said.
Mathews said Mincom’s major customers in Australia had a positive view of the proposed sale of the company to Francisco Partners. Failing arrival of a counter-bid, the transaction is expected to close within 90 days.
Mincom’s management team, company name, head office location and products would not change under Francisco Partners’ ownership, Mathews said. The company has more than 1200 employees working in 13 countries.
