Timberline Software signed an agreement July 16 that will sell the company to U.K.-based The Sage Group plc and its U.S. subsidiary Best Software. The cash deal is worth $102.9 million. Shareholders will receive $8.25 per share, 33% more than the stock's July 16 closing price.
Timberline, based in Beaverton, Ore., will become a wholly owned subsidiary of Best Software. Timberline produces financial and operations software for contractors and developers working in many sectors. A 2002 Construction Financial Management Association survey found that Timberline's Precision Collection is used by 25% of general contractors and 4% of specialty contractors (ENR 8/12/02 p. 26)
Best Software produces a variety of accounting and business management software including ACT!, a contact management product, and ePeachtree, a Web-based accounting system for small businesses.
Timberline officials say the premium price of Sage's offer is what sealed the deal.
"Needless to say, the most compelling reason is the cash price, which represents a substantial premium over what our stock has been trading at for an extended period of time," said Timberline CEO Curtis Peltz in a Thursday conference call.
In a news release, Peltz described his company and Best as having "very similar market strategies, as well as a shared focus on providing excellent service to customers."
Among other things, the purchase has the potential to aid Timberline in its distribution, analysts say.
"Basically, they're [Timberline] now covering every single sector of construction," says Joan Tong, an equity analyst at Sidoti & Co, a New York-based investment firm. "Their offerings are in no way comparable to other companies; they're definitely top-of-the-line. I think this acquisition makes sense in a way that will definitely help Timberline in building up infrastructure."
Sage officials say that the management of Timberline will stay the same as the company comes under new ownership. Products designed by the company should remain similar for now as well.
"Timberline is self sufficient company," Tong says. "They have a customer base, sales channels and lots of products. For Timberline and Sage to realize all benefits, there may be some change in the mid to long term."
There are still a number of obstacles to overcome before the deal is finalized, Peltz says. A majority of shareholders must still approve the deal and it faces antitrust approval from the government.