LONDON (Reuters) - Dutch software firm Exact Holding EXAH.AS said it had been approached by parties about a possible takeover, after Reuters reported that private equity funds including Apax [APAX.UL] and KKR (KKR.N) were eyeing a buyout of the firm.
Exact, which was started by students out of a garage in 1984, said on Friday it had received interest in a possible buyout of all outstanding shares, at indicative prices of 30-35 euros per share. A price of 35 euros would value the firm at 854 million euros ($1.2 billion).
Two sources said Rothschild has been mandated to sell the business software company, which is listed on Euronext Amsterdam with a market capitalisation of 617 million euros.
"Exact is engaged in preliminary discussions," the company said in a statement, adding that there was no certainty of an offer being made.
"The Managing Board and the Supervisory Board of Exact will be carefully evaluating these expressions of interest and will take the interests of all stakeholders, including the shareholders, into full consideration in their decision making."
Exact's shares closed up 23 percent at 31 euros a share at 1629 GMT. At one point, shares hit a high of 36 euros, their highest level since 2001 and on track for their biggest daily gain since the firm's listing in 1999.
"Private equity interest around Exact has been mounting since UNIT4 was snapped up by Advent," said a source, who declined to be named because the talks are private.
Apax, which was previously bidding for software firm UNIT4, has now directed its attention towards Exact. The list of bidders also includes global investment firm KKR, while EQT and Hellman & Friedman initially explored a potential acquisition but are no longer in the process, the sources said.
"Especially after the takeover of UNIT4, we believed Exact could be next, because it has net cash, lots of recurring revenues and there's a very fast-growing cloud software business which is now being internationalised," said Hans Slob, analyst at Rabobank, setting a price target of 31 euros a share.
"Everything above 30 is a good price," he added.
A takeover would bring a multi-million pound windfall to co-founders Arco van Nieuwland and Edouard Hagens, the company's first and second-biggest shareholders respectively.
The pair set the company up along with several other students after being dropped as programmers by Grote Beer (Great Bear), another software company. Grote Beer was eventually bought out by Exact.
Public-to-private or P2P deals have been scarce in recent years as record highs in stock markets have pushed up prices for public assets.
Exact could command multiples of at least 12 times its core earnings (EBITDA) and a premium of around 30-40 percent, one of the sources said, potentially valuing the firm at around one billion euros. Exact generated 47.4 million euros of core earnings in 2013, on revenue of 213.2 million euros.
A deal would mark the second take-private transaction among technology stocks listed on Euronext since Advent International closed its 1.2 billion euro purchase of UNIT4 in March this year, a multiple of around 12 times the firm's 2013 core earnings (EBITDA) of 97.6 million euros.
Media reports said in 2008 that Exact, which provides IT and software to small and medium-sized businesses, was in take-private talks with several private equity firms including Hg Capital, Hellman & Friedman and Providence.
Exact launched an organizational turnaround in 2012, with Chief Executive Erik van der Meijden promising to ramp up growth with a renewed focus on the fast-growing market for cloud-based services. Revenue from that part of the business increased 42.4 percent to 5.8 million euros in the fourth quarter of 2013, against the same period last year.
The company, which is currently trading at 18.5 times earnings, shares the software space with firms such as the UK's Sage Group (SGE.L) which trades at a multiple of around 15 times earnings, and German giant SAP (SAPG.DE) at almost 16 times earnings.
"Exact is now in expansion mode for its cloud business, they are rolling it out internationally. You don’t see the full potential of the company now – the cloud business needs investment," said Marc Zwartsenburg, analyst at ING FM.
"It's a recovery story, but if you wait too long there will be a full turnaround, and then the advantage has gone."
Zwartsenburg added that there was room for synergies if the company went to a private equity buyer. KKR also owns U.S. computer software maker SunGard Data Systems and Visma, a Norwegian business software supplier, while Apax owns software firms Epicor and Paradigm.
Exact Holding, KKR, Apax, Hellman & Friedman and EQT were not immediately available to comment. Rothschild declined to comment.
($1 = 0.7331 euros)
(Additional reporting by Clare Hutchison, and Thomas Escritt in Amsterdam; Editing by Elaine Hardcastle and David Evans)