Golden Gate Capital to Buy Lawson Software for $2 Billion

Billionaire Investor Carl Icahn
Billionaire investor Carl Icahn, one of Lawsons largest shareholders, controlled 8.7 percent of the companys outstanding shares as of March 14, according to data compiled by Bloomberg. Photographer: Jeremy Bales/Bloomberg

Golden Gate Capital Corp. and software maker Infor agreed to buy Lawson Software Inc. for about $2 billion, gaining programs that help run businesses.

Stockholders of Lawson will receive $11.25 a share in cash, according to a statement today. The stock had risen to $12.13 as of yesterday after the St. Paul, Minnesota-based company disclosed on March 11 it was in discussions with Golden Gate and Infor about an unsolicited bid of $11.25 a share.

Private-equity firm Golden Gate is expanding its backing for Infor, which develops programs used by manufacturers and distributors. The deal gives Infor human resources and health-care software, which will help it compete with companies such as SAP AG and Oracle Corp. Those rivals have products that overlap with Lawson’s, which led to a lack of competing bids, said Paul Hamerman, an analyst at Forrester Research Inc.

“The acquirers didn’t pay much of a premium,” said Hamerman, who is based in Richmond, Virginia. “Infor is really the only application company that can absorb Lawson.”

Lawson, founded in 1975, slumped $1.07, or 8.8 percent, to $11.06 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has gained 20 percent this year.

Icahn’s Investment

The price is 19 percent more than Lawson’s $9.46 average closing price in the 90 days before the March announcement. The sale values Lawson at 12 times its earnings before interest, taxes, depreciation and amortization for the 12 months ended Feb. 28, according to the statement.

The buyers of more than 500 U.S. providers of enterprise software and services over the past five years paid an average premium of about 20 percent, compared with the average price of 20 trading days before the deal’s announcement, according to Bloomberg data. The price for 12 of those deals was a median 16 times the target’s Ebitda.

Lawson makes programs used by companies including Safeway Inc. and Volvo AB. It had about 3,900 employees as of May 2010 and makes money by licensing its software and by providing customer support and maintenance and consulting services.

Billionaire investor Carl Icahn, one of Lawson’s largest shareholders, controlled 8.7 percent of the company’s outstanding shares as of March 14, according to data compiled by Bloomberg.

Icahn’s firm began buying shares on April 1, 2010 when the stock was trading at $6.63, according to a regulatory filing today.

“This underscores the benefits of strategic consolidations that shareholders can obtain when management is willing to be open to strategic alternatives,” Icahn said in the filing.

Slumping Sales

Lawson’s sales have dropped for two straight years, as revenue from its consulting services and helping customers maintain their software programs fell amid the recession.

“Lawson had plateaued,” Hamerman said. “It was very lean. They were unable to fund the kind of innovation you need for growth.”

Golden Gate, based in San Francisco, has $9 billion in capital under management, according to its website. In addition to Infor, its technology investments have included Sierra Systems Group Inc. and Geac Computer Corp. It has also invested in retailers Express Inc. and Eddie Bauer Inc.

The Lawson deal will probably close in the third quarter, the companies said. Barclays Capital is Lawson’s financial adviser and Skadden, Arps, Slate, Meagher & Flom LLP is providing it with legal help. Evercore Partners Inc. is advising the buyers.

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