Verint Systems Inc. (Nasdaq: VRNT) has bid to acquire UK company EG Solutions for £26.3 million ($34 million). Based in Stafford, EG Solutions is listed on the London Stock Exchange, with a £23.5 million market cap. The company announced today that its board of directors and Verint's board of directors had reached agreement on Verint's acquisition of EG at £1.125 per EG Solutions share, a 4.1% premium on the average market price over the past three months, but an 11% discount on yesterday's closing price.
The EG Solutions share responded by plunging 12.7% in trading in London. The share has zoomed 173% this year. EG Solutions' board of directors recommended that the company's shareholders accept Verint's offer. At the end of the preceding quarter, Verint had $350 million in cash and cash equivalents, and the company recently announced a new $725 million credit agreement. Verint is scheduled to publish its second fiscal quarter results tomorrow.
Managed by CEO Dan Bodner, Verint provides business and security intelligence systems and services. If and when the acquisition goes through, EG Solutions will be absorbed into Verint's civilian business division.
"I am pleased to recommend this offer to our shareholders," said EG Solutions chairman Nigel Payne. "The offer price of £1.125 per share represents a premium of 85% over the share price of the business just one year ago, a premium of 53% over the last six months' volume weighted average share price and is an attractive exit price when viewed against the fundamentals of the business, against the way comparable small technology companies are currently valued by the market."
In the fiscal year ending on January 31, 2017, EG Solutions posted £8.2 million in revenue, 8.1% more than in the preceding year. The company's gross profit margin fell from 72% to 70%, but its EBITDA grew 51.9% to £1.2 million. Net profit was £151,000, slightly less than in the preceding year, while net profit per share was unchanged. As of the end of the fiscal year, EG Solutions had £2.4 million in cash.
Published by Globes [online], Israel Business News - www.globes-online.com - on September 5, 2017
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