Britain’s Blue Prism agrees to $1.65 bln takeover by SS&C

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SS&C Technologies Holdings Inc. Overview (SSNC:NASDAQ)

SS&C Technologies Holdings Inc. is a US based company that was founded in 1986, by William C.Stone. The current CEO of the company is Bill Stone. It is listed on the NASDAQ stock exchange and has a market capitalization of $19 billion.

It specializes in technology software products and services dedicated to the financial industry. It holds offices in 40 countries and has engaged more than 24,000 employees for around 18,000 clients. The country that provided most revenue to the company was North America, with 77% of revenue. Other revenue originated from the rest of the world (23%).

The company’s revenue underwent a gradual increase since 2018, from a revenue of $3.2 billion to $4.9 billion. This is supported by the net margin growing from 3% to 15%. The rise in revenue can be thanks to the expansion of the company’s services via previously acquired companies, including Advent Software, and Eze Software. These acquisitions largely supported the company to develop its operations in the fund and wealth management segments.

SS&C now currently offers services in all types of industries, like alternative investments, asset management, banking, healthcare, retirement services, insurance and REIT accounting & administration. A few names for their products are: AWD (automation, workforce optimization and digital transformation platform), Benefix (software to simplify the transmission of employee enrollment to insurance carriers),  and Altair (software for superior portfolio management, investment accounting and reporting for financial institutions).

Blue Prism Overview (PRSM:London Stock Exchange)

Blue Prism is a British based company, founded in 2001 by David Moss and Alastair Bathgate. The current CEO of the company is Jason Kingdon. The company is listed on the London stock exchange, with a market capitalization valued at £1.28 billion. Its mission is to “make work smarter and more productive”.

The company is specialized in providing robotic process automation (RPA) and artificial intelligence products and services. These softwares are made to enable the automation of complex operational activities. The industries it targets to offer services are varied and include the Health, FSI, Energy and TMT industry. The revenue from these services are diversified per country, with the most revenue received from the EMEA (47%), followed by Americas (40%) and APAC (13%). The revenue of the company has risen quite fast from 2018, as it went from £55 million to £155 million. However, net income still showed negative levels, which shows that the company has been generating losses from its operations for the past 3 years.

Deal Purpose

The purpose of the deal is to expand the client base of Blue Prism and provide complementation to SS&C’s existing products from Blue Prism’s innovative solutions.

Deal Synergies

  • According to Blue Prism Chief Jason Kingdon, the acquisition of Blue Prism should offer the company access to “significant capital resources and investments in R&D alongside access to SS&C’s extensive 18, 000 customers.”.
  • According to SS&C CEO, Bill Stone “Blue Prism’s innovative solutions are recognized as a leader by RPA analysts and we believe they would complement our existing products, particularly Chorus, our intelligent automation solution.”

The outcome of the deal is to be further announced.

Deal Summary

Deal Structure

  • $1.65 billion take over
  • Cash offer
  • Issued sharecapital expected to be 1275 pence per Blue Prism share
  • Equity Value of approximately $1.7 billion for Blue Prism
  • Acquisition subject to
    • Receipt of antitrust & regulatory approval by majority in number of voting Blue Prism shareholders (representing 75% or more of total Blue Prism shares voted)

Deal Valuation

The valuation method used is a multiples valuation approach. The 24 companies chosen were based on the GICS of “Robotic Process Automation, artificial intelligence and intelligent automation” with the geographical location in the United Kingdom. The companies 24 were narrowed down into four companies based on similar market caps, sector & services.

Figure 1. Potential Peer Companies

Figure 2. Companies chosen for Valuation

Figure 3. Valuation of Blue Prism using Valuation multiples

The estimated enterprise value of Blue Prism using the EV/Revenue multiples approach is shown to be approximately £1.3 billion ($1.72 billion).

Sources

https://www.reuters.com/business/britains-blue-prism-agrees-165-bln-takeover-by-ssc-2021-12-01/

https://www.axios.com/blue-prism-accepts-ssc-takeover-bid-vista-a849e631-15a0-484e-972f-d88a161dba13.html

https://www.prnewswire.com/news-releases/ssc-makes-preliminary-approach-to-acquire-blue-prism-group-plc-301426819.html

https://www.cnbc.com/2021/11/16/blue-prism-stock-surges-on-higher-takeover-offer.html

https://www.bloomberg.com/news/articles/2021-11-16/blue-prism-receives-rival-1-6-billion-takeover-bid-from-ss-c

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