(Bloomberg) -- Private equity fund CVC Capital Partners and some shareholders of Comarch SA announced plans to buyout and delist the Polish software firm. In response, the target’s shares jumped to a record.
In a planned bid that values Comarch at 2.57 billion zloty ($654 million), CVC and the Polish company’s founding family, including Chief Executive Officer Anna Pruska, jointly said on Wednesday they intend to offer 315.4 zloty per Comarch share, 10% above Tuesday’s close. The stock jumped by as much as 15%, advancing to the highest level since its 1999 listing.
The planned transactions are meant to facilitate Comarch’s international expansion, which will “involve significant financial outlays, at the expense of delivering the short-term results expected by stock market investors,” according to the bidders’ statement.
The announcement comes seven months after the death of Comarch founder Janusz Filipiak, who grew the company mainly by winning IT jobs from Poland’s public sector. Since then, Pruska — his daughter — has refocused the company, cutting costs and terminating a costly e-commerce marketplace project. The firm’s shares rallied 54% this year.
“The risk-reward profile for the company is not very attractive, and the offered price in the tender offer is at an attractive level,” Erste Group Bank AG analyst Piotr Bogusz said. “Even as CVC offers a near record price, the company is still traded at a discount to peers due to lower efficiency and weak corporate governance.”
Comarch shares traded at 323 zloty as of 3:51 p.m. in Warsaw, up 13% on the day and 2.4% above the bid price. CVC will “eventually” become the company’s majority shareholder after the transaction, according to the statement. The fund already owns Poland’s biggest convenience store chain Zabka and vodka producer Stock Spirits.
Erste’s Bogusz said the transaction is set to give CVC upside if it’s able to “optimize” Comarch’s “activities and make better use of its existing products and staff.” Established in 1993, the Krakow, Poland-based company employs about 6,400 people. Its sales to Germany, Austria and Switzerland accounted for 15% of group revenue in the first quarter.
“The company is facing the challenge of increasingly strong competition in the industry and the need to enter the path of development outside Poland,” CVC partner Krzysztof Krawczyk said. “CVC is ready to invest significant capital in the company’s transformation and support its international expansion through our know-how and global network.”
Family Control
The Filipiak family owns 35.3% of Comarch shares and has 65.2% of the votes. Other leading shareholders include local pension funds owned by NN Group NV and Generali SpA, each with more than 10% of the shares.
Founder and former CEO Filipiak, who died of a stroke, was known for an extravagant lifestyle. His salary was one of the highest among Warsaw-listed companies, he flew by corporate jet and ran top-flight soccer club KS Cracovia.
The delisting would be the largest from the Warsaw Stock Exchange since chemicals producer Ciech SA went private last year, adding to the issuance woes by the region’s largest capital market. The number of Warsaw-listed stocks has dropped by 77 in the last seven years to 410.
(Updates with comments from CVC and latest markets, from the second paragraph.)
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