Lexmark Jumps ahead of Hyland in bid to Acquire ReadSoft

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Here’s what’s going on in 10 easy steps:

1. Last month, Lexmark bid $182M to acquire Swedish-based document capture ISV ReadSoft.

2. ReadSoft’s board unanimously recommended that shareholders accept the bid, which represented a 118% percent premium over ReadSoft’s share value on the NASDAQ OMX Stockholm at the time.

3. Despite this high premium over ReadSoft’s share value, DIR speculated that the offer seemed relatively low for a capture ISV with $117M in annual revenue.

4. The acceptance period for the offer was scheduled to end on this upcoming Monday, June 23.

5. There was a provision that ReadSoft could consider another offer if it was more than 7% higher than Lexmark’s offer.

6. DIR speculated that an ECM ISV like Open Text (which competes with ReadSoft in the SAP invoice processing space) might think $195M is still a bargain, although ReadSoft management countered that there was more to the purchase agreement than just getting the highest price.

7. Yesterday, June 18, Hyland Software, which competes with Open Text in the ECM space, announced a bid of approximately $198M for ReadSoft.

8. According to industry analyst Harvey Spencer, the bid made sense for both sides for a number of reasons. “Hyland has almost no presence in mainland Europe to speak of and ReadSoft would definitely help them with that,” he told me. “And Hyland’s strong vertical market position in healthcare does not translate to the European market. If they want to expand in Europe, Hyland needs to find new markets and leveraging ReadSoft to increase their presence in the SAP space would be one way to do that.”

9. Today, Lexmark up its offer slightly to approximately $200M. According to a WSJ story, “Lexmark’s tender offer, which requires acceptance by more than 90% of ReadSoft’s shares outstanding, was extended to July 14.”

10. Once again, the ReadSoft board unanimously recommends that shareholders accept Lexmark’s offer. It’s unclear if, for any additional offers to be considered, they need to trump Lexmark’s current bid by 7%, which would still only represent a $214M offer, or less than 2x ReadSoft current revenue. – According to Johan Holmqvist, VP, Corporate Communications, ReadSoft, “Hyland or another bidder, need to increase the [new] Lexmark offer of 43 SEK with 7% in order for the Board to consider it/be able to recommend it.”


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