Lexmark International (NYSE: LXK) on June 18 increased its initial tender offer for Swedish AP automation provider ReadSoft AB (NASDAQ OMX: RSOF-B) to 43 kronor per share, a 7.4% increase over its initial offer of 40.05 kronor, in the wake of competition from the UK business unit of Hyland Software.
Earlier in the day on June 18, Hyland Software’s UK business unit announced a tender offer of 42.86 kronor, amounting to roughly $196 million for all the outstanding shares of the Swedish company. Both the CTO and a VP of Hyland personally own 3.1% of ReadSoft’s shares, and they have agreed to undertake an acceptance of the offer unconditionally.
Hyland is an Ohio-based provider of enterprise content management and business process automation as well as a capture toolkit for document management. The goal with the intended Hyland acquisition is to bolster the company’s European presence.
After Hyland announced its offer early in the day, Lexmark came back with their 43 kronor-per-share counteroffer. ReadSoft management had not issued a statement on Hyland’s offer by the time Lexmark came back with a better bid—now valuing the company’s shares at roughly 1.32 billion kronor ($197 million).
ReadSoft’s directors then recommended that shareholders accept the revised Lexmark offer, which they would have until 3 pm Central European Time on July 14 to do. Settlement of the Lexmark bid would proceed around July 21st if shareholders vote to accept the offer. ReadSoft’s two founders, who together control 64% of the company, still have their weight behind the Lexmark offer.
ReadSoft would join Lexmark under the Perceptive Software line of business, which also includes Brainware – a similar capture solution to ReadSoft. This duplication of geographies and product offerings means users should make sure they get fast answers on what products will be supported and for how long, assuming Lexmark does indeed acquire ReadSoft.
Ardent conducted an initial analysis of the original Lexmark bid back in May. Much of that analysis still holds true, even with the bidding war Hyland instigated. ReadSoft’s stock has traded in a narrow range of 44 to 45 since June 18, when 1.8 million shares changed hands in the wake of the price war. This is an increase of 13% since the June 17 closing price of 39.90, and represented investor confidence that the bidding war is going to keep going.
