General Atlantic Partners has agreed to sell its investment in IXOS Software, which was Germany’s first PIPE (private investment in a public equity) deal. After just over a year General Atlantic is selling its 26% stake in the company to listed Canadian software company, Open Text Corporation. Since the investment IXOS has made two acquisitions, Basel-based Obtree Technologies and the operating business of PowerWork in Kempten, Germany, to become the European market leader in document management software.
General Atlantic bought into the company last August and in so doing became the largest shareholder. The investor acquired its stake from the founding Färber and Strack-Zimmermann families and in the form of newly issued shares. The purchase price was €5.90 per share. Open Text’s tender offer to all IXOS shareholders consists of a cash offer of €9 per share or, as a voluntary alternative, Open Text shares plus additional warrants on Open Text shares for each IXOS share. The takeover offer values the equity of IXOS at approximately €199m based on the cash offer and €223m based on the alternative offer.
“The structure of this transaction for the first time will allow shareholders to choose between a pure cash offer and shares of the bidder. This gives shareholders the opportunity to stay invested in the company while at the same time, accepting the offer,” says Ferdinand Fromholzer, partner at Freshfields Bruckhaus Deringer, which advised IXOS on the deal with Open Text, as well as General Atlantic at the time of the original investment.
General Atlantic invests globally in both private and publicly listed information technology companies. PIPE investments are a relatively new phenomenon in European private equity but General Atlantic has been making investments in this form since the 1980s. It continues to be one of the most active investors in this niche; current European PIPE investments in its portfolio include Infogrames Entertainment, iSoft Group, Meta4 and TDS Informationtechnologie.
IXOS, which provides solutions for eBusiness document management, is fully listed on both the Neuer Markt and on NASDAQ. After the merger the combined company will be the world’s largest Enterprise Content Management (ECM) solutions provider.
The tender offer is subject to certain conditions including regulatory approvals and approval of the issuance of shares by Open Text shareholders. The transaction is expected to close in the next 120 days.