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Hyland and Lexmark continue bidding war for Readsoft

Hyland and Lexmark continue bidding war for Readsoft


Hyland increases offer to SEK55 per share, or approximately $246.4 million, and Lexmark immediately follows with an offer of SEK55.50 per share, or approximately $248 million.

The news was coming fast and furious on Monday, August 4 and Tuesday August 5. It started with this news announcement from Hyland: 

U.S. software firm Hyland raised its bid for peer Readsoft for a second time, valuing the Swedish firm at SEK1.69 billion ($246.4 million) and heating up a bidding war with U.S. printer maker Lexmark.

The battle was sparked by an SEK42.05 per share offer by Lexmark in May, which many thought was under pricing ReadSoft.  This was subsequently topped by Hyland Software UK, offering SEK42.86.  Lexmark then raised its offer to SEK43.00 that Hyland again topped at SEK45.00.  Then Lexmark raised its offer to SEK50; we’re now at over SEK55.

Readsoft’s shares rose 9.7% after the news, to SEK56.75 signaling that the market expects the battle to continue. Hyland’s and Lexmark’s latest offer of SEK55 and SEK 55.50 respectively per share represents a premium of nearly 2x the closing price of Readsoft’s shares the day before Lexmark’s first offer and is 37% higher than Lexmark’s first bid.

Currently, Hyland controls about 10.9 percent of all outstanding shares in ReadSoft which was interesting in that Lexmark’s first bid was not valid unless they acquired 90%. 

Lexmark said it made the decision to increase its tender offer price because it continues to believe the combination of ReadSoft with Lexmark’s Perceptive Software is a strong strategic fit and in response to a competitive offer for ReadSoft shares announced on Aug. 4.  We think that Hyland has a powerful reason to buy ReadSoft too and agree with the market that the eventual price will go higher

It appeared in the past that ReadSoft’s board was leaning towards the Lexmark deal. On July 14 the Board of Directors unanimously recommended ReadSoft’s shareholders to accept Lexmark International Technology’s New Offer of SEK 50.00 per share in the Company.

The founders of ReadSoft, Lars Appelstål and Jan Andersson, representing in aggregate 22.9 percent of the shares and 42.9 percent of the votes in ReadSoft, personally and via holding companies, have undertaken to accept the New Offer. It has been stated that the undertakings will lapse in the event that the New Offer has lapsed or been withdrawn or has not been declared unconditional by the date that is 100 calendar days from the later of Lexmark International Technology’s announcement of the New Offer or the announcement of a revised offer from Lexmark International Technology that matches or exceeds a competing offer to acquire all the shares of ReadSoft.

Lars Appelstål and Jan Andersson, also members of the Board, have due to conflict of interest based on the above described undertakings, not participated in the Board’s handling of or resolutions regarding the Initial Lexmark Offer or the New Offer.  

However, in responding to Hyland’s increased offer on August 5, Göran E Larsson, chairman of the board of ReadSoft, stated “Needless to say, we appreciate the great interest in ReadSoft from the two bidders. They are serious companies and state good reasons why they would be good future owners of ReadSoft.”                               

ReadSoft’s board of directors intends to not later than two weeks prior to the expiry of the acceptance period of Hyland UK’s offer, which is now September 5, 2014, announce its opinion of the offer, and reasons for this opinion. 

Supporting Quotes:

“We remain convinced that the acquisition by Lexmark is the best strategic, long-term fit for ReadSoft and its employees,” said Paul Rooke, Lexmark chairman and CEO. ” We have presented a compelling offer to ReadSoft shareholders, which is confirmed by the undertaking of ReadSoft’s founders to tender their shares to Lexmark, and the unanimous recommendation from ReadSoft’s Board of Directors,” added Rooke.