Sage Group, a British business software company, said yesterday that it will buy Best Software Inc. of Reston for $445 million in an all-stock deal that gives the English firm an increased U.S. foothold in selling back-office software to small and medium-size firms.
Sage paid $35 a share for the 18-year-old Best Software, a 16.9 percent premium over Best's Tuesday closing price of $29.93 3/4 a share. After the deal was announced, Best's stock price rose yesterday to $34.50, up $4.56 1/4.
Timothy Davenport, Best's board chairman and chief executive, said the $35-per-share sale price actually represents an even better deal for the firm's shareholders, about a 35 percent premium over the most recent 50-day average. He said he personally has a 4 percent stake in Best, worth $10 million to $12 million.
Davenport said smaller business software firms are consolidating rapidly. "We just put together two of the best and biggest," he said.
As a result of the deal, Sage will pick up 50,000 customers, adding to the 1.1 million customers it already had in the United States. As a result of the Best deal, it expects to boost earnings 5 percent in the fiscal year ending in September and 9 percent in the 12 months after that.
Best has enjoyed financial success in the past year, with a $12.1 million profit in 1999, a 37 percent increase from 1998. It primarily sells software to companies with $100 million or more in annual revenue to help them manage their human resource operations and asset accounting. Best's FAS asset accounting software contributes more than 50 percent of its sales and assists firms in their tax and depreciation calculations.
Sage describes itself as the largest supplier of personal computer accounting software to small and mid-size firms in the world and has more than 2,500 employees, five times the number at Best.
"Best Software's leadership position and large installed customer base, combined with their exciting Imperativ product line, makes them an ideal addition to the Sage family," Paul Walker, Sage Group chief executive, said in a statement.
Best, which has offices in Canada and Europe and seven regional offices in the United States, will become a wholly owned subsidiary of Sage Group and operate as part of Sage US Inc.