The board of New Zealand IT solutions provider Fronde is recommending shareholders accept a full takeover from Melbourne-based Seisma Group.
A target company statement in response to Seisma’s offer said the offer price of $1.152 a share was within an independent adviser’s value range for the Fronde shares and the board considered it is was very unlikely that a better offer would emerge during the offer period.
That price valued Fronde, a Google, AWS and Salesforce partner, at $8.5 million. The company had revenue of $23.2 million and total equity of $2.1 million in the year ended 31 March 2022.
"The board believes that the offer price adequately compensates you for the current and potential future benefits of ownership of Fronde shares, having regard to the risks of future share ownership," a statement signed by Fronde chair David Bartlett said.
Fronde shares were not listed so were only able to be bought and sold privately.
"This represents a very significant constraint on the ability for Fronde shareholders to realise their investment by selling Fronde shares and means that there is no public ‘price discovery’ of the price paid in any private sales of Fronde shares," the statement said.
The offer provided shareholders with the "significant benefit of a certain opportunity" to sell all of their Fronde shares at a cash price in one transaction free of brokerage fees.
"Ultimately, it is your decision whether or not to accept the offer," the statement said. "When making this decision you should consider your own individual circumstances, views on value and the merits of the offer, and investment time horizon.
Shareholders were encouraged to consider taking their own separate professional advice on the matter.
Fronde was founded in Wellington in the mid 1990s. It has quite an extensive shareholding for a private company and, until 2018, was listed on the Unlisted share trading platform.
In 2020 it sold its NetSuite business to Australia's OnlineOne.
Chair David Bartlett joined the board in 2017. He had been Tasmania's premier and leader of the state's Labor party from 2008 to 2011, having previously been innovation, science and technology minister.
Last year, Seisma bought Australian Salesforce partner Smartapps to boost its own application development and data analytics business. Seisma said Smartapps was one of the largest privately-owned Salesforce partners in Australia.
Seisma had been bought by IT services company PS&C in a deal worth between $11.2 million to $13.7 million in 2018. At the time, it had about 120 employees with a strong presence in financial services, communications and utilities.
However, following a difficult 2019 financial year in which PS&C made a $51 million loss, the company decided to sell Seisma for $21 million the following year.
Seisma was then bought by private equity firm Liverpool Partners and subsequently went on the acquire cloud migration specialists coIB.