SDL wins Alterian takeover battle

SDL has won its bid to acquire Alterian after the board of the troubled marketing technology provider unanimously recommended the approval of the translation software group’s sweetened offer.

Alterian, which develops software for brand monitoring on social networks, on Friday agreed to the all-cash 110p-a-share offer from SDL that valued Alterian’s equity at £68.4m.

The price represents a premium of 73 per cent to Alterian’s closing price of 63.5p on October 23, the day before SDL’s initial offer.

At the time, Alterian’s board “rejected unequivocally” SDL’s initial 80p-a-share approach as “undervaluing the company’s position and its future prospects”, but was tempted to the negotiating table on November 10 when SDL increased its offer to 110p.

“The whole deal had a whiff of inevitability about it all along,” George O’Connor, an analyst at Panmure Gordon, said. “The architect of this was Alterian and its mistakes of the past couple of years.”

The two companies have web content management businesses that are complementary, and the purchase will expand SDL’s customer base.

Alterian has a network of more than 150 marketing services partners, systems integrators and agencies, which SDL will use to expand its presence online.

“We think that there are synergies with the marketing analytics and content delivery,” Mark Lancaster, SDL executive chairman, told the Financial Times.

“The marketing analytics, campaign management and social media were the big attractions – Alterian is one of the leading providers in that space.”

While the takeover price is 37 per cent higher than the initial offer, it is significantly lower than the 215p peak that Alterian’s share’s reached about a year ago.

But a profit warnings early in 2011 – which analysts attributed to late product releases and rising costs – knocked more than two-thirds from the value of Alterian’s shares.

On Wednesday, Alterian released its interim results that showed the group had swung to a pre-tax loss of £18.6m from a profit of £600,000 last year, from revenues that slipped 6 per cent to £17.2m.

Four days after the initial offer, Alterian made public a review of its business strategy that identified £10.6m of cost savings , including cutting staff numbers to 260 from 440 last year.

“This is where we are going in the future,” said Mr Lancaster. “Alterian’s intellectual property is sound, its customer base is sound. Our shareholders can see the logic in this deal – you can see it in our share price.”