Computer Services Group, the UK back-office software company, has been snapped up as part of a merger plan just four weeks after it left the stock market in a £91m deal.
Hellman & Friedman, the private equity group, bought both CSG and Iris Software from HgCapital, the UK mid-market private equity group, in a deal with an enterprise value of £500m.
Neither Hg nor Hellman disclosed their valuation of CSG, which provides back-office software for the legal and not-for-profit sectors. However, Hellman is understood to have bought Iris Software, which had been up for auction, for a price at the top of the £250m-£300m range set by UBS. Other assets were also included in the sale.
Hg backed a management buy-out of CSG led by Michael Jackson, its non-executive chairman, for 150p a share, a 45 per cent premium to the then prevailing market average price.
Nic Humphries, head of technology, media and telecommunications at Hg, said no sale was lined up when Hg bought CSG in May. “There’s no question of that,” he said.
He added that Hellman had only made its interest clear when Hg’s bid for CSG had become unconditional, although the group had not delisted. Hg will retain an 11 per cent stake in the new business.
Mr Humphries said it was the “marriage value” of the two companies together that prompted Hellman “to pay tomorrow’s price today”.
Stephen Duckett, managing director of Hellman in the UK, accepted that his company had put together a unique business in a unique way.
“I think we’ve bought one of the best software companies around in the UK,” he said.
The deal will also benefit Mr Jackson, who arranged the original buy-out through his Elderstreet Capital investment vehicle. He, along with fellow directors Barbara Firth and David England, will not be part of the new management team.
Mr Jackson was unable to comment on the transaction because of a non-disclosure agreement.