Constellation Software Acquires Total Specific Solutions
Constellation Software Inc. (“Constellation”) (Toronto, Canada) have announced that it has, through its wholly-owned subsidiary Constellation Software Netherlands B.V. (“CSN B.V.”), entered into a binding agreement with the shareholders of Total Specific Solutions (TSS) B.V. (“TSS”), to purchase 100% of the shares of Netherlands based TSS, for a total purchase price of approximately €240 million before adjusting for claims under the representations and warranties of the Agreement.
TSS is larger than Constellation’s previous acquisitions. Annual gross revenues of TSS are approximately €174 million and total tangible assets at December 31, 2012 were approximately €71 million. TSS employs approximately 1,400 employees. The purchase price is approximately 2.65 times TSS’s 2013 forecast Net Maintenance Revenues.
The TSS acquisition closed on December 31, 2013.
TSS is the largest vertical market software (“VMS”) business based in the Netherlands, with offerings for the general practitioner, pharmacy, long term care, mental care, property tax, and civil affairs markets. It also owns several non-VMS businesses, primarily involved in information technology services. TSS will form a new Operating Group within Constellation.
Canadian securities laws require that Constellation file a Business Acquisition Report (“BAR”) within 75 days of completing a significant acquisition. The TSS BAR will outline in further detail the historical results of the company and its constituent businesses and will be available at www.sedar.com. Constellation will provide details of the TSS financial results separately within the CSI quarterly financial statements for several quarters post-acquisition.
In conjunction with the acquisition, Constellation has amended its existing credit facility to add a new one year term loan in the amount of US$350 million which may only be used for the purposes of funding the TSS acquisition and related expenses. Before this loan matures, Constellation expects to refinance the TSS acquisition on a stand-alone basis. As explained in Constellation’s last President’s Letter to Shareholders, a number of private equity firms have successfully built portfolios of large VMS businesses using leveraged capital structures. They have effectively dominated the market for large VMS acquisitions. Constellation is planning to adopt some of their financing techniques so that it can more effectively compete for large VMS acquisitions such as TSS.
Constellation may sell a minority stake in the TSS business to the management of the business and some related investors.
According to Robin van Poelje, CEO of TSS, “TSS wants to continue to grow and innovate. We anticipate that a new generation of software will increasingly be developed from a European perspective. Together with Constellation Software, we expect to continue to meet the rapidly developing demand in our markets and achieve our objectives.”
About Total Specific Solutions
Total Specific Solutions (TSS) has 1,400 employees and a turnover of €174 million in 2012 (excluding employees and turnover of TASS). The TSS companies are specialized technology companies with a focus on a particular expertise or a specific market sector. TSS software makes a fundamental difference to healthcare organizations, governments and financial institutions by helping them realize their ambitions. The TSS companies are Everest, Blueriq, KZA, PharmaPartners, PinkRoccade Local Government, PinkRoccade Healthcare and Yonder.
About Constellation Software Inc.
Constellation Software acquires, manages and builds vertical market software businesses that provide mission-critical software solutions.
Source: Constellation Software Inc.