VEBNET shares more than doubled in value yesterday after life and pensions giant Standard Life bid £24.2 million for the Edinburgh technology company, in a deal set to make millionaires of Vebnet's founders.
The Aim-listed company provides software and advice related to bonuses and benefits, covering almost 300,000 employees.
Standard Life, making its first acquisition of a listed company since its flotation in 2006, is offering 260p a share, a 11
4 per cent premium to Vebnet's closing price on Monday, and an 8 per cent premium to the company's all-time high.
Despite no sign of a bidding war for Vebnet, Standard Life said it believed the price it was paying was "fair".
Chief executive Sandy Crombie said:
"This is a rapidly evolving market and an increasingly important part of our business. By adding enhanced flexible benefits and online solutions to our existing employee benefits platform we are able to create a proposition which will offer employers and employees improved choice and flexibility."
A spokesman for Standard Life said Vebnet "ticked all the boxes" for an acquisition, providing the company with new products, routes to market and customers. "The employee benefits market is one we have high hopes for," he added.
Standard Life began negotiations with Vebnet over a product it could offer its clients about a month ago. Despite having fewer than 80 staff, Vebnet provides benefit and rewards software to almost 300,000 employees, with clients including major blue-chips such as BT, Swiss Re and PricewaterhouseCoopers.
Chief executive Gerry O'Neill said the company could have continued as an independent company but the deal should allow it to grow faster.
Vebnet yesterday reported an 85 per cent rise in pre-tax profits to £910,000 for the year to 30 June, while operating costs increased by only 8 per cent during the period.
O'Neill, whose 10.9 per cent stake is now valued at £2.6m, said: "Clearly this is a credible offer from a bona fide source.
"Once we received it we were obliged to take it to the board."
Shareholders representing just over 50 per cent of the company's capital, including the Vebnet board of directors, have given irrevocable undertakings to accept the offer, while Liontrust and JP Morgan, Vebnet's second and third-largest shareholders, have given non-binding support. The deal is almost certain to go ahead.
O'Neill, who co-founded the company with deputy chairman Sandy Nairn in 2000, will stay on once the deal is completed, as will the group's other senior management.
Vebnet shares jumped 132p, or 108.6 per cent, to 253.5p – a record closing price for the company.
BACKGROUNDEVEN before yesterday's seemingly knock-out bid from Standard Life, Vebnet had been a volatile stock since it reversed on to the Alternative Investment Market in 2003.
The company was one of three bidders for Stockbourne, the commercial property company turned cash shell, which was then listed on the main market of the London Stock Exchange.
With more than 70 per cent of the firm held by four directors and three institutional directors, shares in the company have swung between about 60p and 240p, just short of yesterday's agreed 260p bid. But despite those movements, directors at the company have been buying shares since it joined the stock exchange.
Chief executive Gerry O'Neill, a former banker who previously founded emfinance.com, the UK's first fully online mortgage brokerage business, is set to pocket more than £2.6 million from the deal, while Sandy Nairn, Vebnet's deputy chairman, who was previously the chief investment officer at Scottish Widows, will gain some £2.5m from the deal.
Vebnet was confident the company could have continued as an independent entity. O'Neill and the rest of the executive team are staying on after the deal.
The full article contains 640 words and appears in The Scotsman newspaper.
