US-based global private equity firm TPG is to acquire automotive sector software company Infomedia (ASX: IFM) for $651 million equity value three years after interest from rival private equity firm TA Associates failed to progress to a firm offer.
Infomedia was set up 35 years ago to build electronic parts catalogues and listed on the ASX ten years later.
The company now develops software for vehicle makers and dealerships. Platforms cover areas such as buying vehicle parts, managing service and repair operations, through to employee training. The company claims users in 195 countries with customers including BMW, Audi, Alfa Romeo, Bentley, Aston Martin, Buick, Cadillac, Rolls Royce, Porsche and Mercedes as well as Japanese, Korean and Chinese automakers.
Infomedia recently took a 50% stake in Intellegam, a German artificial intelligence (AI) start-up. The strategic partnership has already delivered new AI-driven products and will help it strengthen its existing portfolio with advanced AI capabilities, Infomedia says.
In a 6 August announcement, Infomedia said it had entered into an agreement with TPG under which the private equity firm would acquire 100% of its shares via a scheme of arrangement.
TPG is to pay $1.72 per share cash which represents a 41% premium to Infomedia’s three-month volume weighted average share price and a 30% premium to its closing 5 August share price of $1.32.
The deal is not subject to a financing condition and includes a break fee of $6.5 million either way in certain circumstances.
Infomedia’s board has unanimously recommended shareholders to vote in favour of the TPG acquisition, in the absence of a superior proposal and subject to an independent expert concluding it is in shareholders’ best interests.
Infomedia chairman Jim Hassell said: “While we remain confident in the long-term outlook for the business, the scheme enables shareholders to realise full and fair value now, without the risks and uncertainties associated with continued execution as a standalone listed company.”
Shareholders are expected to vote on the proposal by mid-November. The proposal remains subject to regulatory conditions including approval by the Foreign Investment Review Board (FIRB).
In mid-2022, Infomedia received separate non-binding indications of interest from a consortium of TA Associates and Perth-based activist fund manager Viburnum, which was already a 14.5% shareholder, US-based auto industry software company Solera Holdings and US growth capital firm Battery Ventures. The TA Associates consortium and Solera both indicated $1.70 per share offers. Battery Ventures indicated $1.75 per share. None of the parties progressed to making a firm offer.
TPG’s co-head of Asia, and head of Australia and New Zealand, Joel Thickins, said his firm recognised Infomedia as a leading software provider in the resilient and growing auto parts and servicing sectors.
“Together with its experienced management team, the company has continued to innovate and improve its software solutions, with significant opportunities for further international expansion,” he said.
Infomedia’s share price rose 28% from $1.32 to $1.69 after it announced the deal.
The company is taking legal advice on the transaction from Ashurst.
Image: Joel Thickins, TPG’s head of Australia and New Zealand.