Financial Objects to acquire Raft

Financial Objects to acquire Raft

UK banking systems vendor Financial Objects has agreed a takeover deal with risk software firm Raft International.

Raft said in September that it was up for sale, although details of potential suitors were not disclosed.

The acquisition deal values each Raft share at six pence - a 20% premium on yesterday's closing price - and values the risk managment firm at about £4.0m.

The offer comprises 0.06 of a new Financial Objects share for every Raft share, and 3.6 pence, of which 2.4 pence will be in cash and 1.2 pence in loan notes.

Financial Objects says it has received irrevocable undertakings to accept the offer in respect of 42.6m Raft shares, representing around 64.2% of issued share capital.

The vendor says the acquisition will provide it with two risk management software products based on the Java and Microsoft technology platforms, and provide it with significant cross selling opportunities.

The enlarged group will also be able to compete more successfully for new business in the UK, the US and Scandinavia, says Financial Objects, as risk management is expected to be a high growth sector of the market over the next few years.

Commenting on the acquisition, Roger Foster, chairman and chief executive, Financial Objects, says: "The enlarged group is expected to have significant revenues, employ some 300 people and have a large 'blue chip' international client base of banks and financial services organisations.

"We believe that the enlarged group will be the market leader in the supply of a comprehensive product range based upon the advanced technology Microsoft platform. We believe that these 'component based' products, backed by our offshore development centre in Bangalore, will give us a significant competitive edge in the market."

Financial Objects says the offer is expected to be earnings enhancing in the first full year of ownership.

News of the acquisition comes as Raft reports an 11.9% increase in full year revenue to £8.1m, while loss for the year before operational exceptional items was maintained at £1.0m.

Raft says its cost reduction programme, to match cost base to revenue level, is nearly complete and although it has had minimal impact over the period, it is now entering the new financial year in a position where cost is largely covered by signed contracts and recurring revenues from existing customers.

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