The board of UK-based banking and compliance software firm Lombard Risk has accepted a cash for shares offer from Dutch software firm Vermeg.
Lombard Risk's share price almost doubled as result of the acceptance, rising from 6.55p per share to 12.5p, just shy of the 13p per share valuation in Vermeg's offer, a deal that values Lombard at £52.1 million.
Lombard Risk's board has described the deal as "fair and reasonable", recommending its shareholder to vote in favour of the takeover.
The acquisition follows a difficult 2017 for Lombard. In October it posted a £5.9 million pretax loss, significantly higher than the £100,000 loss reported in 2016. Revenues also fell by 16% during the 12 months to £12.9 million.
While Lombard Risk has its customer base in the banking sector, Vermeg is more aligned with the insurance market, although the issue of compliance has become equally important in both markets, notably the Solvency II requirements facing insurers over their investments and capital adequacy ratios and the imminewnt intorduction of MiFID II in the banking world.
The RegTech market has also experienced a significant boom in recent years.
Consequently, Lombard Risk chairman Phillip Crawford has highlighted potential synergies from the deal. "The combination of Vermeg and Lombard Risk has very strong commercial logic.
“The combined group will benefit from a range of complementary products and solutions, increased scale, a broader international presence and have the ability to accelerate growth through investment and wider routes to market," he said.
Crawford also told shareholders that he expects the company's management structure to remain in place following the deal.