Softline merger 'seamless'

By Iain Scott for Softline

Johannesburg, 02 Dec 2004

Softline CEO Ivan Epstein says the acquisition by UK-headquartered Sage Group a year ago has proved mutually beneficial.

Sage, an international accounting and business management software group, yesterday reported its results for the year to September, showing a 21.7% increase in profit to ₤126.74 million on a 22.7% increase in turnover to ₤687.59 million.

Just 10 months of Softline's performance was consolidated, with the company contributing ₤39.1 million (R430.1 million) revenue and an ₤8.5 million (R93.5 million) operating profit.

Softline comprises Sage's Southern Hemisphere operations, for which Epstein is responsible. He, along with three other regional CEOs (US, UK and Europe), report to group CEO Paul Walker, meeting every quarter for strategic sessions.

Being part of a global group, Epstein says, has allowed for sharing of best practice. Softline has benefited from this and has also been able to contribute ideas of its own.

"The relationship has been phenomenal," he adds, attributing this partly to the fact that Walker has retained an entrepreneurial mindset despite the size of the group.

Added to this is the nature of the organisation. Sage is decentralised and its businesses are autonomous, leaving each country to run the business as the market demands, rather than according to ill-fitting international rules.

Softline was acquired by Sage for R2 a share last November after the UK-based group's bid trumped a management offer of R1.30 a share, which had been spurned by institutional shareholders as being too low.

A consortium comprising Pastel founder Ivan Ferrer and Dutch-based Exact Holding had been considering a R1.45 offer when Sage made its original bid of R1.80, which was later increased.

Epstein says the original plan was to list Softline offshore, but the Reserve Bank did not grant its approval. This sparked management's bid to buy the company and delist it, which brought other suitors, including Sage.

Since the acquisition, Softline has sold off its non-core operations and also sold the US business into Sage's US arm, Best. It also acquired Accpac Africa and Accpac Australia earlier this year.

Epstein says the competitive landscape has changed since the Sage acquisition. Whereas Softline's competition was from companies such as Sage, Accpac and Exact, it now competes against SAP, Oracle, Microsoft and Intuit.

He foresees more consolidation in this space and believes that in a few years there will be only two or three players.