The Softline group`s progressive shift in focus over the past two years from hardware and training to the development and provision of proprietary software has been crowned by the biggest stride of all. It has acquired Pastel Software and entered into restraint of trade agreements. The total consideration is R200 million.
Pastel is South Africa`s leading developer and supplier of accounting software to small and medium-sized businesses and the transaction establishes the combined group as by far the largest accounting software player in South Africa and a force in world terms with, collectively, some 260,000 users of its products world-wide.
"This acquisition immediately moves Softline closer to achieving our goal of building a global mid-range accounting software brand and being a dominant player in this market segment on a global basis" says Softline`s CEO Ivan Epstein.
"Pastel has an extremely strong brand, has been well marketed and has built a comprehensive dealer base both locally and internationally.
"Furthermore, Pastel Accounting has achieved significant penetration among accounting firms, providing the brand with strong credibility and brand awareness.
The purchase from vendors, Ivan Ferrer - who founded Pastel in 1987 - Mike Katz and Siltek, will be settled in cash and Softline shares on a basis to be announced and subject to due diligence.
The transaction, which is effective from 1 January 1999, will have a further positive effect on the group`s operating margin, boosting it to over 16%.
Ferrer joins Softline Limited`s main board of directors where he assumes the responsibility for driving the combined entities offshore mid-range accounting software strategy as a leading exponent in the global market. This is a strong endorsement of his prowess in building Pastel into an international player with over 110,000 users in 34 countries.
"Both Pastel and Softline were working separately towards the same goal of creating a global accounting brand", says Ferrer. "By pooling resources and skills, this deal will leapfrog us towards achieving that goal.
"I look forward to working with Softline`s management and I believe that our complementary skills make us an exceptionally strong team to lead the group forward in its quest to become a significant global player".
Mike Katz retains his responsibilities as development director, to further focus on the group`s accounting software R&D functions, both locally and abroad.
The architecture of the Pastel application provides considerable flexibility in modifying the application to be localised and regionalised, catering for a number of environments, languages, currencies, tax and payroll systems.
Pastel`s software is available in English, Afrikaans, French, Dutch, Portuguese and Danish and, due to the fact that it is fully Euro compliant, provides the opportunity for significant penetration into European markets.
Pastel has received a number of international awards, as well as extensive reviews and is accredited by the Institute of Chartered Accountants in England and Wales.
There are a number of other strengths that the transaction brings to the combined group, now South Africa`s leading accounting software vendor, including:
The financial software systems developed by the group strategically positions Softline to implement enterprise-wide Electronic Commerce solutions.
Pastel`s Internet Banking initiative with Standard Bank enables users to make payments to suppliers and transfer funds between accounts, direct from the accounting package and will further enhance the development of significant Electronic Commerce initiatives.
The acquisition adds to Softline`s already significant R&D resources
Pastel has opened its products to third party developers who have developed modules catering for a number of vertical markets which seamlessly integrate with Pastel
Ivan Ferrer comments that for all Pastel international distributors, VARs, dealers, accountants forum members, third party developers and users, its business as usual.
"We will not be changing our business model, but we believe that many new opportunities and benefits will accrue to our partners and users in the near future", says Ferrer.
Summing up, Softline CEO Ivan Epstein says that "overall, the acquisition now positions us as the foremost accounting technology group in South Africa and a significant player internationally".
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