WWT to acquire Softchoice in $1.25B technology services deal

Today Global Technology Holdings Limited declare Plans to acquire rival Softchoice Corp. for C$1.8 billion (approximately US$1.25 billion).

The all-cash acquisition values ​​Toronto-based Softchoice at C$24.50 per share. That’s a premium of more than 10% to the company’s closing price on Monday and 62% above its 2021 listing price.

Headquartered in St. Louis, Missouri, WWT is a major information technology services provider with annual revenues of approximately $20 billion. The company helps companies move applications to the cloud, deploy artificial intelligence models and carry out other IT projects. In addition, it has established small test data centers where customers can evaluate new technologies before incorporating them into production infrastructure.

Softchoice also provides IT services, but has a narrower focus. It generates the majority of its revenue from three sources: cloud, digital workplace and software management projects.

The company’s cloud division helps companies migrate on-premises applications to infrastructure-as-a-service platforms. Additionally, it improves the performance and security of workloads already running externally. The company’s software and cloud revenue segment accounts for more than two-thirds of revenue.

Its Digital Workplace segment is its second-largest revenue generator and helps businesses adopt technology that increases employee productivity. The company’s third core business is its software management division, which maintains software licenses on behalf of organizations. It identifies unnecessary licenses and situations where businesses may be using an application in violation of the developer’s terms of use.

Softchoice’s total sales last quarter were CAD 628.6 million, an increase of 20.3% over the same period last year. The company’s revenue comes from a customer base of more than 5,000 organizations. Most of these customers are small and medium-sized enterprises with annual revenue of up to C$10 million.

WWT said the acquisition will help strengthen its market presence in the mid-range markets in Canada and the United States. Softchoice is also expected to enhance its cloud, cybersecurity and artificial intelligence capabilities.

“This acquisition enhances our access to commercial, small and medium-sized enterprise customers while expanding WWT’s presence in the United States, Canada and around the world,” said David Steward, founder and chairman of WWT.

Investors holding 51.3% of Softchoice’s outstanding shares have signed an agreement supporting the proposed acquisition. At the same time, the terms of the deal allow the former company to seek more competitive offers before completing the deal. If no such bid emerges, the acquisition would be completed in the first or second quarter of 2025, pending regulatory approval.

photo: WWT