UPDATE 3-Roper to buy privately held iTradeNetwork for $525 mln

Mon Jul 26, 2010 1:23pm EDT

* To buy iTradeNetwork from private equity Accel-KKR

* ITradeNetwork to add more than $55 mln to 2011 EBITDA

* Roper posts higher Q2 results, raises FY10 EPS outlook

* Roper shares rise 5 pct to 2-yr high (Adds details, background, analyst comments, updates share movement)

By A.Ananthalakshmi

BANGALORE, July 26 (Reuters) - Diversified manufacturer Roper Industries Inc (ROP.N) agreed to buy iTradeNetwork for $525 million in cash from private equity firm Accel-KKR to expand its high-growth software-as-a-service (SaaS) business.

Shares of Roper, which also raised its full-year earnings view after posting higher second-quarter results, rose as much as 5 percent to a two-year high of $65.15 Monday on the New York Stock Exchange.

ITradeNetwork, a supply chain management company serving the food industry, is expected to generate more than $55 million in EBITDA in 2011, Roper said.

Roper declined to disclose iTradeNetwork's revenue on a conference call, but Longbow Research analyst Mark Douglass estimated revenue to be between $125 million and $175 million annually.

"(The) iTradeNetwork acquisition looks very interesting and potentially accretive," said Robert W Baird analyst Rick Eastman, adding that SaaS is an area of high interest for Roper.

Pleasanton, California-based iTradeNetwork has about 250 employees and over 6,200 customers, including Wal-Mart Stores Inc (WMT.N), Costco (COST.O), Kroger (KR.N) and Sodexo (EXHO.PA).

Technology-focused private equity firm Accel-KKR, a partnership between Accel Partners and Kohlberg Kravis Roberts & Co [KKR.UL], acquired a minority interest in iTradeNetwork in 2006.

Accel-KKR, which has over $1 billion in assets under management, subsequently bought a majority interest in 2007.

Jefferies & Co and Credit Suisse Securities (USA) LLC acted as financial advisors to iTradeNetwork for the deal.

SEEKING MORE DEALS

Acquisitions are a key growth strategy for Roper, which has completed more than $2.20 billion worth of deals, according to Reuters data.

Roper, a maker of energy systems, industrial technology products and radio frequency products, has been expanding into the SaaS space through a number of acquisitions due to low capital and high margin prospects.

In 2009, it bought United Toll Services, which provides software and in-lane hardware systems for toll and traffic markets.

"The (iTradeNetwork) acquisition gives Roper additional scale to pursue acquisitions in the software solutions space, where (we) continue to see many attractive opportunities," Roper's CEO Brian Jellison said in a statement.

Baird's Eastman said any additional acquisitions by Roper this year would most likely be of the bolt-on variety. He said it could make buys in the SaaS or scientific/imaging businesses.

Roper raised its full-year earnings outlook to $3.05 a share to $3.15 a share and forecast third-quarter earnings of 75 cents to 80 cents a share. [ID:nASA00K06]

Roper's second-quarter net income was $71.3 million, or 74 cents a share, in line with market estimates.

Net sales rose 12 percent to $567.1 million, above analysts' expectations of $559.0 million, according to Thomson Reuters I/B/E/S.

Roper's shares, which have risen 18 percent in value this year, were up $1.63 at $63.64 in afternoon trade. (Additional reporting by Megha Mandavia in Bangalore; Editing by Anne Pallivathuckal)

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