SQS buys Sweden's Validate; eyes France, Benelux
LONDON (Reuters) - SQS Software Quality Systems (SQSGn.DE) (SQS.L), a German software-testing company, acquired Nordic peer Validate Technology Svenska on Wednesday, and said France and Benelux are its next target markets.
London-listed SQS will pay at most 153.3 million Swedish crowns ($25.4 million) in cash and shares, for Validate, subject to the Swedish company meeting targets over the next three years.
"Validate offers the same kind of services as us, so it's a perfect fit," said SQS Chief Financial Officer Rene Gawron in an interview. "It has comparable blue-chip clients."
Shares in SQS had risen 1 percent to 301.5 pence at 0900 GMT, as analysts said the deal bolsters SQS's leading position in pure play testing.
"This looks like a strong deal for SQS that enhances the group's European footprint and takes the group into new, fast growing geographies in the Nordics," said Evolution Securities analyst Roger Phillips.
Gawron said SQS wants to expand beyond its core German and British markets, both of which account for about 40 percent of turnover before the Validate deal.
"We have always stated Scandinavia as an area where we wanted to expand market share, but Benelux and France are other areas where we have a smaller presence" he said.
Acquisition's senior management will remain with the company following the deal. "They have been very successful in penetrating the market and they expect to nearly double revenues to 8 million euros this year," Gawron said.
(Reporting by Paul Sandle; editing by Rory Channing)
