* Deal for $11.25 per share in cash
* Lawson’s board approves the transaction
* Deal expected to close in Q3
* Shares down 9 pct (Adds analyst and investor comments, details in paragraphs 6-10, updates shares)
By Saqib Iqbal Ahmed and Nadia Damouni
BANGALORE/NEW YORK, April 26 (Reuters) - Lawson Software Inc has agreed to be bought by Golden Gate Capital and privately-held Infor for around $2 billion in cash, as mid-sized business software makers look to gain scale in a market dominated by Oracle and SAP AG .
Hewlett-Packard Co had considered buying business software company Tibco Software Inc , Reuters reported earlier this month. [ID:nN11117616]
Last month, Reuters reported that Lawson — 11 percent-owned by billionaire investor Carl Icahn — had hired Barclays Capital to look at strategic options, including a possible sale. [ID:nN08196949]
Days later, Lawson said it received an unsolicited bid from San Francisco-based private equity firm Golden Gate Capital and software firm Infor at $11.25 per share.
Tuesday’s deal, still at $11.25 a share, follows a robust market check, with interest from other parties, and multiple rounds of negotiations over price, a source close to the situation told Reuters. There will be no go-shop provision.
While the offer price is at a 14 percent premium to where Lawson shares were trading before Reuters first reported the possible deal, it is still 7 percent shy of the stock’s $12.13 close on Monday on Nasdaq.
“Clearly there is some disappointment today among some investors relative to were the stock was yesterday and over the last month,” Longbow Research analyst Steve Koenig said.
Lawson shares took a beating and shed more than a dollar, indicating that investors were less than impressed with the offer, especially considering the huge takeover premiums that software firms often fetch.
However, the stock is still trading at levels that it had last touched in November 2007.
And Icahn Capital said the offer price was the highest obtained from a full, fair process and that it continued to support the merger process.
“That’s a good price for Lawson. The stock did run up ahead of that as a lot of people had speculated that another buyer could come in,” said Benchmark Co analyst Mark Schappel.
The acquisition by GGC Software Holdings and Infor comes close on the heels of private equity firm Apax Partners early-April buy of Epicor Software and Activant Solutions, and is expected to close in the third quarter.
“Unlike the Epicor sale, the Lawson sale was a competitive bid process, so by the time Infor came out with its bid everyone had taken a look at Lawson,” Schappel said.
With Lawson having already been shopped around, the likelihood of a competing bid now was slim, he added.
“Private equity is more acquisitive in the ERP application space (and) there aren’t that many listed strategic buyers any more,” Schappel said, referring to the enterprise resource planning software market.
“You may see some private equity players turn their attention to supply chain vendors,” said Schappel, who named Manhattan Associates , JDA Software Group Inc and CDC Software among possible targets.
The Lawson sale comes nearly a year after Icahn disclosed his stake, which prompted shareholder speculation over what he might do and pushed up the stock price, the source said. Lawson said its board unanimously approved the GGC deal.
Lawson will extend Infor’s portfolio, particularly in areas like healthcare, public sector, manufacturing and human capital management, Infor CEO Charles Phillips, a former president of Oracle, said in a statement.
“This is truly a scenario where 1+1=3,” Phillips, who plans to use Lawson’s healthcare business and Infor’s enterprise asset management to target large hospitals, wrote to employees.
The deal has fully committed debt financing from Credit Suisse, Bank of America Merrill Lynch, Morgan Stanley, Royal Bank of Canada and Deutsche Bank, Lawson said.
The deal was financed through $1.1 billion in secured credit facility, $560 million in senior notes and equity plus Lawson cash, a second source close to the situation said.
There will be a separate vehicle for Lawson as Infor, which had signed a non-disclosure agreement in January with Lawson, already has its own capital structure, the second source said.
Barclays Capital acted as financial adviser to Lawson and Skadden, Arps, Slate, Meagher & Flom was the legal adviser for the deal. Evercore Partners and Morgan Stanley acted as financial advisers to GGC Software Holdings and Infor.
Lawson shares, which have risen nearly 50 percent over the last year, last traded down 8.7 percent at $11.07 on Tuesday on Nasdaq, with more than 50 million shares changing hands, nearly 84 times the stock’s normal daily volume. (Reporting by Saqib Iqbal Ahmed in Bangalore and Nadia Damouni in New York; Editing by Ian Geoghegan, Saumyadeb Chakrabarty and Unnikrishnan Nair)