SoftwareOne Confirms Advanced Talks to Buy Norway’s Crayon

(Bloomberg) — SoftwareOne Holding AG is in advanced discussions to take over Crayon Group Holding A/S in a transaction that would create a major pan-European software reseller.

The Swiss firm is planning to buy Crayon for cash and shares, it said in a statement Friday, without elaborating. Bloomberg News reported on the talks earlier and that an announcement on a combination could come this month.

Shares of SoftwareOne jumped as much as 12% on Friday, the biggest intraday again in a month, rebounding from the record low hit on Thursday when Bloomberg News first reported the talks. Crayon fell 1.9% as of 10:20 a.m. in Oslo after closing up 8.4% on Thursday. SoftwareOne has a market value of about 1.1 billion Swiss francs ($1.2 billion), while Crayon’s market capitalization is $1.1 billion.

“Both companies have a similar business, so it seems hard to make sense of the discrepancy in valuation,” said Christian Bader, an analyst at Zuercher Kantonalbank. Their almost identical market values imply the exchange ratio for a deal could be 1:1, he said.

There’s no certainty that the discussions will lead to a transaction, SoftwareOne said. Crayon also confirmed it is in advanced talks with SoftwareOne. Bloomberg reported in September that SoftwareOne, which has been considering a sale of itself, was exploring a potential combination with Crayon. 

Based in Stans, Switzerland, SoftwareOne is among the largest resellers of Microsoft Corp. software licenses. It has been in the crosshairs of private equity suitors for most of the year, with its previous board rejecting a 3 billion-franc offer from Bain Capital in January. SoftwareOne’s founding shareholders voted to oust the leadership in April after the Bain offer was turned down.

SoftwareOne’s new Chief Executive Officer Raphael Erb said last month that disappointing earnings were partially due to execution issues and a top-heavy management structure. Erb said the company also rushed out a program that changed how it organized its approach to customers, which has hurt growth. He pledged to push through a cost savings plan.

Oslo-based Crayon is predominantly active in the Nordic region, distributing licenses for the likes of Amazon Web Services, Microsoft Corp. and Google Cloud. It is expected to record revenue of around 7.2 billion kroner ($648 million) this year, according to analysts polled by Bloomberg. 

–With assistance from Allegra Catelli and Neil Campling.

(Updates share moves, adds comment and context from third paragraph.)

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