London-listed Sage enters Brazilian market with £125m acquisition of Folhamatic

Downtown Sao Paulo, Brazil

British business management software firm Sage Group Plc (LON:SGE) unveiled on Wednesday its entrance into the Brazilian market through the GBP125m (USD197m/EUR155m) acquisition of a 75% stake in local accounting, tax and payroll and regulatory content software developer Folhamatic Group.

The price for the stake gives Folhamatic a total enterprise value of GBP191m, the buyer said, adding that the deal was in line with its plans to growth through building a presence in important emerging markets.

Folhamatic is a top player in the growing small and medium-sized enterprise (SME) market in Brazil, leading the accounting firm sector with some 13,000 accounting firms and around 46,000 businesses as clients.

Its addition is a great complement to Sage’s strategy and business model, with the combination between its customer base and Sage’s technologies, products and best practice expected to ensure further growth. Sage also expects the acquisition to immediately contribute to its earnings, it said.

Folhamatic’s founder and CEO Mauricio Frizzarin will keep the other 25% in the company, while put and call arrangements exercisable by either party in 2015 have been agreed, the buyer said.

Vendors include Fund VII FIP – Fundo de Investimento em Participacoes, Gilberto Caiuby Fischel, Rony Blinder, Mauricio Frizzarin and Insight Venture Partners funds.

Completion is expected in June.

Sage used the advisory services of Citigroup Global Markets Limited.

Folhamatic had revenues of GBP42.4m, EBITDA of GBP6.8m and EBITA of GBO6.5m last year. It is expected to boost its 2012 revenues to GBP48.8m, EBITDA to GBP14.2m and EBITA to GBP13.9m, the buyer said.

At 31 December 2011, its gross assets stood at GBP79.2m.

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