It’s going to be an exciting year at IFS. The main board issued a statement of recommendation to the remaining shareholders to sell their shares to EQT, part of IGT Holding. IGT holding, as of 7th December already owned over 70% of both the A and B shares after the major shareholders agreed to the offer. While the current share price is slightly higher than the offer over the last 12 months is has been more than 20% lower using a weighted average, the full details can be found in the release.
This acquisition seems to be going through smoothly and IGT have also issued a statement that reveals a little about their plans for IFS going into 2016. This is good news for employees as IGT confirm that there is not going to be any negative impact on employees or locations. IFS went through expansion in the 1980’s followed by contraction like many others. It has now been rebuilding and is cash positive but this deal will bring substantial additional investment.
When we first published the news we compared the acquisition to that of Infor, however it seems unlikely that IFS will follow the same path. The investments that IGT Holdings predicts, which are over and above the current strategic direction, are general expansion in areas such as sales and marketing, including the channel.
Only this year IFS introduced certification for its channel partners and it will be interesting to see whether this program is extended. This may be to the benefit of existing channel partners or it might be used to bring additional channel on board. Certainly there are a number of Oracle and SAP partners who are looking beyond their traditional relationships as they see the market evolving.
There is also likely to be investment in product development and this might help to accelerate acquisitions that fill in the gaps within the IFS product portfolio. IFS are likely to keep with the strategy of a single core ERP solution and built it out. Integrating the technology of acquisitions can take time, but if greater investment is available one can see a product roadmap that is shortened as IFS delivers greater functionality in a shorter timescales.
The management team is also likely to remain unchanged, though one can expect a few new faces on the board from IGT Holdings as they look to advise and oversee their new acquisition.
We spoke to Antony Bourne, Global Industry Sales Director at IFS World Operations AB this week on a number of matters, and touching on the acquisition he commented: “It’s an exciting period, it gives us a lot more opportunity, they can take a longer term view on it…It’s very positive”
While this could easily have been seen as a hostile acquisition by many, that the acquisition was led by a company with a similar Scandinavian heritage and culture has helped. The culture of openness that pervades IFS with a fairly flat hierarchy as Bourne explained led to this approach being accepted if not welcomed. Bourne explained: “We are proud of our Scandinavia heritage we want to keep that, customers like that because we have that openness.”
It will be interesting to see where the investments are made once the deal is completed and IFS becomes delisted. While there will be less publicly available information there will no doubt be some announcements around expansion and acquisitions in 2016.
The next IFS world conference being held in Gothenberg in October 2016 could be a very exciting event with several announcements and an indication on the direction that IFS will be taking. While the current agenda current lists “nothing”, that will no doubt start to take shape over the coming months and may be significantly different to that held this year.