Pitch Best Deal 2023: Sopra Steria acquires Ordina

Stem op deze deal via de stempagina: Mena.nl/genomineerden-best-deal-2023

Name of the deal: Recommended and completed all-cash public offer by Sopra Steria for all Ordina shares

Announcement date: 21 March 2023

Closing date: 29 September 2023 (92.73% of shares. After post-acceptance period (13 Oct 2023): 98.01% of shares

Published value: € 518 million
Buyer(s): Sopra Steria Group

Target:  Ordina
Seller: Public shareholders

Involved firms and advisors

Involved firms and advisors buy side:
Financial advisor: Messier & Associés

Legal advisors: Van Bael & Bellis, Houthoff
Financial DD: Eight Adviory

Communication: Image 7

Involved firms and advisors target:
Financial advisor: ABN AMRO (to the Supervisory Board of Ordina)

Involved firms and advisors sell side:

Financial advisor: AXECO

Legal advisor: Stibbe (lead), Clifford Chance

Communication: CFF Communications

Pitch

Brief Description of the Deal / Deal Outline

In March 2023, Ordina and Sopra Steria reached an agreement on a recommended all-cash public offer for all shares in Ordina for a total consideration of approximately €518 million. This strategic combination created a partner of choice in the Benelux IT consulting industry, propelling the transformation toward a digital business partner. Sopra Steria committed to supporting the continued growth of both Ordina and the new combined entity in the Benelux region. The transaction was successfully completed in September 2023.

The amalgamation of operations, including Ordina, Sopra Steria’s existing business in the Benelux, and Sopra’s acquisition in Belgium (Tobania, completed in March 2023), established a preferred partner in digital services in the region. With a combined revenue of €700 million (of which over 60% is contributed by Ordina) and a workforce of more than 4,000 employees, the presence was evenly spread between the Netherlands and Belgium. Additionally, in Luxembourg, the combined entity achieved a strategic size with 300 employees.

This highly advantageous union set the stage for a transformation into a digital business partner, significantly enhancing Sopra Steria’s European expansion strategy by fortifying its position in key geographical areas. It accelerated the strategic goals of both Ordina and Sopra Steria, strengthening their combined presence in the Benelux. This venture offered substantial strategic benefits to all parties involved.

Why This Deal Deserves the Award for Best Deal of 2023?
This deal is a strong contender for the Award for Best Deal of 2023 due to several compelling reasons that set it apart in the world of mergers and acquisitions:

• Exceptional Leadership and Growth: The transaction reflects the remarkable leadership of Jo Maes, who has steered Ordina since 2017, resulting in an astounding total shareholder return of over 350% since January 2019.
• Strategic Market Entry: The deal has created a prominent player in the Benelux IT sector, with a strong presence for the new group. It provided Sopra Steria with a unique opportunity to enter the Benelux market and address a strategic gap in its portfolio.
• Shared Culture and Values: This transaction didn’t just align with Ordina’s existing strategy; it also united two companies with shared cultures and values, a pivotal factor in a strategic merger.
• Complex Nature: The deal’s complexity, involving a public-to-private transition with multiple interested parties, demonstrates its significance and the challenges overcome in its execution.
• Attractive Price: Despite challenging market conditions marked by financial instability in early 2023, the offer presented an attractive price, surpassing the 12-year high share price.

For Ordina: Supporting Growth and Strategy in the Netherlands:
Sopra Steria fully embraced Ordina’s strategy, committing to support the company’s growth and explore further opportunities through mergers and acquisitions. The partnership solidified Ordina’s critical role in the Dutch IT sector, particularly in government contracts, where it derived over 40% of its revenue.

For Ordina: Reflection of Remarkable Progress Under Jo Maes’ Leadership:
This transaction underscored the significant progress Ordina achieved under CEO Jo Maes since 2017, including substantial improvements in employee engagement, customer satisfaction, EBITDA margins, and net results.

For the Combination: Creating a Partner of Choice:
The merger set the stage for transforming into a digital business partner and contributed to Sopra Steria’s balanced European expansion, strengthening its presence in strategic regions. The union benefited both Ordina and Sopra Steria, delivering substantial strategic advantages.

The Transaction: Complex Public-to-Private Transition:
Public-to-private transactions inherently involve complexity, but in this deal, a competitive environment with multiple interested parties ultimately led to a compelling offer from Sopra Steria.

For Shareholders: Attractive Price in Challenging Conditions:
Despite market challenges, the offer represented a significant premium over the share price, delivering immediate value to Ordina’s shareholders. It garnered strong support from the Management Board, the Supervisory Board, and major shareholders.

Ultimately, this deal’s success and the benefits it brings to all parties involved make it a deserving candidate for the Award for Best Deal of 2023.

Deal Rationale

This combination formed a partner of choice in digital services, bolstering Sopra Steria’s European growth by creating a balanced geographical portfolio, with a reinforced position in digital sovereignty and trust. The merger delivered significant strategic advantages, including an excellent strategic fit for becoming a digital business partner, cultural alignment, complementary geographical footprints, opportunities for mutual expansion, improved positioning to capture growth opportunities, enhanced knowledge sharing, strengthened capabilities, talent development, and enhanced career opportunities for employees.

The significance of the market, the weight of public sector and financial services clients, and the presence of European institutions made this region a strategic development area for Sopra Steria. The acquisition of Ordina notably strengthened Sopra Steria’s position in public sector and financial services segments.

The combination of Ordina, Sopra Steria, and Tobania maximized the potential reach, scale, and resources of their combined businesses.

Impact of the Deal on the Company

This deal has brought about significant positive changes for both Ordina and Sopra Steria, transforming the landscape of the BeNeLux IT consulting industry and enhancing their positions.

For Ordina, the deal delivers multiple advantages:

• Shareholder Benefits: Shareholders of Ordina have gained an attractive premium, reflecting the deal’s value and providing them with immediate financial benefits.
• Employee Opportunities: Employees now have access to increased career development prospects within a larger and more international group. The expanded company offers a wider range of opportunities for professional growth.
• Non-Financial Covenants: The offeror has committed to maintaining the Ordina brand, culture, and identity, respecting existing employment terms and conditions, and supporting continued growth in the BeNeLux region for 2.5 years after settlement.

On the other side, the deal positively impacts the buyer company, Sopra Steria:

• Enhanced Growth Prospects: The deal has boosted Sopra Steria’s growth potential by creating a partner of choice in digital services in the BeNeLux region. This transformation opens up new avenues for business expansion.
• Diversified Revenue Streams: The combination diversifies Sopra Steria’s revenue streams, reducing dependence on a single market or service and providing resilience against market fluctuations.
• Improved Profitability: The deal is expected to contribute to improved profitability and margins for Sopra Steria, strengthening its financial performance.
• Expanded Presence: Sopra Steria’s footprint in the dynamic and competitive Benelux market has significantly expanded. This not only increases its reach but also positions the company more competitively in the European IT consulting industry.

In summary, the impact of this deal on both Ordina and Sopra Steria has been substantial, with a clear focus on growth, diversification, and enhanced value for shareholders and employees, while fortifying their positions in the Benelux IT sector.

Impact of the Deal on Direct Stakeholders

This merger established a more robust organization, providing clients with a broader range of complementary digital products and services. The highly complementary geographical footprint and positioning across sectors, with opportunities for mutual expansion, benefited the entire BeNeLux economic ecosystem. Ordina’s customer base could now access Sopra Steria’s end-to-end capabilities, particularly in hybrid cloud, technology services, cybersecurity, and Sopra Banking Software solutions. Employees enjoyed cultural alignment, access to increased knowledge sharing, strengthened capabilities, talent development, and enhanced career prospects.

Impact of the Deal on Society

The impact of this deal on society is notably positive, with several key aspects contributing to the betterment of the Benelux region and beyond.

• Enhanced Digital Transformation: The partnership between Ordina and Sopra Steria creates a stronger and more innovative player in the field of digital transformation. In an era where digitalization is crucial for economic and social development, this deal empowers the region by offering advanced digital services and solutions.
• Support for Sustainability and CSR: Both companies share a commitment to environmental, social, and governance (ESG) issues. This deal aligns with their sustainability and corporate social responsibility (CSR) goals, contributing to a more responsible and sustainable business environment.
• Preservation of Identity and Culture: Sopra Steria’s intention to maintain Ordina’s identity and culture post-settlement is a positive aspect of the deal. This ensures the continuation of Ordina’s values and commitment to society, thereby benefiting the communities it serves.
• Elevated Quality of IT Consulting: With IT consultants in high demand, the collaboration allows Ordina and Sopra Steria to leverage their scale and capabilities for providing higher quality services to a broader client base. This benefits clients who rely on IT consultancy services.
• Strengthened Services for the Dutch Government: A significant portion of Ordina’s revenue was derived from services provided to the Dutch government. This deal strengthens Ordina’s offerings, enhancing the value delivered to the Dutch government and its citizens, ultimately contributing to the welfare of the society.

Complexity of the Deal

The Ordina-Sopra Steria deal represented a multifaceted and intricate transaction. It initiated as a fiercely competitive auction process with numerous potential bidders. A pivotal challenge arose when Ordina, due to extraordinary trading volumes in its shares, felt compelled to announce its discussions with multiple parties. This public disclosure heightened the urgency to expedite the agreement.

Adding to the complexity were the new foreign direct investment (FDI) regulations in the BeNeLux countries. These regulations, while not yet in effect at the time of signing, became applicable before the deal’s completion. This necessitated a meticulous adaptation by advisors to navigate the evolving legal landscape, addressing various criteria and procedures in each jurisdiction. Advisors demonstrated remarkable agility by collaborating closely with newly established FDI authorities while navigating the intricate approval process at the European Commission.