UK Software Provider Buys Brazil Stake

British enterprise software provider Sage Group has purchased a 75% stake in Brazil’s Folhamatic Group for GBP125m ($197m), it says. It will pay GBP101m upfront and a GBP24m performance-driven earn-out on 2012 targets, and a put and call agreement is in place for 2015 for the remaining 25%, based on 2014 performance. “This appears a well structured deal, and Sage has not overpaid for what could become an important seed asset into LatAm,” says a Deutsche Bank report. It and other shops find an implied 13.4x-13.5x Ebitda multiple. The purchase of a market leader which is accretive immediately was desirable for the company, says a person familiar with the deal, giving a 13x Ebitda multiple for transaction. The deal should be 1%-3% accretive in its first full year, according to analyst reports. Sage sees Folhamatic’s 80% recurring revenue, market access in Brazil, along with the room for growth in the SME market as advantageous to its business, according to the company. Folhamatic founder and CEO Mauricio Frizzarin holds the remaining 25% of the equity. Sage, a software and services provider for SME businesses, was advised by Citi.