Hexagon Buys Intergraph for $2.13 Billion

[dave]

From Bloomberg...


Hexagon Buys U.S. Software Maker Intergraph for $2.13 Billion

July 07, 2010, 3:33 AM EDT

By Niklas Magnusson and Ola Kinnander
July 7 (Bloomberg) -- Hexagon AB, the world’s biggest maker of measuring instruments, agreed to buy U.S.-based Intergraph Corp. for $2.13 billion to add software that helps companies visualize complex data and design factories, ships and oilrigs.
The purchase is fully financed through bank facilities, Stockholm-based Hexagon said in a statement today, adding that it will seek to raise $850 million from a share sale to existing investors once the transaction has been completed.
Buying Huntsville, Alabama-based Intergraph will boost Hexagon’s workforce by more than 50 percent, adding 4,000 employees in 34 countries. The deal follows the purchase of Brown & Sharpe, Leica Geosystems and NovAtel in the past decade.
“This fits right into Hexagon’s strategy,” said Jon Hyltner, an analyst at Handelsbanken AB in Stockholm with a “buy” rating on shares of the Swedish company. “They have talked for a while about wanting to do something, so it’s not a huge surprise, but this is a really big acquisition.”
Intergraph, which provides software to businesses and governments in more than 60 countries, seems to have “pretty good” profitability, Hyltner said.
Hexagon was trading little changed at 101.60 kronor as of 9:23 a.m. in Stockholm. It has declined 3.9 percent this year, valuing the company at 27 billion kronor ($3.5 billion).
--Editor: Chris Jasper.
To contact the reporters on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net; Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net
To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.ne; Frank Connelly at fconnelly@bloomberg.net

[pipingdesignguy]

Good or bad news?

[dave]

Remains to be seen I think. Any time someone get's bought, people get nervous. Nervous people don't commit resources to software that makes them nervous. So I would say that no news is better news.

[dave]

Intergraph to Become a Subsidiary of Hexagon
Link to Article (http://www.upfrontezine.com/current.htm)


A trio of investors took Intergraph private in 2006 for $1.3 billion; just four years later, Hellman & Friedman LLC, Texas Pacific Group, and JMI Equity are selling the oldest independent CAD vendor for $2.125 billion -- a huge profit, and one that I am surprised Hexagon agreed to pay.

Stockholm-based Hexagon isn't well known in CAD circles, but is a worldwide player in precision measurement business (7,500 employees in 39 countries; last year's revenues were $1.6 billion). Their hardware and software products measure the locations and positions of objects precisely, such as how well the side panels of a car were pressed. Hexagon pays for Intergraph in cash, but will have to raise $850 million to do so. As for answering the "Why?" question, Hexagon says:

"The combination of Hexagon's leadership in solutions that capture rich geospatial data using aerial and ground based point cloud sensor technology, with Intergraph's leadership in GIS and CAD application software, will enable the enlarged Hexagon Group to develop and provide unrivalled [sic] integrated solutions to clients."

The other aspect of the deal that titillates observers is the position of Bentley Systems. As I understand it, Intergraph still owns 30% of Bentley, meaning either (a) Hexagon becomes a miniority owner, or (b) the Bentley brothers buy out Intergraph's share.

http://www.hexagon.se (http://www.hexagon.se/)

Thanks to pipingdesignguy for sending me this article. I was pretty shocked to hear Intergraph still owned 30% of Bentley.