Translation and web content management provider SDL is considering the purchase of beleaguered Alterian, but Alterian is having none of it and rejected the idea the day the possible offer came to light. SDL is talking about an all-cash offer of 80p per share, which it states is a 40.4% premium over the closing share price of 57p on October 20 (the day before receipt of the proposal). SDL has until November 21 to determine whether to proceed further.
SDL talks about the two UK-based companies being a strong strategic fit and of Alterian being better placed to expand its customer base if it was part of the SDL group. Alterian would slot into SDL’s web content management operation readily enough. Although it remains the junior partner within SDL, it is fast growing and revenue jumped 24% in H1 2011 (see SDL maintains organic growth in H1). The demand for content management within organisations, and particularly for internationally available web sites which is what Alterian is good at, is not going to go away. Alterian’s social media solutions combined with SDL’s translation capabilities could also open up a new area.
As for Alterian, it is in disarray: quarters of plummeting revenue, cost cutting initiatives, a top team reshuffle which included the appointment of Heath Davies as CEO, a review of its sales structure and we suspect its partners, plus a review of its financial reporting, forecasting and revenue recognition underway (see Alterian not for sale, looking for a fresh start as a starting place for Alterian’s recent history). Last month the company stated that it was not preparing for a sale but its weakened state was bound to attract predators.
An initial analysis of a combined SDL/Alterian entity suggests SDL would see most of the benefit although Alterian would benefit from a firmer financial foundation. Alterian is working hard to stablise its situation but may not have the time to see it through if SDL decides to make a formal offer.