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One last mega deal closed the eventful year 2024.
World Wide Technology (WWT), a technology services company based in St. Louis, on Tuesday announced it agreed to a deal valuing Canadian IT provider Softchoice at C$1.8 billion (~$1.25 billion).
The all-cash deal has been unanimously approved by Softchoice’s board, but has yet to be voted on by the company’s shareholders. It is also subject to court approval and customary closing conditions; the firms expect this to be completed by the end of the first quarter or the beginning of the second quarter of 2025.
If not, Softchoice could be on the hook for a $49 million Canadian (~$34 million USD) termination fee. However, its board reserves the right to consider other proposals.
Softchoice’s software, cloud, cybersecurity and artificial intelligence capabilities will complement WWT’s existing product portfolio, WWT co-founder and CEO Jim Kavanaugh said in a statement.
“Softchoice has been a transformative player in the IT industry for more than 35 years,” he said, “and (this acquisition) will allow us to create even greater value for our customers as they strive to achieve their digital transformation goals.”
Softchoice was founded in 1989 by David Holgate and John Panavas to provide corporate clients with hard-to-find software products. The company has grown and evolved over the years and is now one of the largest technology solutions and services providers in North America, according to the Softchoice website.
In 2013, private equity firm Birch Hill bought Softchoice for C$412 million (~$286 million). per head Crunchbase. Nearly a decade later, in 2021, the company filed for an initial public offering on the Toronto Stock Exchange (TSX), valuing it at approximately C$1.15 billion (~$800 million).
Softchoice’s finances have been pretty strong lately. In the third quarter of 2024, the company informed 10% increase in annual gross profit and 8% increase in net income due to expanding customer base. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter was $23.2 million, up 2.2% from the third quarter of 2023.
WWT says its offer represents a gross shareholder return of approximately 62% over Softchoice’s initial public offering price. If the deal ends, Softchoice will be delisted from the TSX.
“We are excited to join WWT,” Softchoice President and CEO Andrew Caprara said in a press release. “Its scale and global reach, large enterprise customer base and industry-leading infrastructure solutions are a perfect complement to our software and cloud-centric solutions, our presence in Canada and our strength in the North American mid-market.”
Founded in 1990 by Kavanaugh and David Stewart, WWT helps clients and partners conceptualize, test and implement technology solutions, including projects involving cloud computing, data center infrastructure and application development. The company’s annual revenue is around $20 billion and it employs more than 10,000 people.
Softchoice is the third acquisition in WWT’s history. In 2010, WWT acquired Baltimore, Maryland-based Performance Technologies Group. In 2015, WWT acquired the software company Asynchrony.
