24SevenOffice

Reference is made to the press release issued by 24SevenOffice Group AB (the “Group Listed Company” or “24SevenOffice”) on 11 October 2024 announcing that the Group Listed Company had entered into a Memorandum of Understanding regarding a potential sale of parts of its assets and subsidiaries. 24SevenOffice, a leader in cloud-based enterprise software across the Nordics, is today announcing that the Group Listed Company has entered into a definitive agreement with Abacus Bidco Oy (the “Purchaser”), the holding company of Accountor Software, which is majority owned by funds managed by KKR, a leading global investment firm, for the sale of certain subsidiaries and assets of 24SevenOffice (the “Transaction”).

KKR acquired Accountor Software, one of the leading providers of business software in Finland and Sweden, earlier this year. KKR will be the majority owner of both companies, which will be combined to create one of the leading financial management and HR software businesses serving the Nordics.

24SevenOffice will retain several strategically important business units with high growth potential.

Details about the Transaction:

• The Transaction consists mainly of the ERP related subsidiaries and assets, including among others 24SevenOffice Norway AS, 24SevenOffice Scandinavia Systems AS and 24SevenOffice Sweden AB  (jointly referred to as the “Target”).
• The purchase price for the Target Business equals its enterprise value of approximately SEK 2.4 billion, subject to customary closing balance sheet adjustments. The purchase price will be paid by the Purchaser to 24SevenOffice in cash upon completion of the Transaction. 
• The Transaction will be fully settled in cash and completed upon the receipt of necessary clearances or approvals from the relevant competition authorities, approval by the Company’s shareholders and the completion of necessary separation steps. Closing is expected to take place by the end of 2024, subject to the timing of regulatory approvals.
• The Board of Directors of 24SevenOffice (the "Board") will convene an Extraordinary General Meeting in Q4 2024 to obtain shareholder approval as a condition to completion of the Transaction. Shareholders representing more than 56% of the votes of The Group Listed Company have expressed their support for, and intend to vote in favor of, the Transaction (other than [R-Venture AS] and [ICT], who will abstain from voting in connection with the Transaction).
• Following the completion of the Transaction, the Board intends to return value to shareholders with the intention to propose a dividend of approximately SEK 23 per share, after settling debt and other obligations that could impact the final amount.
• The proceeds will be distributed to its shareholders as soon as legally and practically feasible following completion of the Transaction, with the dividend expected to be approved at the Annual General Meeting and payment anticipated towards the end of Q1 2025.
• The Group Listed Company will continue operating as a listed company with its remaining operations.
• As part of the transaction, the Board intends to propose retaining SEK 200 million in cash, representing SEK 2.94 per share, in The Group Listed Company, to amongst other things invest in the Group Listed Company’s remaining business areas of fintech, CRM, MRP and others.
• The Transaction is unanimously supported by the Board.
• Satisfaction of the simple majority requirement has been secured by irrevocable and unconditional voting undertakings in favor of the Transaction from shareholders representing more than 50.1% of the votes. 

The Target will continue to serve its clients under the 24SevenOffice brand in its respective markets. The majority of employees, including the leadership team and other key personnel, will form part of the Target. The Company’s CEO, Eirik Aalvik Stranden, will upon completion of the Transaction resign from his position with the Group Listed Company and become CEO of the Target. The Board will commence the search for the Group Listed Company’s next CEO.

Eirik Aalvik Stranden, upcoming CEO of the Target commented:

“We are a fast-growing challenger in the market, and this transaction gives us even better conditions to strengthen our position and be the preferred choice for corporate customers and accounting firms. KKR knows the sector extremely well and will provide both financial and industrial expertise to the company and enhance our growth capacity. That they have chosen to invest in us is a recognition of the whole 24SevenOffice team and the work we have done during the last years.” 

Hans Arstad, Managing Director and Head of Private Equity in the Nordics at KKR, said: “24SevenOffice has demonstrated an outstanding growth ability in the ERP and SaaS market, and we look forward to backing the company on this continued journey. We see substantial growth potential in the sector across the Nordics, and believe that combining 24SevenOffice’s strong team and presence in Norway and Sweden with Accountor Software will be a key component in unlocking this potential”.

Ståle Risa, Chairman of 24SevenOffice added: “The Board supports the transaction and I believe this is a great outcome for the shareholders in 24SevenOffice. The ERP business will have the best conditions to continue its growth journey. At the same time, we will also have more dry powder to invest in 24SevenOffice’s fintech business. The Group Listed Company will continue to be listed and represents a strong investment case with significant growth potential. We are excited about the future for both businesses in the years to come.”

The Transaction

The Transaction perimeter consists mainly of the ERP-related subsidiaries and assets, and the following subsidiaries, subject to carve-outs of the Remaining Business (as defined below), will be transferred upon completion of the Transaction: 24SevenOffice Norway AS (including among others subsidiaries 24SevenOffice Scandinavia Systems AS, Oflow Group AS, ViaOss AS and Karriere.no AS), 24SevenOffice Sweden AB, Exicom Software AB, Copernicus AB, Smartbob AS, 24SevenOffice NC AS, IMS Venture AS and 247Ventures AS (including subsidiary Busy Technology AS as well as certain early stage minority investments).

The purchase price for the Target equals its enterprise value of approximately SEK 2.4 billion, subject to customary closing balance sheet adjustments. The purchase price will be paid by the Purchaser to 24SevenOffice in cash upon completion of the Transaction. In addition, all intra-group debt between Target and the remaining business will be settled.

The Board intends to propose the retention of SEK 200 million of the cash proceeds from the Transaction in the Group Listed Company and to propose a dividend distribution of the remaining proceeds (after settlement of the Group Listed Company’s debt and the earn-out payment to R-Venture AS, covered below) to the Group Listed Company’s shareholders as soon as legally and practically feasible following completion of the Transaction. The total net debt is dependent on the definitive agreements. It is expected that the total dividend will be approximately SEK 23 per share. In addition the Group Listed Company will have 2.94 SEK per share in cash, totalling a cash value to shareholders of approx 26 SEK per share. Closing is anticipated to happen before the end of 2024, with the dividend expected to be approved at the Annual General Meeting and payment anticipated towards the end of Q1 2025.

As part of the Transaction, the Group Listed Company’s largest shareholder, R-Venture AS, will reinvest a substantial part of its net proceeds into the buyer group.

The Transaction is conditional upon the approval of the shareholders in 24SevenOffice and the Board will convene an Extraordinary General Meeting to obtain such shareholder approval.

Earn-out payment to R-Venture AS

Reference is made to the Group Listed Company’s acquisition of all shares (incl. the intellectual property rights) in IMS Venture AS from R-Venture AS pursuant to a share purchase agreement entered into on 3 May 2023 (the "Share Purchase Agreement"). The Share Purchase Agreement was approved by the Extraordinary General Meeting of the Company held on 10 June 2024. The purchase price for the shares consisted of a cash payment and of synthetic options issued by the Company entailing that the Company shall pay an additional purchase price in the event of an exit (the “Earn-Out Payment”). The intention of the Company and R-Venture AS was that a sale such as the Transaction shall constitute an exit for the purpose of the Share Purchase Agreement, and the Board will propose that the Extraordinary General Meeting ratifies such Earn-Out Payment being made by the Group Listed Company on the basis of the completion of the Transaction. The estimated amount of the Earn-Out Payment is SEK [306] million.

Extraordinary General Meeting

The Board will convene an Extraordinary General Meeting where shareholders representing more than half of the votes cast will be asked to approve the Transaction and the Earn-Out Payment. [The approval of the Transaction and the Earn-Out Payment will be conditional upon each other]. Shares and votes directly or indirectly held or controlled by R-Venture AS or by persons controlling R-Venture AS, shall not be taken into account. This implies that the shares in the Company held by R-Venture AS and ICT Group AS shall not be taken into account to determine whether the simple majority requirement is met.

The Company has received irrevocable and unconditional voting commitments in favor of the Transaction and the Earn-Out Payment from shareholders representing more than 50.1% of the votes eligible to be cast at the extraordinary general meeting (excluding the shares held by R-Venture AS and ICT Group AS), thereby satisfying the simple majority requirement.
 

Continuing business

The Group Listed Company will retain the following companies and business units (the “Remaining Business”):

●  The Company’s US business, consisting of 24SevenOffice US Inc., Masterplan ERP Inc., the MRP business (including the holding company 24SevenOffice MRP AS), and a licensing right to CRM business from the Target Business and an intended forking of the CRM software, but excluding the US intellectual property rights in respect of ERP and CRM (which, for clarity, will be transferred or licensed to the Target);

● The Company’s fintech business, consisting of (i) 24SevenOffice AI AS, (ii) 24SevenFinans AS, (iii) the Pay by 24SevenOffice software (previously Optin Pay), and (iv) the strategic partnership with Storebrand;

● The Company’s Danish business, consisting of 24SevenOffice Danmark A/S (formerly Innomate A/S) and its HCM SaaS business;

● The debt collection business of Oflow AS (formerly Inkassopartner AS), excluding the Oflow debt collection software and license held by Oflow Group AS (which will, for clarity, remain part of the Target, but the software will be licensed to Oflow AS pursuant to a software licensing agreement); and

● In the first half of 2024 the Remaining Business had revenues of SEK 15.1 million. The EBITDA result was SEK -2.2 million.

The Board believes that the value of the Remaining Business including the fintech technology, an exclusive distribution agreement to be agreed with the Target for the provision of financial services to the 24SevenOffice ERP customer base, the SaaS MRP software, and the CRM sales and marketing solution (campaign automation tool) represent a substantial value that could potentially be similar to that of the ERP software division being sold.

In particular, the value potential of fintech technology is reflected by the rapid growth these products have experienced since launch for comparable companies.

Through in-house development, previous acquisition of fintech technology from Optin Bank, strategic partnerships, and planned acquisitions, the Remaining Business possesses the necessary technology and expertise to successively launch these products over the next few years. The Transaction provides the Remaining Business with the strategic and financial capacity to effectively pursue this initiative effectively and gives 24SevenOffice the resources to secure the rollout of these services.

The timing to secure strong financing presents a prime opportunity, positioning 24SevenOffice perfectly to capitalize on future growth. With the right financial backing in place, the Remaining Business can accelerate strategic initiatives, unlock new markets, and enhance innovation within the fintech industry.

24SevenOffice Group AB will have an exclusive right to distribute fintech products to Target’s customer base, which is expected to be an attractive customer acquisition strategy for the Remaining Business.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group’s website at www.globalatlantic.com.