Norkom board agrees €217m takeover deal

IRISH ENTREPRENEUR Paul Kerley is in line for a windfall of about €13.7 million from the sale of Dublin-based listed financial software group Norkom, which he founded in 1998.

The board of Norkom yesterday announced it had agreed a €217 million recommended cash offer for the business with UK-based defence and security company BAE Systems.

BAE acquired 13.2 million Norkom shares yesterday, the equivalent of 14.7 per cent of its stock.

With Norkom’s board, senior management and largest shareholder – Irish private equity group TVC – all supporting the deal, this virtually guarantees that the sale will not fall out of bed.

Norkom has been in an offer period since November 26th, when it informed the market that it had received interest from external parties.

It sought other offers from potential interested parties and it is understood that this is when BAE joined the fray.

BAE has offered €2.10 a share for Norkom. This is a 36 per cent premium to its closing price of €1.54 on January 13th and 121 per cent more than Norkom’s 95 cent price just before it informed the market that it had received offers.

Speaking to The Irish Times yesterday, Mr Kerley described it as a “fantastic deal”.

“The businesses are hugely complementary,” he added.

Mr Kerley said the sale secures the future of Norkom’s 380-strong workforce, which includes about 180 staff in Ireland. “I could look at them proudly and say there’s nothing but opportunities for you. This company will grow.”

It is not clear if Mr Kerley will remain with the business once the transaction is completed.

“I’m very open to staying with the business but if they have a different leadership model in mind [that’s fine],” he said.

“I’m an entrepreneur . . . there will be other opportunities for me.”

Mr Kerley founded Norkom in 1998 and listed the company in Dublin and London in 2006.

It provides software to the financial services industry to combat crime and fraud, including money laundering. It has six of the 10 biggest financial groups in the world as clients. Jefferies advised Norkom on the deal.

BAE plans to combine Norkom with Detica, a software subsidiary it acquired in 2008. Detica is based in Guildford in England but Norkom’s operation in Dublin is expected to be retained.

Mr Kerley owns 4.99 million Norkom shares, worth €10.5 million. He also holds 2.47 million shares in options and awards, worth about €3.2 million.

Chairman Shane Reihill, an executive with TVC, will earn just under €800,000 from his holding of 381,000 shares. TVC is Norkom’s biggest shareholder with a holding of 28.9 per cent, which will be worth €62.7 million.

Norkom director Gavin O’Reilly, who is chief executive of Independent News & Media, will net €208,208 from the sale of his 99,147 Norkom shares. Norkom will be delisted from the stock market on completion of the deal.