Investors to pocket large gains in Eontec €84m sale

A banking software company based in Dublin has been sold for up to $100 million (€84 million) in one of the largest ever Irish software company sales.

Eontec Ltd, founded in 1994 and based in the East Point Business Park, Dublin, has been sold to US multinational Siebel Systems, for $70 million in cash and "earn-out" payments of up to $60 million. The target earn-out, based on the Eontec's revenue projections, is $30 million. If that is achieved, the sale price would end up being $100 million.

Investors who put €25 million into Eontec in October 2001, including Mr Denis O'Brien and a number of venture capital companies, are likely to receive a return on their investment of significantly in excess of 50 per cent.

The investors included ICC Venture Capital and Warburg Pincus. Warburg Pincus is understood to have been the largest shareholder by far in Eontec, followed by ICC Venture Capital, and founder director Mr James Callan (41).

Mr Callan had 6.7 million (17.6 per cent) of the approximately 38 million shares believed to be at issue. A price of €100 million would mean Mr Callan's take from the sale would be approximately €17.6 million, though a source warned that classes of shares carrying different values were in issue. Mr Callan could not be contacted yesterday.

The company's chief executive, Mr Pat Brazel, had 2.5 million shares and options according to the company's most recent accounts. Such a shareholding could be worth €6.7 million.

Another founder director, Mr Colin Piper, who is current president of north American operations, has close to one million shares.

Mr O'Brien's Madeira-based company, Eastbound Consultores eServicos Ltd, had 995,103 shares. Warburg Pincus and ICC Venture Capital, along with Mr O'Brien, Mr Callan, and a number of Eontec directors, invested $25 million in the company in October 2001, paying $1.71 per share, according to filings. It was the fourth round of financing in the company since 1996.

Shareholdings of between 16,000 and 66,000 were held by 17 employees, according to filings at the Companies Registration Office. Share options were widely held in the company, according to Mr Brazel, and the options were converted to shares prior to the sale to Siebel.

Company secretary Mr Denis Murphy had 250,000 share options, according to filings. The options held by him and by directors were exercisable at prices ranging from $0.88 to $1.47, according to the filings.

The latest filed accounts for Eontec, for the year to end December 2002, show a loss of €8.89 million.

Asked yesterday if Eontec had since moved into the black, Mr Brazel said the figures had improved since 2002. He said the value of the company had obviously grown, as evidenced by yesterday's news. He said the company was now covered by stock market regulations in relation to the disclosure of information. Siebel is quoted on the US Nasdaq.

Eontec employs 150 people. It has offices in Britain, the US, Germany, Canada, Spain, the Czech Republic, Japan, Australia, Korea and Singapore. The sale will not result in any lay-offs.

Mr Brazel said Eontec had been very successful in recent years in building a business that was globally recognised as a world-class software company.

He said he believed the deal would be "fantastic" for Eontec and that there were "huge market opportunities out there".