One last mega-deal closed out an eventful 2024.
On Tuesday, World Wide Technology (WWT), a tech services company based in St. Louis, announced it has agreed to acquire Canadian IT provider Softchoice in a deal that values the latter at C$1.8 billion (~$1.25 billion).
The deal, which is all-cash, was unanimously approved by Softchoice’s board, but has yet to be voted on by the company’s shareholders. It’s also subject to court approval and customary closing conditions; the firms expect it to be finalized in late Q1 or early Q2 2025.
If it isn’t, Softchoice could be on the hook for a C$49 million (~$34 million) termination fee. Its board has retained the right to consider other offers, however.
In a statement, Jim Kavanaugh, WWT’s co-founder and CEO, said that Softchoice’s software, cloud, cybersecurity, and AI capabilities will complement WWT’s existing product portfolio.
“Softchoice has been a transformative player in the IT industry for over 35 years,” he said, “and [this acquisition will] enable us to create even greater value for our clients striving to achieve their digital transformation goals.”
Softchoice was founded in 1989 by David Holgate and Jone Panavas to supply hard-to-find software products to enterprise customers. The company grew and evolved over the years, and now is one of the largest tech solutions and services providers in North America, according to Softchoice’s website.
In 2013, private equity firm Birch Hill acquired Softchoice for C$412 million (~$286 million), per Crunchbase. Close to a decade later, in 2021, the company filed for an initial public offering on the Toronto Stock Exchange (TSX) that valued it at around C$1.15 billion (~$800 million).
Softchoice’s financials have been fairly strong as of late. In Q3 2024, the company reported a 10% year-over-year increase in gross profit and 8% uptick in net income, driven by an expanding customer base. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $23.2 million for the quarter, up 2.2% from Q3 2023.
WWT says its offer represents a total shareholder return of around 62% over Softchoice’s initial public offering price. Should the deal go through, Softchoice will delist from TSX.
“We are excited to join WWT,” Softchoice president and CEO Andrew Caprara said in a press release. “Its scale and global reach, customer base of large organizations, and industry leading infrastructure solutions are a perfect complement to our software and cloud focused solutions, our Canadian presence, and our strength in the North American mid-market.”
WWT, founded in 1990 by Kavanaugh and David Stewart, helps customers and partners conceptualize, test, and deploy tech solutions, including projects involving cloud computing, data center infrastructure, and app development. The company’s annual revenue hovers around $20 billion, and it employs a workforce of more than 10,000 people.
Softchoice is WWT’s third acquisition in its history. In 2010, WWT acquired Baltimore, Maryland-based Performance Technology Group. And in 2015, WWT bought software company Asynchrony.
