Northern Irish software firm agrees £542m US private equity takeover

A prominent Northern Irish software developer has agreed to be acquired by a US private equity business in a deal valuing the group at £542million. 

FD Technologies revealed on Wednesday that it was in ‘advanced discussions’ with Boston-based TA Associates regarding a potential £24.50 per share bid.

It has now accepted the proposal, which reflects a 27 per cent premium to its closing stock price on Tuesday.

FD’s directors intend to unanimously recommend the cash offer, which they say provides shareholders with ‘cash certainty’.

The Newry-based firm is also providing investors with an alternative offer involving the exchange of every share they hold for 2,450 rollover shares.

Founded in 1996 as First Derivatives by Brian Conlon, who died aged 53 in 2019, the company is one of Northern Ireland’s largest homegrown technology businesses.

It employs approximately 3,000 people in 15 offices across Europe, North America and the Asia Pacific regions. 

FD’s signature technology is KX Insights, which analyses data sets in real-time to help groups in industries like aerospace, life sciences, and financial services react to market trends. 

Clients have included investment banks Credit Suisse, JP Morgan, and Goldman Sachs, as well as betting giant Paddy Power and numerous Formula One teams such as Red Bull Racing. 

Three years ago, Microsoft agreed to integrate KX Insights into its cloud computing platform Azure, a deal FD’s chief executive, Seamus Keating, hailed as a ‘landmark agreement.’

Ashok Reddy, chief executive of KX, said: ‘KX’s high-performance data and analytics software supports fast-moving, data-intensive organisations and is foundational to the AI and analytics stacks of global enterprises.

‘TA’s strategic and operational expertise will support our mission to accelerate product innovation and deepen our impact across high-growth, high-value verticals.’

FD Technologies shares increased 2.3 per cent to £24.25 by mid-Thursday afternoon, having soared by 21 per cent yesterday.

In the year ending February 2024, FD recorded turnover of £248.9million, but a pre-tax loss from continuing operations of £7.7million, up from a £0.4million loss in the previous 12 months.

Earnings were impacted by revenue declining in its First Derivative business by 8 per cent to £170million due to cautious spending among investment banking clients.

FD’s takeover announcement comes one day after American food delivery giant DoorDash struck a £2.9billion deal to buy Deliveroo.

While Deliveroo recorded its first annual profit last year, its shares have plunged since a disastrous initial public offering in 2021, partly owing to cost-of-living pressures and loosening Covid-related curbs slowing demand for takeaways.

Multiple major London-listed groups have been snapped up in recent years by foreign predators taking advantage of discounted valuations to buy firms cheaply.

They include cybersecurity specialist Darktrace, Robinsons Squash maker Britvic, private security business G4S and video game services provider Keywords Studios.

Others to have made acquisition deals include NHS landlord Assura, Royal Mail’s parent company, International Distributions Services, and the Bank of England’s currency printer, De La Rue.

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