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smartFOCUS CEO says combination with Emailvision represents "best opportunity" for shareholders to realise investment at significant premium

Following today's announcement that software firm smartFOCUS is to be acquired by Emailvision Holdings for £25 million, Proactive Investors takes a look at the background to the deal


News today that software firm smartFOCUS (LON:STF) is to be acquired by Emailvision Holdings for £25 million in cash should come as little surprise to those familar with the sector.

Recent deals set the benchmark within the sector, yet the smartFocus share price has singularly failed to reflect this.

The company is a business software developer that supplies ‘intelligent marketing’ systems, which aim to deliver relevant communications to a brand’s customers through different channels, such as print, e-mail, mobile phones and the web.

Its marketing expertise and client base make it an obviously appealing proposition for Emailvision - an e-mail marketing specialist.

The SmartFOCUS share price has been volatile over the last six months and in the last year has ranged from 10.75 to 25 pence but the management have consistently maintained that the company is undervalued.

As Proactive Investors reported last October, interim results to 30 June last year showed pre-tax profits doubling to £310,000 and earnings per share improved from 0.11 pence to 0.21 pence.

SmartFOCUS won contracts with over 30 customers is the period, including significant new contracts with lastminute.com, Expedia, Morgan Stanley. Clients include well-known brands such as Easyjet (LON:EZJ), Harrods, Hilton, Manchester United, Rabobank, Société Générale (Euronext:GLE) and Sony (NYSE:SNE).

There has already been much consolidation in the software sector and today's news is justification of the management view, as the company joins a list of others that have been acquired.

Indeed, it was noted in October last year by broker Arbuthnot Securities that the stock looked increasingly attractive in light of the M&A activity in the software sector.

The broker referenced IBM’s (NYSE:IBM) US$480 million bid for Unica Corporation (NASDAQ:UNCA), which is 4x the enterprise marketing management specialist’s 2010 forecast revenues.

According to Arbuthnot, this made smartFOCUS look a compelling opportunity valued at just 0.6 times its enterprise value.

Buyer Emailvision was founded in 1999 and is now a market leader in software as a service for email marketing. It has 2,500 clients worldwide.

The company's software, Campaign Commander, has become the industry standard email marketing tool for eCommerce and publishing.

Emailvision has offices in 18 countries and delivers 4 billion messages per month on behalf of more than 3,000 clients, including IKEA, Disney and Unilver, worldwide.

Curt Bloom, the interim CEO of smartFOCUS, said he considered "a combination with Emailvision represents the best opportunity for shareholders to realise their investment at a significant premium".

The recommended deal values SmartFOCUS at 25 pence a share – a 61 per cent premium to Friday’s closing price.

Emailvision has received the backing from investors speaking for 51.7 per cent of the shares.

Nick Heys, CEO of Emailvision, said: "We are excited to further our presence in the UK and US as well as adding multi-channel campaign management to our portfolio of products."

The company is indirectly controlled by investment funds advised by Francisco Partners.

SmartFOCUS shares were trading up this afternoon by nearly 55 per cent - at 24.02 pence per share.

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