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Tetra accepts Sage offer

Will there be a counter-bid?

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Sage is pumping up its mid-range capability with the takeover of UK rival Tetra. The Tetra board is recommending the all-share offer which values the company at £78.1 million. Tetra effectively came into play last month when it received an unsolicited bid approach from Lynx Group, a diversified computer services conglomerate. The 305p per share offer from Sage is a 63 per cent premium on Tetra’s share price on the day it announced it was in bid talks with Lynx. With the backing of the Tetra board, and the muscle of Sage behind the bid, it is hard to envisage a counter-bid from Lynx -- or other parties. Sage’s offer coincides with the publication of a good set of interims from Tetra. For the six months to 30 November, 1998. Sales jumped 26.2 per cent ot £16.2 million (1998: £12.8 million), and PBT edging up to £1.53 million (1998: £1.24 million). Software licence sales through the channel grew 21.2 per cent to £7.3 million (1998: £6.1 million); and consultancy revenue leapt 62 per cent to £4.5 million). Sage dominates the European low-end accountancy software market, but it is weaker in mid-range -- and non-existent -- in high-end markets. Sage has the money and the distribution channels to take forward CS/3, Tetra’s new Microsoft- platform client-server offering, much further than Tetra could do by itself. Last week, the company extended its accountancy software portfolio with the £10.1 million cash acquisition of London-based TaxSoft. Following the Tetra takeover, there will effectively be only two UK accountancy software vendors with significant reseller channels, privately-held Systems Union, and AIM-quoted Pegasus. In recent years, the Pegasus board has rebuffed several bid approaches, including a serious offer to buy the company from Sage. ®

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