Trimble intends to acquire Tekla

Trimble Navigation today announced that it was launching an effort to acquire all outstanding shares of Tekla Corporation. The offer as stated today is for €15.00 per share in cash for a total of €337 million (about $489 million). This is a premium of 52% to Friday’s closing price on the NASDAQ OMX Helsinki, and a premium of 59% to the 3 month average share price, weighted for volume and adjusted for Tekla’s recent dividend distribution of €0.60 per share. The tender offer is expected to commence on May 19 and expire on June 18 2011. Trimble and Trimble Finland will finance the deal with internally generated cash and a $1.1 billion credit facility.

Tekla welcomes the acquisition. Tekla’s chairman Olli-Pekka Laine said in a press release that "Trimble’s offer is attractive to Tekla’s shareholders and reflects Tekla’s improving business and financial performance while providing an outstanding opportunity to accelerate Tekla’s global growth… significant value to customers is to be gained if Tekla becomes a part of the Trimble organization. The board of directors and the management of Tekla are of the opinion that this is a beneficial development for Tekla’s shareholders, customers and employees." Tekla’s largest shareholder, with 38% of shares, has already agreed to the deal.

Trimble’s rationale for the deal is sound: Integrating Tekla’s BIM tools with Trimble’s construction estimating, project management and BIM-to-field solutions will give the combined entity a solution that addresses some of the glaring gaps in the AEC industry’s overall productivity. I have seen estimates that put the waste in construction at 20% of overall project cost — if Tekla/Trimble can claim to remove or recover even a portion of that waste, their offer will be compelling.

Too, being part of the Trimble family will offer Tekla’s products a far wider reach. Consumers probably know Trimble for its GPS technology, but AEC folks know it for positioning technologies such as LIDAR, optical and inertial technologies with application software, wireless communications, and much more.
Trimble says its products are used in over 100 countries and that it has employees in over 21 countries, supported by a larger network of dealers and distributors.

Steven Berglund, Trimble’s CEO said in a press release that Tekla’s BIM plus Trimble’s construction software will “integrate data throughout a project lifecycle, while eliminating costs through better accuracy and interoperability, [which] is key to our customer’s success.  BIM is becoming a strategic element in accomplishing this. Tekla and Trimble’s combined solutions will enable us to provide our customers with the broadest and most sophisticated BIM capability available today.”

My only question is of the price. It seems remarkably high, with a €337 million price tag for a business that had sales of €58 million last year and operating income of €10 million last year; it’s not exactly minting cash. But it is a profitable software business, fills product gaps for Trimble and enables it to expand its offer to existing customers — perhaps that makes it worth the price.

There’s a conference call about the deal later today. I’ll update if warranted. But the real news will be when/if the deal closes.

UPDATE: Analysts on the conference call didn’t question the purchase price — I guess it’s too late to argue about a deal that’s been accepted by a significant proportion of the shareholders. The call focused on the strategic implication of the combination; analysts wanted to understand BIM, how this “smart model” would be leveraged in field operations and how Trimble/Tekla will bring a combined offering to market. Trimble execs seem genuinely excited about the potential Tekla offers them to bring BIM and construction technology closer together. [Tekla execs were not on the call, although Mr. Berglund did call in from Finland.]