Bentley acquires Seequent for ~$1.05 Billion

Bentley just announced that it was acquiring Seequent, a “leader in software for geological and geophysical modeling, geotechnical stability, and cloud services for geodata management, visibility, and collaboration”. I need to learn more, but Bentley says “Seequent … [serves] geologists, hydrogeologists, geophysicists, geotechnical engineers, and civil engineers in over 100 countries, and the world’s top mining companies” and make it possible for infrastructure digital twins to reach “subsurface depths, augmenting environmental resilience against flood, seismic, climate, and water security threats”.

In typical Bentley fashion, it’s a complicated deal. According to the announcement, Bentley will pay $900 million in cash and turn over 3,141,361 BSY Class B shares to Seequent’s current owners. In total, before adjustments to Seequent’s cash on hand at closing, the deal is estimated to be valued at $1.05 billion.

Bentley didn’t disclose revenue or profitability but did say that “Seequent is expected to initially add approximately 10% to each of Bentley Systems’ key financial metrics (ARR, annual revenue, and EBITDA) and is expected to be measurably accretive to Bentley’s organic growth rate.” Looking at 2020, that means Seequent had revenue of about $80 million (versus Bentley’s 2020 revenue of $801.5 million) — making deal this a ~13x revenue multiple.

Why so spendy? A couple of possible reasons. First, Seequent’s had been planning to IPO this year — which might have jacked up expectations. Intersting, then, that Tom Barnds, co-managing partner at Accel-KKR and a Seequent board member, said “we are so convinced of the logic of this combination that we are glad to anticipate instead becoming BSY shareholders … this [is a] great outcome for Seequent investors and colleagues.”

Perhaps as part of the IPO process, Seequent announced that CEO, Shaun Maloney, will retire and his successor, Graham Grant, will take over. Sometimes that change is easier to make in this type of transition.

Next, Seequent is based in New Zealand and “[i]ts established presence in mineral-intensive geographies such as South America and southern Africa is expected to accelerate Bentley’s overall opportunities in these regions with significant infrastructure requirements. In turn, Bentley’s established presence in China, and its mainstay reach across civil engineering sectors, is expected to accelerate Seequent’s expansion in new markets”. A geographic win-win.

And of course, mining is a big, cyclical industry that we simply can’t do without — rare earth minerals power our cell phones, less rare minerals are in everyday products. Bentley already has some geotechnical assets, assembled over the last several years. Seequent “Leapfrog, its leading product for 3D geological modeling and visualization, Geosoft for 3D earth modeling and geoscience data management, and GeoStudio for geotechnical slope stability and deformation modeling [will be integrated with] Bentley’s complementary geotechnical engineering software portfolio, including PLAXIS, gINT, and OpenGround … to support open digital workflows from borehole and drillhole data to geological models and geotechnical analysis applications“. [Note: to make that sentence flow, I cut out Bentley’s statement that the integration would happen in due course.]

Bentley says the transaction is expected to close in Q2, using a combination of cash on hand from a revolving credit facility and those 3.1 million class B shares.

There’s a conference call tomorrow morning about the deal and I’ll update if warranted.