Technology company Vebnet is being bought by insurance giant Standard Life in a £24.2m deal that will net its prominent backers seven-figure sums and give the insurance company a chance to expand its corporate pensions offering.
Technology company Vebnet is being bought by insurance giant Standard Life in a £24.2m deal that will net its prominent backers seven-figure sums and give the insurance company a chance to expand its corporate pensions offering.
Standard Life yesterday offered Vebnet investors 260p a share for their stakes, a 114% premium to the closing price on Monday evening and well above the shares' historic highs.
Edinburgh-based Vebnet, which provides flexible benefits and online rewards schemes to 145 corporate clients, was set up in 2000 by former Royal Bank of Scotland banker Gerry O'Neill, the company's chief executive, and Edinburgh Partners boss Sandy Nairn, listing on the AIM market three years later. The pair will net £2.6m and £2.5m respectively from the transaction.
Company chairman Derek Scott, former finance director of Stagecoach, will receive £218,000 for his 0.9% holding.
The deal, which came on the same day as Vebnet announced an 85% increase in pre-tax profits to £910,000 for the year ended June 30, has received the irrevocable backing of 50.5% of investors including company directors and venture capitalist Cross Atlantic Holdings.
Edinburgh Partners Opportunities Fund, which is run by Nairn's company, controlling around 2.3% of shares, and other institutions JPMorgan Asset Management and Liontrust, also gave non-binding backing to the offer. Between them they control 26.4% of the company.
The deal will see Vebnet continue to offer its products under its own brand as well as support the development of Standard Life's corporate offering. O'Neill said it would allow Vebnet to offer additional products to its customers.
He added: "The price offered by Standard Life represents an attractive price for shareholders." Vebnet's customers include some of Standard Life's competitors including Friends Provident and Royal London.
O'Neill acknowledged that there are change of control clauses in some its customer agreements but said the risk of them moving away from Vebnet was "minimal".
Vebnet's 78 employees will remain with the company, at least initially. O'Neill told The Herald: "In the short term it is a case of carrying on doing what we are doing."
Standard Life is using the opportunity to offer wider employee benefits to its corporate pensions clients. Group pensions are massive business for Standard Life, accounting for a quarter of sales in the first half of the year.
The company wants to develop an online product, called the Employee Wealth Plan, that will enable its customers to offer a menu of benefits to their employees, for instance allowing younger employees to seek repayments to student loans instead of pension contributions.
Standard Life chief executive Sandy Crombie said: "This is a rapidly evolving market and an increasingly important part of our business. By adding enhanced flexible benefits and online reward solutions to our employee benefits platform, we are able to create a proposition which will offer employers and employees improved choice and flexibility."
Vebnet shares rose 108.6%, or 132p, yesterday to 253.5p.
Scotland's largest law firm Dundas & Wilson and Deloitte Corporate Finance are advising Vebnet. Standard Life is represented by investment bank Noble Grossart and law firm Burness, both based in Edinburgh.
