Acquisition of Prodex business expands Sopheon’s global footprint

Sopheon plc, the InnovationOps software company, is pleased to announce the acquisition of the business and assets of Prodex Systems Australasia (“Prodex”), a specialist provider of innovation software and consulting based in Brisbane, Australia.

Now doing business as Sopheon Asia Pacific, the former Prodex business is focused on markets in Australia, New Zealand and South-East Asia and has a number of customers in the region from the food and beverage, chemicals and mining sectors. The acquired business has been Sopheon’s reseller in Australia for over a decade and is a healthy and profitable business with revenues for the year ended June 2022 of AUD $1.5m with EBIT of AUD $0.15m. Financials for the year just ended are expected to be at broadly similar levels, with good pipeline visibility for the remainder of 2023. Historically, approximately AUD $0.3m of Prodex revenues have been included in Sopheon’s revenues annually, through reseller recharges.

Rationale for acquisition

In the previous 18 months Sopheon has completed two M&A transactions with the acquisition and integration of ROI Blueprints and Solverboard, both of which brought important technology assets to the Group that have now been further developed and launched as Acclaim Projects and Acclaim Ideas, respectively. Alongside internally developed Acclaim Products, the launch of these new solutions expands Sopheon’s addressable market by an estimated $2bn and boosts the Group’s position as the leading software vendor focused on operationalizing the business of innovation.

As signposted in previous announcements, we have turned our attention to leveraging M&A to add revenue and geographical footprint. The acquisition of the Prodex business, that we know very well thanks to many years of working closely together, brings the group a strong and stable platform to advance customer acquisition and growth in the world’s most dynamic region, giving the group a truly global footprint. Prodex, led by Gerard Ryan, has built an enviable reputation and an impressive roster of customers.

Deal structure and consideration

The transaction was structured as transfer of business and assets into a new company immediately acquired by Sopheon. The consideration comprises AUD $1m of which two thirds is payable immediately in cash, and the remainder over three years as contingent deferred consideration tied to baseline performance metrics. An additional contingent earn-out of up to a maximum of AUD $1.2m is also payable over the next three years, tied to revenue and EBIT growth objectives. Up to 50% of the deferred and earn-out consideration may be satisfied in Sopheon shares issued at £5.63 per share being the average closing price of the two weeks preceding the signature of the agreement. The cash consideration component of the acquisition is being funded out of existing and healthy cash resources. The share consideration elements will be subject to orderly market provisions.

Greg Coticchia, CEO of Sopheon, said: “This is Sopheon's third acquisition in 19 months and the latest evidence of the strong momentum that our company is experiencing. With companies throughout South-East Asia increasing their innovation investments, it's fitting that Sopheon's first acquisition to expand our geographic presence be in this expanding market. Prodex, a long-time reseller of Accolade, assists innovative and successful companies to make better, quicker decisions and increase speed to market. Sopheon’s innovation leadership continues to expand as a result of our consistent growth in product offerings, customer implementations and global reach.”

Prodex founder and CEO Gerard Ryan added: “The transition for Prodex to become a Sopheon entity is an exciting extension of the reseller agreement we have had in place for many years. We are already working with Sopheon in Australia, New Zealand, and Thailand with market development plans in place for the wider South-East Asian region. We’re excited by the synergy of immediate geographic expansion for Sopheon in this highly innovative and high-growth region, while also enabling true 24/7 coverage for Sopheon’s global customer base.”

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Sopheon®, Accolade® and Acclaim™ are trademarks of Sopheon plc. All other trademarks are the property of their respective owners.

About Sopheon
(LSE: SPE) empowers organizations to change the world while achieving exceptional long-term revenue growth and profitability. By operationalizing the entire innovation life cycle, Accolade® and Acclaim™ software and expertise enable innovation, product and project professionals to accomplish the full range of InnovationOps tasks to drive innovation at scale. Sopheon’s industry leadership was highlighted in the comprehensive MarketsandMarkets™ report on the Innovation Management market, in which Sopheon was listed in the “Stars” category, the highest recognition. Sopheon’s solutions have been implemented by hundreds of blue-chip customers with over 137,000 users in 50 countries. Sopheon is listed on the AIM Market of the London Stock Exchange. For more information.