(News Bulletin 247) – The action of the French specialist in virtual prototyping soared by nearly 50% after the proposed takeover of the American Keysight. The company, listed on the Paris Stock Exchange since July 2000, should leave the Paris market by the end of the year.

The company specializing in virtual prototyping solutions ESI Group is about to change ownership. This change will probably mark the end of the stock market history of ESI Group which began in July 2000, in the midst of the Internet bubble. It is therefore one more digital services company that will leave the Parisian coast. The latter are regularly the target of takeover bids.

And the operation of the day testifies to the attraction of predators for this highly fragmented sector in France, like Keysight. This American company has indeed made a binding offer to certain shareholders of the company founded in 1973, with a view to acquiring a controlling block representing a total of 50.6% of the share capital and 55.8% voting rights of ESI Group.

The American group offered 155 euros per share in cash to acquire this block of control. The price retained represents a premium of 54.2% compared to the closing price on Tuesday evening (100.5 euros), a premium which rises to 72% compared to the closing price on May 17. ESI Group then quoted 90 euros, just before the company confirmed that it was the subject of expressions of interest.

A course that soars on the Paris Stock Exchange

In mid-May, the spotlight was on ESI Group, following reports from Bloomberg that the company was working with advisers to review a potential sale. The press agency cited among the interested candidates, private equity funds, but also the French tenor of computer-aided design and manufacturing (CAD/CAM) Dassault Systèmes.

The company was then forced out of the woodwork and had indeed confirmed to exchange with third parties after having received non-binding takeover proposals.

This time, the rumors turned into a firm proposal from Keysight. On the Paris Stock Exchange, the reaction was quick, ESI Group soared 47.3% to 148 euros, around 3:00 p.m., to logically approach the price offered by the American group.

Keysight’s offer, which values ​​ESI Group at around 913 million euros, will be followed by the filing of a draft mandatory takeover bid (OPA) relating to the balance of ESI Group shares in circulation. In the event that the regulatory threshold of 90% of the capital is crossed, Keysight will proceed with the implementation of a withdrawal offer on the specialist in virtual prototyping solutions.

According to the indicative offer timetable provided by ESI Group, the completion of the acquisition of the control block is expected to take place during the fourth quarter, while the filing of the subsequent offer will follow shortly thereafter…

A technological brick

For Keysight, the acquisition of ESI Group will bring an additional technological brick. The American group will integrate the French software into its portfolio of electronic tests and will thus be able to extend virtual prototyping capabilities in the computer-aided engineering sector.

The company, which celebrated its 50th anniversary this year, employs approximately 1,000 people worldwide. Last year, the company generated revenues of 130 million euros, up 2.1% excluding currency effects, while its operating margin was 17.5%.

In September 2022, the company held a day dedicated to investors, setting out its multi-year outlook, namely revenue growth of between 5% and 7% in 2023, 6% and 9% in 2024, and 7% and 10% in 2025. The operating margin must gradually rise to reach more than 20% in 2025. The future of ESI Group will therefore ultimately be written differently after the Keyshight takeover proposal announced on Wednesday evening ….