Craneware in £12m swoop for US rival

Published on Thursday 17 February 2011 21:47

Software specialist Craneware unveiled its first acquisition yesterday, swooping on an American peer in a $19.5 million (£12m) deal.

The Edinburgh-based company - which writes hospital billing software, mainly for clients in the United States - paid $9m in cash and $6m in shares for ClaimTrust, with a further $4.5m due if the firm performs in line with expectations.

Craneware believes the acquisition will enhance its profits during the first full year of ownership and broaden the range of products that it offers to its clients.

Chief executive Keith Neilson said: "The acquisition of ClaimTrust represents an exciting step forward for Craneware by enhancing our product set, increasing our market share and adding to the profitability of the group."

Shares closed up 8.5p or 1.5 per cent at 851p, having risen in value by more than 54 per cent in the past 12 months.

Simon Strong, an analyst at Evolution Securities, said: "This looks to be a very sensible acquisition and very effectively deployment of group resource.

"Together with a new product category, the acquisition also brings 275 hospital clients, a data centre and further domain expertise. There is only 10 per cent overlap of hospitals between the two organisations."

Craneware currently has more than 1,000 US hospital clients.

Paul Morland, an analyst at Peel Hunt, said: "The real benefit of this acquisition for Craneware is that it comes with highly complementary products and an experienced management team who will all be staying."

Morland predicts that Craneware will have $20m in net cash by June, "leaving scope for more deals of this type".

Anna Brown, a corporate partner at Scottish law firm McGrigors, which advised Craneware on its maiden acquisition, added: "The business is a real success story and an example to Scottish corporates seeking to expand into overseas markets.

"The management knows its market inside out, and makes the most of the benefits of operating from Scotland. We are delighted to have been able to play a part in its continuing growth."