Pegasus rebuffs overseas bid and eyes up takeover targets

Kettering-based PC accounting software specialist Pegasus rebuffed a foreign takeover bid just before Easter.

According to marketing director Chris Leak, the listed company was required to disclose the approach after its share price rose from 295p to 365p in the run-up to the holiday. Leak said the company dismissed the offer because it was not equivalent to the company’s market capitalisation – based on the 365p price.

Leak said that this year’s 23% increase in sales had contributed to a cash surplus of over #2m and that Pegasus itself was considering possible takeover targets and joint ventures in Europe.

‘We see consolidation of companies in our sector as inevitable because of the enormous investment required in new product development and the shortening time cycles,’ said Leak.

The latest bid follows a failed approach last year from Sage, the UK market-leader for PC accounting software.

For six months, Pegasus has been readying a new 32-bit Windows package for release. It acquired rights to a system developed in Denmark and has been localising it for the UK and adapting it to the company’s look and feel. The package, to be called Mpower, will be launched in July, said Leak.

Market analyst Richard Holway suggested the offer would have been from an US company trying to get in the UK. ‘If I were a Pegasus shareholder I would sell, because the lower-end market is especially crowded and the small players are going to get squeezed out of business,’ he said.

Additional reporting by Sinead Carew, VNU Newswire.

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