British Group to Acquire Simulation Sciences
Software supplier Simulation Sciences said Wednesday it agreed to be purchased by the British engineering group Siebe PLC for $145.5 million cash.
Siebe is paying $10 a share for the commercial software supplier, a 19% premium over Tuesday’s closing price of $8.06. Simulation Sciences closed Wednesday at $9.81, up $1.75. Nearly 9.3 million shares changed hands in Nasdaq trading, about 38 times the average daily volume.
Siebe is buying a struggling company. Simulation Sciences also said Wednesday that it expects to report a net loss of 38 cents to 48 cents per share, or $5.5 million to $6.9 million, for the first quarter.
Sales should come in at about $9 million to $9.6 million, about half of the company’s expectations.
Simulation Sciences blamed the disappointing numbers in part a slowdown in plant expansions in the petroleum and petrochemical industries, which was caused by the drop in crude oil prices. The company makes software packages that, among other things, simulate the refining process.
Siebe, one of Britain’s largest engineering and electronics firms, said the acquisition will allow it to significantly expand its presence in the rapidly growing process-simulation market. The company earned about $425 million last year on revenue of about $5 billion.
The deal is not expected to result in any layoffs, said Robert E. Grice Jr., Simulation Sciences chief financial officer. The company employs 260 people, including 175 at the Brea headquarters.
Simulation Sciences Chief Executive Charles R. Harris, who earned $305,000 last year, will gross $625,370 for his stake in the company. He will remain with Simulation Sciences in a yet-to-be-defined role, Grice said.
After the buyout, which already has been approved by Simulation Sciences’ board of directors, the company will become a part of the Foxboro Co., a Siebe division in Massachusetts that develops industrial automation software and hardware.
“We should be able to boost revenues quite rapidly just through the synergies we have with the two companies,” Grice said.
On Wednesday, about 170 Simulation Sciences workers jammed into the company’s lunchroom for a “town hall meeting” designed to soothe their nerves about the planned buyout. Employees in the company’s other offices participated via telephone and video hook-ups.
“I think the reaction in general is very positive because now there’s just a much bigger, stronger entity going forward that can give the combined company a lot of strength,” Grice said. “Most of the people in our company are fairly well educated around this industry [and] 90% of them have heard of Foxboro and Siebe before.”
The agreement marks Siebe’s second foray into Orange County this year. Last week, the company completed its $375-million purchase of Irvine automation software maker Wonderware Corp.
Simulation Sciences also announced Wednesday the resignation of Dirk Pfeiffer, executive vice president of sales, marketing, engineering services and field operations, effective March 31.
