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    Solteq Plc Stock Exchange Bulletin 17.6.2015 at 1 pm

    Solteq Plc (Solteq) has signed an agreement today to purchase the share capital and purchase the capital loans of Descom Group Oy (Descom Group). Descom Group’s Data Center Solutions business will not be included in the purchase. The prerequisite for the deal is that financing is secured for the cash payment portion of the purchase and for the repayment of the companies’ current bank loans.

    The sellers in the deal are Funds managed by Sentica Partners Oy (after the conversion of the convertible bond of the target company agreed to be performed in connection with the purchase, total 61.04%), Aidacom Partners Oy (after the above conversion, 6.32%) Corpinghouse Oy (after the above conversion, 12.35%) and Descom’s private investors (after the above conversion, total 20.29%).

    The enterprise value (EV) of the deal will be EUR 26,0 million and the estimated purchase price of the Descom Group shares EUR 11,1 million. The final purchase price of the shares will be determined on the basis of Descom Group’s Balance Sheet at 30 June 2015. Based on the authorization granted to the Board of Directors by the Annual General Meeting on 16 March 2015, about 4,6 million euro of the purchase price of the shares will be paid with Solteq’s new shares, and the remainder will be paid in cash.The subscription price of the shares will be EUR 1.65, determined on the basis of the volume-weighted average price of the shares during the period 4 May 2015 – 3 June 2015. A total of 2,8 million new shares will be issued to pay the purchase price. The number of shares in the issue represents about 16 % of the number of shares after the share issue.

    In addition, the amount of capital loans to be purchased as part of the transaction arrangements will amount to about 11.9 million euro at the estimated time of the deal.

    The share deal will be subject to the following conditions: (i) The divestment of the Descom Data Center Solutions business has been implemented, (ii) Descom Group’s convertible bond has been fully converted into shares and (iii) Solteq has sufficient funding to finance the share deal and to repay Descom Group’s bank loans, purchase Descom Group’s capital loans and pay off its own bank loans.

    To finance the cash portion of the purchase price and the purchase of the capital loans and to restructure Solteq’s and Descom Group’s current loans from financial institutions, Solteq plans, subject to market conditions, to issue a bond aimed at Finnish and Nordic institutional investors and other professional investors. The prerequisite for issuing the bond will be that the company acquisition will materialize.

    The aim is to implement the company acquisition by 31 August 2015.

    Descom Group with its subsidiaries is a Finnish company that provides IT and digital marketing services. Descom Group is a trendsetter in its line of business in the Nordic countries and the most valued IBM partner among its clients. Together with its clients, Descom builds sales, marketing and customer service solutions, creating excellent customer experiences.

    In 2014, Descom Group’s revenue (FAS) was EUR 35.2 million, EBITDA EUR 2.6 million, operating profit before goodwill amortization EUR 2.3 million, and operating profit EUR -0.1 million. Without the Data Center Solutions business, which is not included in the transaction, the revenue of the Descom Group for 2014 has preliminarily been estimated at EUR 27.4 million and imputed EBITDA at EUR 3.3 million.

    In 2014, Solteq’s revenue was EUR 40.9 million and operating profit EUR 2.5 million. In the first quarter (1 January 2015 – 31 March 2015), Solteq’s revenue was EUR 9.1 million and operating profit EUR 0.5 million. Solteq’s reported figures are IFRS compliant.

    Through the transaction, Solteq and Descom actively implement their strategy. For the companies, which aim at being a leading provider of digital commerce services in Finland and the Nordic countries, the transaction will provide a good starting point for speeding up the implementation of their strategy.

    The solution and service offerings of the two companies complement each other in an excellent manner, and no overlapping has been detected in their offerings.Consequently, the company resulting from the transaction will be able to offer an excellent overall offering to their current and new clients.Until now, the companies have served the same clients in various projects that have complemented each other.As the companies have also had several client groups with which one of them has not actively conducted business, the transaction will offer an opportunity to deliver integrated solutions to a wider clientele than before.For the clients, the transaction will bring benefits in the form of a clearer and wider overall offering. On the other hand, the company will be able to offer the customers of its clients better services and thereby contribute to their success.

    By combining their operations, Solteq and Descom will be able to make significant improvements to their international operations. The materialization of the transaction means that the offices in Finland and in Sweden, Poland and Denmark will be able to expand the solution offering to the Nordic market and at the same time utilize the efficiency of the Polish subsidiary’s nearshore operations in software production.

    The benefits of the transaction include a significant synergy potential for developing new digital commerce solutions.In addition, the back office functions of the companies have overlapping structures and operations. By eliminating duplicate structures, the merged company will be able to operate in a better and more efficient and faster manner.For the personnel, the transaction will open important new opportunities to develop into top experts in their competence areas, acting as digital commerce experts in Finland and in the other Nordic countries.

    After the completion of transaction, the company will create a new overall strategy and specify it in further detail in autumn 2015.The strategic cornerstones will be profitability, growth and the creation of the best provider of digital commerce services in the Nordic market for the benefit of its clients, owners and personnel.

    Due to the deal, Solteq will not make changes to the profit guidance and will specify, if needed, the guidance in more detail during autumn 2015.

    Descom Group

    Descom Group, which was established in Jyväskylä, Finland in 1997, is a modern marketing and technology company that builds sales, marketing and customer service solutions for companies in trade, industry and the service sector.Descom Group has about 240 employees in Finland, Sweden and Poland.Of the employees, a total of 19 work for the Data Center Solutions business unit.Descom has been an IBM partner for almost 20 years and an IMB Premier Business Partner since 2003.Descom has grown at a fast pace through company acquisitions and organic growth.In 2008, the Group’s revenue was slightly under five million euro, and in 2014 it was more than 35 million euro.Apart from the parent company, Descom Group Oy, the Descom Group includes Descom Oy, which includes the Group’s business operations in Finland and the subsidiaries in Sweden, Poland and Denmark.

    Descom’s main business comprises multi-channel sales solutions and the development of its clients’ electronic marketing.In the area of multi-channel sales, the company delivers multi-channel e-commerce and store systems as well as order and product data management solutions.In electronic marketing, the company’s core solutions consist of search engine optimization and advertising, conversion optimization, and analytics and customer experience solutions. In addition, Descom offers its clients application development, integration and maintenance services.

    The below table shows Descom Group’s audited financial statement information (FAS) for financial periods 1 January – 31 December 2013 and 1 January – 31 December 2014 (thousand euro):

    Income Statement (FAS):

    1.1.-31.12.2014 1.1.-31.12.2013
    Revenue 35 248 39 024
    Other income 306 296
    Materials and services -13 278 -17 101
    Employee benefit expences -14 511 -13 505
    Depreciation and impairments -2 720 -2 520
    Other expenses -5 176 -4 681
    Operating profit -131 1 513
    Financial income and expenses -1 795 -1 585
    Profit before extraordinary items -1 926 -71
    Extraordinary items -510 0
    Profit before appropriations and taxes -2 436 -71
    Appropriations 43 -45
    Profit before taxes -2 393 -116
    Income tax expenses -180 -289
    Profit for the financial period -2 573 -405

    Balance Sheet (FAS):

    31.12.2014 31.12.2013
    Non-current assets
    Goodwill 14 641 16 924
    Other intangible assets 390 254
    Machinery and equipment 992 847
    Investments 6 6
    Total non-current assets 16 028 18 031
    Current assets
    Inventories 644 279
    Trade receivables 7 428 8 980
    Other receivables 752 643
    Cash and cash equivalents 1 626 2 751
    Total current assets 10 450 12 654
    Total assets 26 477 30 685
    Equity and liabilities
    Total equity -2 040 454
    Appropriations 0 47
    Interest-bearing liabilities
    Capital loans 11 277 10 094
    Convertible bonds 1 930 2 009
    Loans from financial institutions 5 167 6 996
    Total interest bearing liabilities 18 374 19 099
    Other liabilities
    Trade payables 5 845 6 219
    Other non-interest bearing liabilities 4 299 4 866
    Total other liabilities 10 144 11 085
    Total equity and liabilities 26 477 30 685

    Changes in Descom Group’s operations after 31 December 2014

    In connection with the company acquisition, Descom Group’s Data Center Solutions business has been agreed to be sold at the same time as the company acquisition was agreed on.

    New shares

    In order to complete the transaction, the shareholders' subscription rights will be excluded in the issue of new shares, and the share issue will be directed to the current shareholders of Descom Group.The subscribers will be entitled to exercise shareholder rights in the company after the shares have been registered in the Trade Register.The shares will be added to the book-entry system maintained by Euroclear Finland Ltd.After the shares have been registered in the Trade Register and their listing prospectus has been published, Solteq will apply for the shares subscribed for in the share issue to be admitted to public trading on NASDAQ OMX Helsinki Stock Exchange in the same share classes as the company’s other shares.The aim is to submit the application by 30 September 2015.Half of the shares to be given as consideration will be subject to lock-up until 1 January 2016.Further, in compliance with the terms of the share purchase agreement, Descom Group’s current shareholders will pledge approximately one quarter of the shares they will receive, i.e. appr. total of 700.000 shares, as security in favour of the company for their obligations based on the share purchase agreement.After the completion of the transaction, the Board of Directors of the company will, based on the authorization granted by the Annual General Meeting on 16 March 2015, make a decision on the pledge.


    Board of Directors

    Additional information:

    CEO Repe Harmanen

    Tel. + 358 400 467 717


    CFO Antti Kärkkäinen

    Tel. + 358 40 8444 393



    NASDAQ OMX Helsinki

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