In Osuuspankki’s (OP) morning review this morning, OP explored the most potential M&A targets on the Helsinki Stock Exchange. Digia was also on this list. Below are OP’s justifications:
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Digia is an interesting acquisition target due to its strong position in selected industries among mid-sized client companies and its staff, which includes 1300 experts. There is a scarcity of available employees in the industry, so Digia would offer a ready-made package for larger companies operating in the field.
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Numerous smaller M&A transactions have taken place in the industry in Finland in recent years, and Digia has also strengthened its own growth and service offerings through acquisitions. In Finland, a larger deal in Digia’s size class was seen in 2017 when the Canadian IT company CGI acquired the IT service house Affecto. Affecto employed approximately 1000 people. In August, private equity firm Triton made a tender offer for HiQ, an IT consulting firm operating in Sweden and Finland. At the offer price, HiQ’s EV/EBIT multiple, calculated with the 2021 forecast, was approximately 17.7x, while Digia’s corresponding multiple with our operating profit forecast is about 13x.
Other companies on the list included Basware, Citycon, Enento, eQ, Huhtamäki, Nokian Renkaat, Teleste, and Qt Group.