Lawson Stock Soars on Rumors of Potential Sale

A Reuters report indicating that the St. Paul-based software giant may be seeking a buyer boosted the company's stock price more than 13 percent on Tuesday.

A recent report indicating that St. Paul-based Lawson Software, Inc., is exploring the possibility of a sale sent the company's stock skyrocketing.

Reuters on Tuesday reported that Lawson has hired Barclays Capital to help the company review “strategic alternatives.” The report cites two unnamed sources “familiar with the process.”

According to the report, prospective buyers have been contacted, and there are many technology companies in the mix-including Hewlett-Packard Company, International Business Machines Corporation (IBM), Microsoft Corporation, Oracle Corporation, SAP, and Golden Gate Capital.

The sources also told Reuters that private equity firms may be attracted to the sale because of Lawson's stable cash flows.

Lawson's shares jumped more than 13 percent on news of the potential sale, closing on Tuesday at $11.19. The price continued to rise on Wednesday, closing up about 2 percent at $11.45.

Reached by phone on Thursday, Lawson spokesman Joe Thornton declined to comment on the Reuters report.

Billionaire investor Carl Icahn acquired an 8.5 percent stake in Lawson last May. Regulatory filings indicated that Icahn purchased the 13.8 million shares believing they were undervalued. He then upped his stake in the company in October, increasing his shares to about 16.9 million, or roughly 10 percent of the company, according to regulatory filings.

The filings also indicated that Icahn wanted to have conversations with Lawson “to discuss the business and operations of [Lawson] and the maximization of shareholder value.”

A Lawson spokesman told Twin Cities Business last fall that Lawson's leaders had met with “Icahn's team,” and he described the discussion as “cordial and constructive.” He said, however, that the company does not disclose the specific details of such meetings with major shareholders.

Other regulatory documents indicate internal changes within the company, although it is unclear whether these measures were taken to prepare for a possible sale. For example, a January filing indicates that Lawson's board approved alterations to the company's rules surrounding majority voting in director elections and the number of directors required to call a special meeting of the board.

In addition, the company has maintained a longtime relationship with IBM, and in the event of a sale to another entity, it is yet to be seen whether the two companies' existing relationship could complicate the transaction.

Documents filed with the U.S. Securities and Exchange Commission in February state that the two companies entered into an agreement in 2005, and the companies signed a three-year extension of that deal in December, but Lawson reserves the right to terminate the agreement.

Lawson has recently reported improved financial performance, including a significant jump in second quarter earnings-which totaled $12 million, or 7 cents per share, up from $2.8 million, or 2 cents per share, in the same period from the previous year.

The company also recently bolstered its human resource software services through the acquisition of California-based Enwisen, Inc.

Lawson is among Minnesota's 40-largest public companies based on revenue, which totaled $736.4 million in its most recently completed fiscal year.