Administer - Significant growth opportunity
Administer announced that it intends to acquire the financial, payroll and software services business of Sarastia, a significant and attractive opportunity that would increase Administer’s revenue by closer to 50%.
- Administer announced on June 23rd that it has signed a letter of intent with Numera Palvelut Oy to acquire the financial, payroll and software services business of Sarastia’s (Numera Palvelut Oy) municipal customers.
- The acquisition would be notable in size, as the turnover of the business to be transferred is approx. EUR 35m, representing a close to 50% increase to Administer’s current level. The “non-profit” focus has kept profitability at low levels, with the 2024 EBITDA-margin at -3.1%.
- Sarastia provides services to and is owned by its municipal customers, supported by the Act on Public Procurement and Concession Contracts providing. The rationale behind the sale appears to be planned amendments to the act, with changes to ownership requirements for “in-house” procurement services providers a limiting factor for the current operations. From Administer’s perspective the acquisition is clearly driven by the so far smaller share of public sector clients, which is a growth area in the current strategy.
- In the first phase of the acquisition, Administer will acquire Sarastia’s municipal customer business on behalf of its new subsidiary to be established (Administer/Numera Palvelut 80%/20%). The purchase price in the first phase is EUR 5m (50%/50% cash/Administer shares). The remaining 20% will be acquired in two instalments by summer 2029.
- We see that the value creation potential is significant, and the purchase price is clearly attractive. We expect the acquisition to create some cost synergies. There is however still clear uncertainty in the ability to pivot profitability while retaining customers and to a smaller extent through the actual amendments to be made to the Act on Public Procurement and Concession Contracts.
- The completion of the acquisition requires the approval of Numera Palvelut’s general meeting and the competition authority. The acquisition is estimated to be confirmed in early autumn.