RBS BidCo, a subsidiary of British banking group RBS, has agreed to buy FreeAgent, a software provider for UK micro-businesses and their accountants, in a deal worth around £53m.
Under the terms of the deal, shareholders of Edinburgh-based FreeAgent will receive 120 pence in cash for each share held.
FreeAgent will maintain its operational independence under RBS, and continue to operate from its existing Edinburgh base. The software firm will retain its current management team following the takeover.
RBS also plans to retain the FreeAgent brand along with its existing Royal Bank of Scotland and NatWest brands.
The deal is RBS’ first acquisition since its ill-timed takeover of ABN Amro that eventually led to the British bank’s collapse and its bailout by the government. The British government still owns a majority stake in the lender.
FreeAgent chairman Andy Roberts said: “The combination of FreeAgent and RBS makes sense for our talented people, for our company’s growth prospects, and for the shareholders who have backed our journey so far. For those shareholders, today’s offer represents a 5x multiple on our current revenues as well as a very substantial premium to our IPO price.
“For the FreeAgent team, it opens up a huge opportunity for them: a chance to target the entire RBS SME client base with a product designed with their needs in mind.”
The bank has already been offering FreeAgent software to its business banking customers. Currently, FreeAgent has over 10,000 of the bank’s customers as clients.
RBS CEO Ross McEwan said: “Since the beginning of our partnership, we have been impressed by FreeAgent and its technology and are excited by the enhanced offering we will be able to provide to our customers. We believe that a technology-enabled solution for our business banking customers will make it easier for our customers to build their businesses safely and securely.”