Nitro backs revised $527.4m takeover bid from KKR-backed Alludo

The fight to acquire the Melbourne-based software outfit is intensifying, with shareholders weighing multiple offers.

The takeover tussle for ASX-listed cloud PDF and productivity software group Nitro is intensifying, with KKR-backed Canadian suitor Alludo lifting its bid to $2.15 a share, or $527.4m, on Monday.

The sweetened offer from Nitro’s preferred suitor trumps Sydney private equity group Potentia’s revised $2 per share bid last week, that valued the software maker at $490.5m.

Nitro’s board urged shareholders to reject Potentia’s revised offer on Monday, and its shares climbed when the market opened – jumping 4.7 per cent higher to $2.23 – indicating shareholders were preparing for a ­higher bid and further action.

“The Nitro board has determined that the revised Alludo transaction is superior to the revised Potentia takeover offer and, therefore, unanimously recommends that you reject the revised Potentia takeover offer,” Nitro told shareholders in a letter.

Alludo’s bid was made on the condition that Nitro refused to open its books to Potentia, a condition that Nitro agreed to.

In a matter of weeks, Nitro’s board has driven up the bid from an initial $1.58 per share offer to $2.15, an uptick of about 36 per cent, or $140m, amid a flurry of takeover activity across the technology sector.

Potentia, an Australian firm that counts former MYOB boss Tim Reed and former Archer Capital executives among its ­senior ranks, is Nitro’s biggest shareholder, while Nitro chief executive Sam Chandler has held on to 7 per cent of the company he founded. Other major shareholders include Australian Ethical, Spheria Asset Management and Battery Ventures, along with AustralianSuper and Alex Waislitz’s Thorney Investment Group.

Nitro had already rebuffed a bid from the Sydney-based private equity firm Potentia in August, which the board has described as “highly opportunistic” amid a wave of significant sharemarket tumult.

“(The proposal) does not adequately compensate shareholders for Nitro’s position as one of only two software companies worldwide with a proven enterprise-grade SaaS PDF productivity and eSigning platform,” the board said at the time.

Independent expert Kroll Australia has determined the fair market value of Nitro at between $2 and $2.20 a share.

Founded in Melbourne in 2005, Nitro began as a direct rival to Adobe’s PDF offerings, but has since expanded to offer broader cloud-based software tools helping employees and customers share, sign, approve, track and collaborate on documents faster and more securely. The company has a customer base of about 13,000 corporates and 3 million ­licensed users globally.

The Canadian-based Alludo was previously called Corel and consists of a portfolio of tech­nology businesses that provide services such as virtualisation, productivity and professional-calibre graphic solutions for ­digital remote workforces.

In addition to the takeover offer, Alludo has made an off-market proposal with an alternative aim of a minimum 50.1 per cent approval, meaning the company would be content with a controlling interest in Nitro if the full takeover didn’t go ahead.

Local technology companies Infomedia, Pushpay, Tyro, Nuix and Nitro have all had approaches from suitors this year, but no deals have yet materialised, as private equity firms move to take advantage of depressed valuations that had soared during the height of the Covid-19 pandemic.

Nitro said it expected shareholders to vote on the proposal in February 2023.

“The company will continue to keep its shareholders and the market informed of developments in accordance with its continuous disclosure requirements,” the board said.

Shares in Nitro last traded at $2.23. The company’s shares have almost doubled in the past six months, but are down by about 20 per cent over the past year.